A Practical Guide to the Five Levels of AP Automation

Charles Kaplan Mark BrousseauPerceptive Software Brousseau & Associates

A Practical Guide to the 5 Levels of

Accounts Payable Automation

What percentage of your invoices are paper-based?

More than 75 percent

51 percent to 75 percent

26 percent to 50 percent

11 percent to 25 percent

Less than 10 percent

Poll Question No. 1

71% of organizations say that at least half of their invoices are paper-based.

Source: 2013 IFO AP Automation Study

52% of business-to-business payments are made via paper check.

Source: 2013 IFO AP Automation Study

The Problems with Paper

12%

13%

19%

39%

44%

45%

0% 10% 20% 30% 40% 50%

Difficulty handling high amounts of supplierinquiries

Risk of payment-related fraud

Inability to effectively manage cash accordingto current business needs

Difficulty finding or managing paper-baseddocuments

Corporate directives to lower costs

Lack of visibility into invoices and APdocuments

Percentage of Respondents, n = 188

Source: 2012 Aberdeen Group

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3

4

5

1

Level 149%

Level 224%

Level 319%

Level 44%

Level 53%

Level Breakdown

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4

3

5

1

Level 1: Paper-based

Entirely paper-based invoice receipt

Manual indexing and storage in file cabinets

Manual data capture

Manual approval workflow

Inquiries handled by phone and email

Ad hoc, manual reporting

Decentralized, disconnected environment

High cost, transaction-focused

Percentage of Invoices Received Electronically

0%1%

1-10%16%

11-20%6%

21-30%19%

31-40%12%

41-50%9%

51-60%9%

61-70%4%

71-80%10%

81-90%4%

91-95%6%

96-100%1%

More than half of the respondents

receive the majority of their

invoices as paper.

64%

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1

Level 2: Image-enabled

Paper-based invoice receipt with front- or back-end imaging

Manual or partial auto-indexing

Physical and electronic storage

Manual capture from paper or image

Manual approval workflow

Inquiries handled by phone and email

Manual reporting

Partially centralized environment

First step towardpaperless office

% of Invoices Scanned: Front or Back-End

0% 1-10% 11-20%

21-30%

31-40%

41-50%

51-60%

61-70%

71-80%

81-90%

91-99%

100%0

5

10

15

20

25

30

35

40

% paper invoices front-end scanned

0% 1-10% 11-20% 21-30% 31-40% 41-50% 71-80% 81-90% 100%0

5

10

15

20

25

30

35

40

% paper invoices back-end scanned

2

1

Level 3: Workflow-driven

Invoice receipt: front-end imaging and some EDI

Auto-indexing, ECM

Minimal physical storage

Use of OCR/ICR

Automated approval workflow

Image portal available for inquiries

Automated reporting

Centralized, connected

Bridge to electronicinvoicing

3

Automated Reporting and Discount Management

Yes25%

No75%

Yes25%

No75%

Do you use automated reporting tools?

Do you use automated tools for discount management?

Does your organization use automated workflow for approvals and exceptions?

Yes

No, but planning to within 6 months

No, but planning to within 12 months

No, but planning to within 24 months

No, and we have no plans to do so

Poll Question No. 2

Saving $1 million annually by streamlined payment cycle

The Company

Privately held

1,300 employees

50 office locations across Canada and US

Real estate advisory and services firm

The Challenges

Control and standardize AP process across 50 office locations

Streamline payment cycle and improve visibility

Reduce redundancy and waste of paper-based process

Increase automation to handle 1,000 invoices per day

Case Example: Bentall Kennedy

Automation Highlights:

• Improved accuracy and compliance

• Saves more than $1 million annually

• Provides instant, anytime, anywhere access to documents and a detailed audit trail

• Accelerates payment cycle and helps capture of early payment discounts

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1

Level 4: E-enabled

Invoice receipt: imaging, EDI, e-invoicing, email (minimal paper)

Auto-indexing, ECM

Use of intelligent data capture, PO line-pairing

Automated approval workflow, routing and dispute management

Self-service portal for inquiries

Automated, integrated reporting

Shared services

Significant steps towards STP

3

4

Winner: 2012 Huntington Innovation Award

A/P Statistics and Trends

~ 5M invoices annually ~ $18B in disbursements annually Global scope encompasses N. America and EMEA Cost per invoice $1.71

May ’04 May ’07 May ’10 May ’11 May ‘12 May ’13

Headcount 105 88 64 61 53 52

Defect Rates 11.3 % 10.1% 10.1% 10.7% 8.6% 6.2%

Invoices Per FTE(annualized)

38k 59k 64k 69k 83k 86k

Electronic Payments

15% 32% 48% 49% 53% 54%

Electronic Invoicing 86% 89% 92% 92% 96% 97%

Invoices POT (HOT) 67% 82% 91% 92% 95% 95%

Progress Since Go-Live ...

© 2013 Perceptive Software, LLC. All rights reserved.

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10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

AP Paper Invoice Volume

Total Paper Linear (Total Paper) Manually Posted Linear (Manually Posted)

Intelligent Capture Go-Live

Perceptive Intelligent Cap-ture:60% + of paper invoices are now Auto Posting

Winner: 2013 Huntington Innovation Award

The Company

2012 Sales – $6.3 billion

8,200 employees

Cable, security solutions, electronic wire, fasteners

Operating in 260 cities in 50 countries

The Challenges

1.8 million invoices annually

Single solution must interface with multiple backend systems

Ability to support rollout to North America, Latin America, AsiaPac, EMEA

The Results

95% of all keystrokes eliminated

Email input has increased 59%

Paper use is down 38%

Case Example: Anixter

Automation Highlights:

• 92% STP for PO invoices

• 74% STP for freight invoices

• 98% of expense utilities

Does your organization use a supplier portal for self-service invoice status?

Yes

No, but planning to within 6 months

No, but planning to within 12 months

No, but planning to within 24 months

No, and no plans to do so

Poll Question No. 3

2

1

Level 5: Paper-free

Fully electronic invoice receipt

Auto-indexing, ECM

Touch-free data capture

Exception-based approval workflow

Self-service portal for inquiries, online dispute resolution

Real-time, predictive, integrated reporting

Shared services, harmonized

Analytics-driven,value-focused

3

4

5

Electronic Posting with No Manual Intervention

0%61%

1-10%12%

11-20%4%

21-30%7%

31-40%1%

41-50%1%

51-60%3%

61-70%1%

71-80%3%

81-90%1%

91-99%3%

Best-in-class companies

electronically post 70%+ of their invoices

without manual intervention.

-- Gartner

A Roadmap to Paperless AP

© 2013 Perceptive Software, LLC. All rights reserved.

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Paperless AP is a journey, not an destination

Paper remains a “fact of business” for AP organizations

Reducing focus on transactions allows focus on value

Knowing where you are helps you plot where to go next

Technology Excellence in Healthcare Supply Chain

Recognition for Excellence

Charles Kaplan Mark Brousseau

Perceptive Software Brousseau & Associates

charles.kaplan@perceptivesoftware.com m_brousseau@msn.com

Questions

www.paperlessofficematurity.com