Automating Payables for the SME Market:

Transcription

1 Automating Payables for the SME Market: Diving Head First into AP Automation Waters Q Featuring Insights on... The SME Universe Underwritten in part by SME Opportunities and Challenges in Automation Automated Payables Process Where to Start with Automation How to Select a Solution

2 Table of Contents Introduction...1 Executive Summary...2 A Closer Look at the SME Universe...4 SME Opportunities and Challenges...11 Taking the Plunge...16 Payables Automation From Front to Back...18 Automated Payables Process...22 Anybill...25 Anybill Case Study...29 Where to Begin...31 How to Select a Solution...33 Conclusion...35 About PayStream Advisors...35

3 Introduction Cloud computing and Software-as-a-Service (SaaS) applications were once just buzz words heard, or read when perusing high-tech publications. However, these terms have gained increasing momentum over the past few years and are helping to pave the way in accounts payable (AP) automation in small to medium enterprises (SME) those with annual revenues under $250 million. Until recently, AP automation initiatives were limited to tech-savvy, IT heavy Fortune 1000 companies, who had the human and capital resources to implement and manage these applications. Today, PayStream is witnessing an increasing number of SME s implement AP automation solutions in an effort to reap the benefits of the large early adopters. SME s are buried in paper and are struggling with manual, paper-based AP processes. More and more SME s are now realizing that automation solutions can eliminate the vast majority of challenges they face in their day-to-day operations, including late payments, missed discounts, long invoice processing cycles, manual data entry, lack of visibility, and high discrepancies, just to name a few. The availability of affordable, easy-to-use and easy- to-implement technology solutions is driving renewed interest in AP automation in the SME market place. While paper is still prevalent, PayStream s latest research reveals that the use of paper to trade business-to-business (B2B) invoices is waning, as the use of electronic invoicing (einvoicing) continues to increase. Research reveals that 59 percent of respondents report they are trading B2B invoices via paper, down 5 percent from 64 percent in 2011, see Figure 1. More suppliers (17 percent) are now submitting the majority of their invoices electronically, a five percent increase from Aggressive supplier onboarding programs, and free supplier portals are enticing more suppliers to adopt einvoicing, which is working to help eliminate more paper for SME s. PayStream predicts this trend will continue as the barriers to supplier onboarding decrease. On the purchasing side, electronic invoicing and automated workflows continue to be the hot AP trends, and are both experiencing increased adoption. The integration of einvoicing and workflow functionality is gaining momentum, as a static electronic invoice isn t much better than a paper one. The true value of an electronic invoice lies in how successful companies are at assimilating invoice data into accounting systems and management workflows. This culture of integration yields the best return on investment (ROI). An integrated approach to invoice automation works to automate data capture, invoice coding, workflow, review and approval. While the benefits of AP automation have been available for quite some time, SMEs are now diving head first into the automation waters. SME s are witnessing the tactical benefits around cost containment and productivity enhancements, in addition to the strategic advantages around improved supplier relations and working capital improvements.

4 Executive Summary PayStream Advisors has developed this Technology Insight report titled Automating Payables for the SME Market: Diving Head First into AP Automation Waters for small and mid-sized enterprises with an interest in payables automation. The report includes the latest adoption statistics, current thinking, best practices, strategies, and key performance indicators for evaluating and selecting the solution that meets your needs. In addition to trends and analysis of the latest survey data, this report profiles leading solution providers and offers case studies illustrating how others have used payables automation technologies to accelerate approval cycles, improve productivity, capture discounts, strengthen working capital positions and improve trading relationships. PayStream Advisors conducted in-depth surveys among AP and other finance professionals, and this report contains the results. Key findings in this report include: More SME s are doing a better job controlling invoice processing costs. The number of SME s able to process an invoice for under a dollar increased from 8 percent in 2011 to 10 percent in More SME s ranks themselves as innovators, having made significant investments in automation up 6 percent to 21 percent in Front-end imaging witnessed the biggest increase in adoption, up 9 percent from 2011 to 41 percent in Increased AP automation has led to more SME s to successfully capture supplier discounts. More suppliers (17 percent) are now submitting the majority of their invoices electronically, a five percent increase from Sixteen percent of SME s are paying over half of their bills electronically, up from 12 percent in Lack of budget (28 percent) remains the number one barrier to the adoption of einvoicing. The fact that the majority of invoices are received in paper format remains the number one challenge SME s face in the invoice management process. SME s report einvoicing (31 percent) as the number one 2013 financial automation goal. Challenges SME s face in migrating from paper to einvoicing continue to decrease due to supplier onboarding and the explosion of SaaS solutions. This report is based on the results of PayStream s Electronic Invoice Benchmark, Invoice Workflow and Automation, and Shared Services surveys of over 500 account payable and procurement professionals at U.S. based enterprises. AP professionals at SME s are encouraged to explore AP automation solutions with the goal of reduced processing costs, increased visibility, increased on-time payments and capture of supplier

