The Future of Accounts Payable The Top 5 Trends in AP for 2016

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Conrad Lee
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1 The Future of Accounts Payable The Top 5 Trends in AP for 2016

com Twitter: @_tomflynn Bob Cohen, Vice President 20+ years working with clients American Express, CA, IBI, Cendant Extensive

2 Introductions The Panelists Tom Flynn, Co-founder & CMO 15+ Years Serving the AP Community Extensive background in Accounts Payable & Procure-to-Pay Experience working with 250 of the F1000 companies Bob Cohen, Vice President 20+ years working with clients American Express, CA, IBI, Cendant Extensive background in Procure-to-Pay & Supply Chain Finance Expertise in Enterprise P2P, Electronic Invoicing, Working Capital Mgmt Twitter 2

Top Five Trends for Accounts Payable Widespread adoption of Supplier Self Service Portals Suppliers Compliance critical to reducing risk - globally and locally Crossfunctional Initiatives Compliance

3 Top Five Trends for Accounts Payable Widespread adoption of Supplier Self Service Portals Suppliers Compliance critical to reducing risk - globally and locally Crossfunctional Initiatives Compliance Data & analytics increasing profitability and comp advantage Leverage automation to improve payment strategies Automation Data & Analytics Software & Initiatives viewed more holistically, less siloed 3

Data & analytics increasing profitability and comp advantage Leverage automation to improve payment

4 What do we Mean by Portal? Common Uses & Types Vendor information Invoice processing Payment visibility Dynamic discounting Card & payment programs Combination of some or all Broad Definition Interface with supplier community and internal customers Communication & capture Repository of information Typically visible to more than one party Cloud-based, SaaS Security-enabled May have a self-service feature 4

& payment programs Combination of some or all Broad Definition Interface with supplier community and

Cost savings and avoidance speed of business Growing

5 Why should my organization consider a supplier portal? Data criticality Fraud protection and risk mitigation Cost savings and avoidance speed of business Growing regulatory complexity Multiple contacts & locations 5

Market Adoption 10-30% of organizations using a supplier portal Steep learning curve Lack of knowledge of business drivers Expected to increase significantly over next two years Traditionally,

6 Market Adoption 10-30% of organizations using a supplier portal Steep learning curve Lack of knowledge of business drivers Expected to increase significantly over next two years Traditionally, portals had two main functions Data and system integration and presentation Waiting for portals to become widely adopted is not a good strategy. You will be left behind and will not be able to maintain a competitive advantage Mary Schaeffer President, AP Now & Tomorrow 6

and system integration and presentation Waiting for portals to become widely adopted is not a good strategy.

7 Two-Phased Approach at Adoption The First Phase A move to consolidated portal functionality Vendor master, invoicing & payment visibility Cross-functional process automation Greater supplier self-service Documents 3 rd party validations The Next Phase Dominant design, de facto standard Experts predict: Bolt-on becomes standard integration Network effect dramatically increase connectivity and data quality Financing strategies 7

3 rd party validations The Next Phase Dominant design, de facto standard Experts predict: Bolt-on becomes

8 Top Five Trends for Accounts Payable Widespread adoption of Supplier Self Service Portals Compliance critical to reducing risk - globally and locally Data & analytics increasing profitability and comp advantage Leverage automation to improve payment strategies Software & Initiatives viewed more holistically, less siloed 8

& analytics increasing profitability and comp advantage Leverage automation to

9 Supplier Compliance throughout the Supplier Lifecycle Typical Best Practice 9 9

10 What Is The Cost of Non-Compliance? Penalties U.S. Treasury o o IRS Program penalties range from $50,000 to $10,000,000 per violation Civil penalties range from $250,000 to $1,075,000 per violation. o Over $2.5B in OFAC fines and penalties since 2013 Jail time U.S. Treasury o Imprisonment ranging from 10 to 30 years for willful violations Company reputation Protesting, strikes, and boycotts Credit rating o Conflict minerals, diversity & small business 10 10

$250,000 to $1,075,000 per violation. o Over $2.5B in OFAC fines and penalties since 2013 Jail time U.S.