5 discounts, improved vendor satisfaction, fewer duplicate invoices, and a reduction in exceptions and discrepancies. Based on the number of survey respondents, PayStream believes that the surveys have a confidence level of +/- 5 percent. For more information on this and other research reports available from PayStream Advisors, visit PayStream s Research Vault at

6 A Closer Look at the SME Universe Large enterprises have the bandwidth in the form of human and capital resources to invest in financial operations automation; whereas this may not be the case for SME s. Until cloud-based or SaaS solutions exploded on the market, new financial automation technologies were built with large enterprises in mind. While solution providers are still actively engaging in sales to large organizations, much of this market is saturated, leaving technology providers to look for new opportunities. This opens the door to the large pool of SME s that are actively looking for ways to eliminate paper and streamline their AP operations. Eighty-three percent of U.S. based SME s have 10 or fewer employees. While this may not be a problem when the company is small, as it grows and transaction volumes increase, the impact on an SME can be disproportionate, due to limited resources. It s not surprising that manual processes predominate in the typical SME AP function. Lacking the scale of the larger companies, many SME s have much less flexibility in allocating resources to overcome the challenges of AP processing. Figure 1 Methods Used to Trade B2B Invoices 64% 59% Paper wanes as the use of einvoicing increases. 22% 14% 13% 14% 9% 6% Paper einvoice / Portals / EDI Fax With paper as the number one method used to trade B2B invoices, it s not surprising that SME s are all over the map when it comes to invoice processing efficiency. The number of SME s able to process an invoice for under a dollar increased from 8 percent in 2011 to 10 percent in 2012, and the number of SME s able to process an invoice for $ $5.00 increased from 25 percent to 29 percent, see Figure 2. While more SME s are doing a better job controlling the cost of processing invoices, a sizeable segment (29 percent, down from 45 percent in 2011) are still not measuring invoice processing costs. SME s that are not measuring invoice processing costs most likely lack the systems to measure these costs and will most likely be in the over $15 segment. Please note that fully loaded costs include AP staff, managerial overhead, facilities and IT support.

7 Figure % Average Fully Loaded Cost to Process an Invoice 25% 29% 29% More SME s are doing a better job at controlling invoice processing costs. 8% 10% 9% 14% 12% 15% 2% 3% Under $1 $1 - $5 $6-$10 $11-$15 Over $15 We do not measure invoice processing costs Organizational Structure Due to the lack of organizational skill, the majority of SME AP departments are centralized (68 percent, up from 66 percent in 2011), see Figure 3. PayStream attributes this to the fact that many SME s are single location enterprises. Only a small minority, 6 percent remain decentralized. It is interesting to note that more SME s are utilizing a shared service center for AP (28 percent). AP processing from an SME perspective is likely to be much less complicated than a larger organization, which in theory should make the implementation of an automation solution easier. Figure 3 68% Nature of SME Accounts Payable Departments The majority of SME AP departments are centralized. 24% 6% 2% Decentralized Invoices are received, approved, and paid at different locations Partly Centralized Invoices are received at multiple facilities but paid centrally Centralized Invoices are approved and paid centrally We outsource our invoice receipt and payment process

8 SME s Move Towards Innovation Over one-third of SME survey respondents report that they have adopted some form of AP automation. What s important to note in Figure 4 is that more SME s are evaluating some advanced tools, but have not yet adopted them, (28 percent, up from 26 percent in 2011), and a surprisingly high number of SME s report they are innovators and have made significant investments in automation (21 percent, up from 15 percent in 2011). Figure 4 Where SME s Rank Themselves 43% % 26% 28% 21% 15% 16% 15% We are an innovator we have made significant investments in automation We have adopted some advanced technology, but it is not widely used and has limited impact We are evaluating some advanced tools, but have not yet adopted them We have not evaluated financial automation technology and have no immediate plans to do so PayStream likes it when companies do what they report. In the 2011 survey, SME s reported technology they were currently using, along with technology they planned to use within six months. As reported, implementation increased in all five areas, see Figure 5. The biggest leap was witnessed in the number of SME s that adopted frontend imaging, up 9 percent from 2011 to SME s realized that by simply scanning documents at the back-end, rather than scanning paper invoices upon receipt, they were missing a huge potential for cost savings, workflow acceleration, increased accuracy, improved compliance and advanced reporting functionality. Today s best practices call from front-end image and data capture, where paper documents are scanned upon receipt, either at a central processing site or remote facility to digitize the data they contain. PayStream attributes the increase in front-end imaging to the increase in OCR/Automated Data Capture and Automated Workflow.

9 Figure 5 Technology in Use or Planning to be in Use within Six Months 2011 Results Using Implementing in 6 months 2012 Results Using Implementing in 6 months 68% 61% Front-end imaging 52% witnessed the biggest increase up 9 percent. 41% 38% 46% 32% 17% 14% 31% 31% 26% 22% 14% 11% 19% 14% 13% 11% 9% Front-end Imaging OCR / Automated Data Capture Automated Workflow Electronic Payments Purchasing Cards Figure 6 Ability to Capture Supplier Discounts Interest in capturing supplier discounts has increased slightly among SME s, up 2 percent to 33 percent in Due to increased automation, the ability to capture supplier discounts has also increased, with 38 percent of respondents reporting they capture all available discounts., see Figure 6. 38% 42% More SME s report successful capture of supplier discounts. 14% 5% 1% We capture all available discounts 1-10% 11-20% 21-30% More than 50%

10 More suppliers are now sending SME s invoices by electronic means EDI, XML, Web Portal or einvoicing, see Figure 7. This means less manual data entry for SME s. PayStream predicts that suppliers will continue to move in the right direction and SME s should receive a significant volume of invoices from suppliers over the next year. Figure 7 Percent of Invoices Received Electronically from Suppliers 34% 38% 40% More SME s are receiving invoices by electronic 24% means, a sign that suppliers are moving in the right direction. 11% 13% 5% 6% 5% 9% 7% 8% None 1-10% 11-25% 26-50% 51-75% % In addition to receiving more invoices electronically, SME s are making headway in sending electronic payments to suppliers. While 4 out of 5 of SME s have electronic payment capabilities, only 16 percent pay over half of their bills electronically, up from 12 percent in 2011, see Figure 8. Supplier portals or networks are used to facilitate einvoicing. Portals allow suppliers to upload invoices, enter invoices manually, or flip a purchase order into an invoice. Once the invoice is captured, it can be routed automatically through the payables approval process. More SME s are now adopting electronic invoicing and automated workflow solutions in an effort to reap the rewards of the large, early adopters.

11 Figure 8 34% 34% Percent of Invoices Paid Electronically More SME s report paying their bills electronically, as witnessed by the 5 19% 13% 19% 21% 15% 16% percent reduction in the number of SME s reporting they pay 7% 9% 5% 7% none of their bills electronically. None 1-10% 11-25% 26-50% 51-75% % For the SME s that have not yet taken the plunge into the automation waters, 2012 survey results show that cost remains the primary concern. Twenty-eight percent of 2012 survey respondents report the lack of budget as the number one barrier to electronic invoicing, up from 23 percent in Other barriers include the belief that current processes work (18 percent) and the belief that there will be no return-on-investment (ROI), at 11 percent. PayStream expects these numbers to continue to shift as more solutions are targeted to the SME market.

12 Figure 9 Barriers to Electronic Invoicing Lack of budget 23% 28% Barriers to automation are beginning to decline We do not think there will be an ROI 11% 15% as solutions become more affordable, easy to No executive sponsorship 4% 4% implement and easy to use for SME s. Lack of understanding current available solutions 7% 9% Lack of technical resources to manage an automated solution 4% 6% Current processes work 18% 21% None of these 13% 18% Other 9% 10%

13 SME Opportunities and Challenges Front-end imaging, electronic invoicing and automated workflow are experiencing increased adoption among SME s as companies strive to migrate from a manual paper-based invoice system to an efficient automated system. The convergence of these three technologies presents SME s with a single, comprehensive solution that can handle both paper and electronic invoices through a common automated process. This holistic approach to electronic invoicing and automated workflow is gaining momentum, and yields the best ROI. An integrated approach to invoice automation works to automate data capture, invoice coding, workflow, review and approval. Paper is still the number one method used to trade B2B invoices, see Figure 1. Paper and manual processes are the enemy of efficiency. Paper invoices result in manual keying, manual routing and the opportunity for errors, lost invoices, discrepancies, exceptions, late payments, missed discounts, etc. Routing paper invoices for payment is time consuming and leads to other problems downstream, including the lack of visibility into outstanding invoices and the inability to capture supplier discounts. The 2012 survey results reveal that the number one challenge in the invoice management process is still that the majority of invoices are received in paper format, see Figure 10. By eliminating the paper, AP departments can eliminate all the other challenges in the invoice management process. The increase in respondents reporting lack of visibility into outstanding liabilities, up 10 percent from 2011, and the inability to approve invoices in time to capture discounts, up 6 percent from 2011, reveal that momentum continues to build for broader applications of AP automation among SME s. Once accuracy and efficiency driven, AP automation solutions are now being utilized as a management information tool for real-time spend visibility and discount capture.

14 Figure 10 Challenges in the Invoice Management Process Majority of invoices received in paper format 59% 65% Lack of visibility and the inability to approve Decentralized invoice receipt 17% 15% invoices in time to capture discounts are linked to SME s drive for increased cash flow and the greater control of Lost or missing invoices Manual data entry & other inefficient processes 18% 20% 39% 43% when invoices are paid. Lack of visibility into outstanding liabilities 13% 23% High number of discrepancies and exceptions 24% 24% Inability to approve invoices in time to capture discounts 16% 22% Increasing electronic invoicing has been the top priority among AP professionals, see Figure 11. This trend underlies the desire to squeeze paper out of the system. Eliminating paper solves a host of quality issues, while improving efficiency and driving down costs. The benefits of migrating from paper to electronic conversion also hold true if companies are migrating to electronic payments or electronic procurement. Moving from manual, paper-based systems to an automated environment enhances visibility in the form of transaction transparency. With instant access to real-time visibility, companies can quickly identify trends that work to facilitate actionable insights that ensure control over the entire process.