11 Regulatory Compliance Definitions Understand the Acronyms OFAC - Office of Foreign Asset Control OIG - Office of Inspector General (For Healthcare) FATCA - Foreign Account Tax Compliance Act FFI s Foreign Financial Institutions EPLS - Excluded Parties List System SAM - System for Award Management BIS - Bureau of Industry and Security SDNs - Specially Designated Nationals 11 11

Compliance Act FFI s Foreign Financial Institutions EPLS - Excluded Parties List System SAM -

12 OFAC Case Studies

13 Tracking Compliance 13

14 Do not limit your compliance ambitions 14

15 Top Five Trends for Accounts Payable Widespread adoption of Supplier Self Service Portals Compliance critical to reducing risk - globally and locally Data & analytics increasing profitability and comp advantage Leverage automation to improve payment strategies Software & Initiatives viewed more holistically, less siloed 15

Lack of visibility into invoices Process invoices too costly Difficulty managing invoices Cannot maximize discounts Mitigating vendor fraud Timely payment of invoices Minimizing errors IOFM 2014

16 Lack of visibility into invoices Process invoices too costly Difficulty managing invoices Cannot maximize discounts Mitigating vendor fraud Timely payment of invoices Minimizing errors IOFM 2014 Controller s Report: Lack of Visibility the Top Challenge Which of the following are the biggest challenges in your AP department? (check all that apply) 45.4% 38.7% 42.0% 17.6% 10.1% 25.2% 47.1% What does this tell us? Lack of visibility is the main challenge cited facing AP departments All of the secondary challenges rely heavily on visibility All challenges beyond visibility are tied directly to bottom line and ftraud

your AP department? (check all that apply) 45.4% 38.7% 42.0% 17.6% 10.1% 25.2% 47.1% What does this tell us?

17 Automation and the effect on visibility Insights for AP leaders Insights for financial leaders Spend/supplier insights

18 Real Time Analytics

19 Visibility for Finance / Treasury Cash Need Forecast

20 AP Becomes Proactive

21 Strategic Spend Management

22 Top Five Trends for Accounts Payable Widespread adoption of Supplier Self Service Portals Compliance critical to reducing risk - globally and locally Data & analytics increasing profitability and comp advantage Leverage automation to improve payment strategies Software & Initiatives viewed more holistically, less siloed 22

23 The Ideal Payment Strategy Pay When We Want Still Get Discount Maintain Great Relationships

24 Goals for building a program Risk mitigation Improve working capital positions Efficiency gains Payment processing cost reduction Improve supplier relationships Create stronger goals & benchm ks

25 Where is the Opportunity for a Payment Strategy?

26 Tools to promote your Payment Strategy Supplier Information Management Optimize Cash & Cash Flow Supply Chain Financing Dynamic Discounting Early Payment Program Payments (Same Day ACH)

27 Many New Options & Considerations Multiple vehicles EFT/ACH Various Card Programs Dynamic Discounting Card Payment Discounting Supply Chain Financing B2P Discounts Select best vehicle Timely Processing Working Capital Management Hard Financial Benefits Program Sustainability Supplier Acceptance Uniform controls Program Enrollment/Onboarding Risk/Fraud Validations Program Management & KPI s Strategic Payment Program Methodology Ongoing Checks OFAC (SDN etc.) checking before each payment Look for duplicates before and after TIN/Address/Banking Changes 27

28 Top Five Trends for Accounts Payable Widespread adoption of Supplier Self Service Portals Compliance critical to reducing risk - globally and locally Data & analytics increasing profitability and comp advantage Leverage automation to improve payment strategies Software & Initiatives viewed more holistically, less siloed 28

29 AP is at the hub of Cross-functionality Decision Support Scenarios Suppliers Scenario 1 Purchasing needs AP to re-collect accurate terms information to manage supplier contracts for Legal Scenario 2 Strategic Sourcing needs to analyze supplier spend from the AP transactional history and usage data to reduce costs for HR benefits Accounts Payable Scenario 3 Executive Mgt. needs AP to collect diversity and charitable contributions to support Compliance and Tax as well as Sales initiatives with Customers Scenario 4 Operations needs to find a new service provider for security services to protect their Employees and engages AP or Purchasing Many Others. 29

30 Tactical Impacts 30

31 Top Five Trends for Accounts Payable Widespread adoption of Supplier Self Service Portals Suppliers Compliance critical to reducing risk - globally and locally Crossfunctional Initiatives Compliance Data & analytics increasing profitability and comp advantage Leverage automation to improve payment strategies Automation Data & Analytics Software & Initiatives viewed more holistically, less siloed 31

32 Introductions The Panelists Thank You! Tom Flynn - tom.flynn@lavante.com Bob Cohen - Robert.Cohen@basware.com 32

The State of Vendor Management

The State of Vendor Management November 20, 2013 Presenter Jeff Ulanoski Lavante Agenda Introductions The Supplier Management Survey Lavante 7 Best Practices for Process Improvement Recommendations What