15 Electronic invoicing via EDI 3% Figure 11 Top Financial Automation Goals for 2013 Electronic invoicing via portal or network 28% Electronic invoicing ranks as the top financial automation goal, as more AP professionals strive for paperless invoice processing. Front-end imaging Automated workflow 23% 25% Electronic payments via ACH 18% Purchasing cards 3% It s hard to argue with results. The benefits of electronic invoicing and automated workflow (the top automation goals for 2013) have been well documented for both buyers and suppliers. Benefits of sending einvoices: Get paid faster with invoices going straight to processing Cut costs and increase efficiency Track the status and increase visibility of every invoice for improved cash flow and working capital management Trade anywhere in the world with the correct sales tax automatically applied Easily add digital signatures to comply with policies and regulations Quickly resolve disputes and queries with collaboration features Boost your green credentials by eliminating paper immediately Benefits of receiving einvoices: Save on every invoice slash invoicing costs from day one Eliminate paper and save time with invoice automation Integrate automatically with any invoice processing or back-end system Qualify for early payment discounts by paying suppliers faster

16 Bring new suppliers on board faster and get the relationship off to a flying start Free up office space with easy-to-use electronic invoice archiving According to 2012 survey respondents, fewer lost or missing invoices (58 percent), quicker approval cycles (56 percent), and increased on-time payments (51 percent) ranked as the top benefits achieved from an electronic invoicing solution, see Figure 12. Electronic invoicing speeds up approval processing time which results in on-time payments and the ability to capture discounts. This in turn results in fewer supplier inquiries and improved vendor satisfaction. Figure 12 Key Benefits Achieved from an einvoice Solution Fewer lost or missing invoices and quicker approval cycles ranked as Fewer lost or missing invoices Increased on-time payments 43% 51% 57% 58% the top benefits achieved as a result of electronic invoicing. Quicker approval cycles Improved vendor satisfaction 27% 34% 52% 56% Increased ability to capture discounts 21% 34% Reduction in FTE / processing costs Better visibility across the transaction lifecycle 39% 39% 30% 35% Fewer supplier inquiries 18% 18% Reduction in exceptions discrepancies Fewer duplicate invoices 27% 31% 24% 28% Other 7% 5%

17 Barriers to Automation Success is predicated upon the ability to change the operating culture. Though large organizations have a reputation for being less nimble than smaller businesses, the biggest hurdle for an SME is nonetheless internal change management, see Figure 13. It s worth noting that the challenge of gaining supplier adoption dropped from 2.5% in 2011 to 2.0 percent in 2012 due to the prevalence of aggressive supplier onboarding programs and free supplier portals. PayStream predicts the challenge of supplier adoption to continue to decrease with improved supplier portals, supplier onboarding and increased emphasis on win-win functionality, including accelerated payment, free supplier analytics, and dynamic discount management. While technical challenges were once a formidable obstacle, the explosion of Software-as-a-Service (SaaS) and Cloud computing has been a real game changer for SME s. SaaS applications can be deployed rapidly at a lower cost and with minimal IT resources required. An added bonus of SaaS applications is they are highly scalable. Growing SME s can quickly add users and additional functionalities without having to worry about additional infrastructure and the related support. Figure 13 Biggest Challenges SME s Face in Migrating from Paper to einvoicing Gaining supplier adoption 2% The biggest barrier for an SME remains internal change management. Internal change management 2.8% Integration with in-house and supplier systems 2.3% Solution does not function as expected 2.2% Other 2.2%

18 Taking the Plunge More SME s are taking the plunge into AP automation waters and the timing couldn t be better. Reduced costs, scalability, improved functionality and ease-ofuse are driving the adoption of AP automation in the SME market. Here s why: 1. Proven Technology Large enterprises have been benefiting from reliable AP automation tools to deliver a definable return on investment. SME s are adopting these technologies to reap the rewards that the large, early adopters witnessed. 2. Reduced Costs Cost is no longer a barrier. With cloud-based and SaaS technology maturing, and competitive solutions continuing to enter the market, SME s are realizing shorter times to ROI. 3. Easily Accessible Most of the solutions offered to the SME market are hosted (SaaS) and operate in a cloud environment. This eliminates the need for IT resources to implement and maintain automation tools. SaaS solutions can be quickly accessed via any web browser. In addition, most solution providers now provide mobile functionality to keep invoices moving through the system while users are out of the office. 4. Easy to Use Today s turnkey solutions eliminate disparate legacy solutions, simplifying the approval process and moving documents along with clear rules, permissions and escalations to ensure that invoices get to the right people, arrive on schedule and get paid on-time. The powerful functionality and usability of today s automation solutions allow for wide-spread adoption in companies of all sizes, including SME s. 5. Cash Management/Working Capital Invoice automation pays dividends to both buyers and suppliers in the form of liquidity and control. Through automation, buyers can manage their free cash and invest it for big returns in the form of early-payment discounts to suppliers. Suppliers benefit by accelerated collection of receivables. 6. Data Analytics Automated invoice processing solutions brings increased visibility into all invoices, which allows for greater control of cash flow and working capital management. Powerful reports can be quickly generated and used to make highly data-driven business decisions. Companies that harness this data are able to quickly drill down into report details with increasing granularity and accuracy for fast, effective decision making. 7. Wide Variety of Solutions Available There are a lot of components to AP automation, and there are a host of vendors with solutions that address the different subsets thereof (e.g., financial service firms providing epayments and P-Cards, software vendors delivering imaging and workflow, and networks providing portals for electronic data exchange).

19 8. Scalable and Configurable Growing organizations like SME s benefit when the automation tools they employ have an extended lifespan. Payables automation tools have been built with large enterprises in mind. They are feature rich, which allow a small or medium size company to grow into the solution. SME s don t have to start out utilizing everything at once, and can turn on certain functions as they are needed. This makes these solutions very scalable from an SME perspective. They are also portable, so if an organization moves from one ERP system to another, you can continue to work from the same automated payable platform by simply integrating it with the new system of record. 9. Outsourced Service Availability Outsourced services are available to augment the SME that has limited resources. SME s don t have to do it all on their own. Solution providers can help fill the resource gaps in a number of areas, from remote scanning to supplier onboarding.

20 Payables Automation From Front to Back All AP automation solutions share the common goal of improving process management. However, not every solution follows the same approach, or provides similar functionality at each step of the cycle. Accounts payable professionals should understand the different forms that invoice automation solutions can assume in order to decide which methods would work best in their environment. Back-End Document Capture and Archival -The simplest form of invoice automation uses scanning technologies for back-end imaging and archival. Operators batch and scan paper documents at the end of the invoice receipt-topay process. AP staff then manually index the invoices after which the document images are stored in an electronic repository for retrieval. While this eliminates physical storage requirements, facilitates document retrieval for discrepancy resolution and audits, and improves responsiveness to supplier inquiries, the invoice approval process continues to follow its current manual and paperintensive course. Since scanning is done after the fact this storage and retrieval solution is seldom used anymore because it fails to yield any improvement or efficiency in workflow. Front-End Document and Data Capture - When employing an imaging solution at the front end of the invoice processing cycle; invoices are scanned remotely or at a central processing facility upon receipt. Once scanned, images are enhanced to optimize recognition and data is extracted from the documents using automated image recognition technologies. Front-end document and data capture represents a quantum leap over back-end imaging by facilitating improvements to the invoice receipt-to-pay cycle, especially workflow automation. Validation rules ensure that the data extracted is accurate, and many companies now opt to automatically pay invoices that meet all validation rules, freeing AP staff to focus on exceptions. Advanced systems put the onus of exception and discrepancy correction back on suppliers, facilitating the evolution of AP departments into profit centers focused on spend analytics and working capital management. Front-End Capture with Matching and Workflow - In a more advanced form, invoice automation solutions combine front-end document and data capture with matching and workflow capabilities to streamline and automate invoice receipt and approval processing. Workflow-enabled invoice automation solutions automate more of the invoice receipt- to-pay cycle than stand-alone document and data capture solutions. Workflow solutions enable AP departments to define how different types of invoices are processed. PO-based invoices can be automatically matched against the purchase order and receipt documents, while non-po invoices can be routed to the people who must approve them. All tasks are routed based on pre-defined business rules and user roles with access rights set to match the organization s existing approval hierarchy. Approvers are typically notified via when invoices require their approval. By clicking on the hyperlink

21 contained in the messages and logging onto the system they can view, code and approve the invoices online. Most solutions available today come bundled with reminders, out-of-office delegation rules and escalation procedures to ensure invoices are processed in a timely manner. They also deliver auditing, reporting and management benefits that document and data capture solutions alone cannot provide. Automated Data Extraction Tools -Tools and technologies that facilitate the extraction of information from scanned invoice images have had an interesting life cycle, starting from template-based optical character recognition (OCR) to free-form recognition and more recently, intelligent document recognition (IDR). IDR systems enable end users to extract content from invoices without the system having to learn the layout of the invoice and without requiring the coding of rules or design form templates. Embedded fuzzy search methods improve the extraction results by using other known data sources to automatically validate the information before exporting it to the ERP and document management systems. Consequently, more invoices can be processed straight through from scan to post in the least amount of time and with a minimal amount of manual intervention. Fuzzy logic can also make the IDR solution language-agnostic, allowing global organizations to process high volumes of invoices in multiple languages. Combining Electronic Invoicing with Imaging and Workflow - The most sophisticated invoice automation solutions combine front-end document imaging and data capture with electronic invoicing and automated workflow. This enables organizations to process all the invoices - irrespective of whether they are submitted in paper or electronic format - through a single, common process. Under this scenario, suppliers are transitioned from paper to electronic invoice submission, usually through a stand-alone portal or a shared supplier network. Most solutions offer suppliers multiple options when it comes to submitting electronic invoices - direct integration with ERP and billing applications to transmit invoices in a hands-free manner without manual intervention, flipping purchase orders into invoices and web forms and templates that can be used to generate electronic invoices. Once invoices have been submitted, they can be subjected to a range of validation criteria based on buyer-defined rules. Invoices that do not meet any of the specified criteria are flagged as exceptions and suppliers are asked to correct them while clean invoices are then forwarded for further processing. For suppliers that continue to send paper invoices, organizations can use front-end imaging and data capture to extract information from the invoices. After data extraction, the converted invoices are processed using the same matching and workflow rules as the electronic invoices. Also gaining popularity is the outsourcing of the scanning and data capture function that takes on the responsibility of receiving invoices, scanning them and extracting the requisite data.

22 Figure 14 Payables Automation Components Reporting & Analytics T&E Management - Organizations of all sizes can take advantage of the benefits of automating their Travel and Expense (T&E) processes. Automation provides complete end-to-end control of report submission, approval, reimbursement, reporting with data analysis and integration into back end accounting systems. Having this integration provides more visibility into spend with accurate accounting and detailed reporting for every single transaction and expense category. When organizations have this information at their disposal, they are equipped to determine exactly what areas in their travel and expense spend are excessive and can put automated controls in place to reduce runaway cost. The T&E automation space handles corporate card integration as a standard feature. Card statements are integrated into today s T&E systems, granting complete visibility into spend. Not only can expense reports be filed quickly when transactions are readily available, but merchant details accompanying each transaction can make tracking and reporting easier. Statements can be recalled instantaneously and analyzed for company violations or excessive spending. Electronic Payments - Electronic payments have seen remarkable changes in the past decade with the creation of new alternatives to paper checks. Recent innovations include virtual or ghost credit cards, Single-Use Accounts, Buyer Initiated Payments, ACH funds transfer, supplier-friendly web portals and

23 collaborative networks. Once a legitimate concern, compatibility issues have largely been relegated to the status of urban legends. Most epayment solutions on the market today integrate seamlessly and cost-effectively with major ERP, AP, and Supply Chain systems. As more suppliers embrace epay via ACH, there has been an increasing concern about the loss of important detail inherent in traditional ACH transactions. The recent emergence of payment and remittance advice consolidation alleviates this issue. Buyer initiated payments offer buyers and suppliers a fast track to electronic payments, without any significant IT burden. None of the above electronic payment types are mutually exclusive from one another or from paper checks. Depending on an organization s level of innovation, technological savvy and diversity of supplier base it can use a combination of the different payment types to satisfy its unique financial and business requirements. Commercial Cards - Commercial cards are unique as they not only support the procurement function to purchase goods at the point of sale, and in many cases without paper invoices, but also permit accounts payable professionals to automate the settlement process. They have evolved into several types, including corporate purchasing cards, travel and entertainment cards, and fleet cards that target specific indirect spend categories, as well as one/multi-card systems that target multiple indirect spend categories (e.g. virtual or ghost credit cards, Single-Use Accounts, and Buyer Initiated Payments). Purchasing Card (P-card) programs are attractive because of the automation and process efficiency they bring, especially to the purchase of small items, where it is difficult to justify the high overhead of using requisitions, purchase orders, approvals, matching and settlement by check through the AP process. Increasingly, p-card programs are also being touted for the rebates that are provided by the issuer based on how much is spent on the P-card. eprocurement - Electronic procurement solutions streamline the purchasing process by enabling organizations to connect to vendor catalogs, generate requisitions, use sophisticated workflow tools for approval processing and deliver purchase orders to suppliers electronically. Although the adoption of automation currently remains skewed toward large corporations, many mid-sized and smaller companies are also making great strides towards less paper, even paperless environments. These aggressive technology adopters have learned that in many cases automation diminishes the procure-to-pay cycle time from weeks to just days and delivers a rapid return on investment. By automating each stage of the procure-to-pay cycle, from electronic procurement to programmed exception handling and matching along with enhanced dispute management and approval workflow, adopters can not only achieve productivity gains and cost reductions, but also obtain traceable Sarbanes-Oxley audit trails. There are six components within the eprocurement universe: purchase requisition, requisition approval, workflow management, purchase order delivery, receiving and reconciliation, and reporting and analysis.

24 Figure 15 AP Invoice and Payment Automation Process Automated Payables Process PayStream has identified 16 areas that impact automated accounts payable processing from the point of receipt all the way through to payment. Once an invoice or other payables data is captured electronically, the question to ask is: Does this invoice need to be approved? The ability to derive an automated answer by using business rules, which in turn trigger appropriate workflows, is the centerpiece of an automated AP environment. If the answer to the question is no, the system will move the invoice into the payment process. If the answer is yes, the system will route it to the approving party along with any necessary decision support documents and information. Business rules, flexible workflow and transactional transparency are essential. Figure 15 illustrates the AP invoice and payment automation process. Accounts Payable Invoice and Payment Automation 4 epayments ACH & P-Card Discounting & SCF 1 2 Paper Invoice Matching & Management Workflow OCR / Data Capture Invoice Document Management Outsourced Document Conversion Invoicing 3Electronic PO Matching & ERP Integration Approval Workflow einvoicing Networks * EDI Invoicing * Including PO transmission Below are the 16 areas that PayStream has identified that impacts automated AP processing. They are listed here to provide you with a checklist for evaluating both your company s needs as well as the functional capabilities of any solutions you may consider. 1. Invoice Submission The system should facilitate the exchange of invoices between buyers and suppliers by supporting several methods of supplier submitted invoicing including PO flips, blank e-forms, standard templates and direct integration (Electronic Data Interchange EDI) with a supplier s ERP system. 2. Document Scanning Having all invoices sent to a single location for scanning is preferable, but not always practical. In decentralized organizations

25 the best practice is to receive paper invoices in regional scanning centers and then scan to one central repository. 3. Compliant and Secure Storage The ability to capture and then maintain both structured and unstructured data must be accomplished within a secure environment that is not only compliant with all relevant regulatory and industry standards, but also extends to the integrated process. 4. Invoice Recognition It is very important to be able to capture line items and not just header data. Without line item details automated systems must forego the use of advanced matching and business rules to decipher apparent exceptions. The use of free form ICR or IDR can provide an added level of automation compared to a template driven OCR process. 5. Invoice Validation The system must check every invoice for duplicity and mathematical integrity. In a portal environment, checking invoices against a set of buyer-defined criteria and notifying suppliers to correct any errors before the invoice is accepted and routed provides an additional layer of validation. 6. Invoice Matching This involves matching invoices with purchases, goods receipt documents and/or contracts based on criteria configured in the system. The system should also route any match exceptions for review and resolution. 7. Workflow Configuration Administrators need the ability to configure and change the business rules that determine how invoices will be routed to appropriate users for review and approval. 8. Alerts and Notifications The system should notify approvers of invoices pending their review and escalating invoices to managers if no action is taken within a specified period of time. 9. Payment Processing The steps that buyers take to initiate, post and execute payment, including preparation, processing, and submission of the payment file to the financial institution need to be seamless. 10. ERP Integration Besides the exchange of transactional data between the invoice automation solution and the ERP, this stage also includes integration with and posting of the payments to buyers GL and accounting systems. 11. Remittance Management Sending the remittance information to suppliers via the portal in a format of the suppliers choice is critical so that they can easily transfer the remittance advices into their receivables systems. 12. Travel & Expense Receipts Paper receipt capture, either scanned or via a mail service, and matching those items to submitted expense reports or credit card downloads (in addition to providing confirmation to the employee), must be integrated with workflow providing approval, exception/discrepancy handling and delivery to AP.

26 13. Card Management The ability to capture complete details on all card transactions is the necessary first step in order to support workflow driven cost allocation and expense reporting activities as well as monitor usage compliance. 14. Contract Management Leading edge firms are implementing automated contract management capabilities (typically for handling non-po invoices related to leases, utilities and other recurring bills) to further reduce manual processing. 15. Mobile Apps Delivering tasks and supporting documents to a mobile device facilitates approval by executives who travel regularly. Most solutions on the market today provide mobile functionality. 16. Business Intelligence There is a wealth of information gleaned from the P2P process, which can be used not only to comply with regulatory requirements but also to provide valuable business intelligence for strategic spend analysis.

27 Anybill Founded in 2001, Anybill provides end-to-end accounts payable automation for small to medium enterprises (SME), as well as some of the world s largest corporations and institutions, encompassing a variety of industries. The company has consistently experienced year-over-year double-digit growth, which is a testament to their ability to meet market demands and customer requirements. Anybill s all-in-one approach to accounts payable automation, including invoice receipt, invoice approval and invoice payment, is an easy-to-use, easy-to-implement solution. It combines all the necessary pieces of AP automation into an integrated and complete cloud-based package, allowing for instant upgrades and quick deployment, with little IT involvement. Website Founded 2001 Headquarters Washington, DC Number of Employees 50+ Number of Customers Key Clients Portfolio includes Fortune 500 companies, large enterprise, and small and medium enterprises including not-for-profit organizations. Target Verticals Not-for-profit, Banking, Financial Services, Retail, Property Management and Professional Services Partners / Resellers Accounting service, technology firms, financial software companies, and other service providers Solution Name AnyAP Solution Overview Anybill s end-to-end solution, AnyAP, is a cloud-based platform for automating the accounts payable process, from invoice receipt and data capture to approval and payment. AnyAP provides complete control and visibility over the entire AP process with clear approval authority and robust reporting functionality. While Anybill s solution is comprehensive, it is flexible and can be used to support stand-alone functions such as invoice management and payment processing. In addition, AnyAP is fully scalable, which will benefit SME s that experience rapid growth. As one of the first web-based solutions available on the market, Anybill has evolved its combination of technology and services to meet and exceed a diverse set of client requirements. The AnyAP platform has proven successful for a wide variety of companies within many markets, such as not-for-profit, banking, financial services, retail, property management, and professional services. Anybill has also witnessed success with large enterprise clients that utilize AnyAP to meet specific requirements

28 such as managing indirect corporate tax payments and strategic payment processing integrated within their supply chain. The solution s clear approval authority, reporting functionality and seamless integration back into a company s financial system of record, results in lower invoice processing costs and shorter approval and payment cycle times. Looking beyond direct cost savings, AnyAP also provides total transparency and control over the entire AP process, mitigating maverick spending and payment delays while opening the door to potential vendor discounts. In addition, the freeing up of AP personnel from focusing on mundane tasks to more strategic business initiatives contributes to better problem solving and higher employee morale within the department. AnyAP is a secure solution and is SSAE 16 compliant. It also provides a transactional audit trail, in which every action is time-dated and user stamped. Invoice Receipt The AnyAP solution allows for the receipt of both electronic and paper invoices. Paper invoices are received at Anybill s invoice lock-box that is located at regional postal facilities. Services include importation of invoices from any format (Paper, PDF, , fax, etc.), sorting and batching, scanning with the latest OCR technology, data extraction, and validation. Anybill utilizes template-based and free-form OCR technology to capture invoice information. Initial invoice validation is performed through a cross-reference of invoice data, including vendor, account number, invoice number, invoice date, amount due, and other data elements. Vendor Portal The Anybill solution does support an AnyAP vendor portal for suppliers to review invoices and research their accounts receivable. It also validates all invoices based on any number of criteria, system, or client requirements, according to configurable business rules. Getting new vendors set up in the AnyAP vendor portal is part of the exceptional client service that Anybill provides. Anybill currently has over twenty thousand unique suppliers enrolled in their network, with more added each day. Approval Workflow One of the most attractive and powerful features of the AnyAP solution is its invoice approval process and workflow approval routes. Pre-defined workflow approval routes can be used, or clients can easily configure their own, with the ability to dynamically assign routes based on invoice amount, vendor type, or other data elements. Anybill s approval routes can include an unlimited number of approvers, based on a company s specific needs. To help facilitate dispute management, AnyAP captures all user and system activity, stores documents, and provides the capability to quickly and easily access vendor and invoice information. In addition, standard and ad-hoc reports can be quickly generated for information gathering, during the dispute resolution process.

29 Payments, Discounting and Remittance Details As an end-to-end solution, AnyAP provides invoice payment options in the form of paper check, automated clearing house (ACH), and wire transfers. In an effort to improve working capital management through the capture of supplier discounts, users with the appropriate permission can easily change the invoice amount to reflect any discounts. In an effort to manage the supplier discount process, Anybill users have the ability to track payment terms and review invoice images in the system, prior to changing the invoice amount. Anybill seamlessly integrates with a client s accounting or ERP system. To provide crystal clear visibility into spend to make informed business decisions, Anybill maintains a mirror image of a client s general ledger and requires that all expense items be coded. In addition, Anybill can flow through non-anybill transactions such as purchasing card transactions and manual checks, to provide an even more comprehensive view of spend management. Custom fields can also be utilized to track transactions by project, contract or any other relevant data element. At the supplier account level, Anybill stores transactional data and posts it back to the accounting or ERP system. Anybill provides visibility down to the transaction level, and a record of all system and user activity associated with a payment is maintained, as well as images of the issued check, an image of the cleared check, ACH information, and wire transfer information. This unsurpassed level of visibility creates a one-stop shop for valuable data, all at the click of a mouse. Rather than dialing in and speaking with an AP staff member, suppliers can simply view certain information relating to the status of their invoices through the AnyAP vendor portal. This is a huge time saving benefit to AP, and allows AP the freedom to focus on more strategic tasks. Anybill provides an aggressive supplier on-boarding program, and facilitates the exchange of remittance information as part of the on-boarding process. Content Management AnyAP includes storage and archival functionality for captured images and data. Anybill allows for complete visibility to all invoices. With proper authorizations, users have the ability to search on any information saved with the invoice or by any action performed against it. Information can be quickly downloaded to multiple data formats (e.g. CSV) for data manipulation and additional reporting functionality. Anybill integrates directly with the financial or ERP software to provide all relevant client transactional data. Invoice, payment and vendor history transactions can be searched online and Anybill meets all federal government standards for data and records retention. Reporting and Analytics As part of its standard reporting capability, AnyAP provides multiple reports covering AP, treasury, invoice history and financial reconciliations. Clients can quickly define the criteria needed to gain instant access to the desired results. Clients can also run