Achieving Bottom Line Profit by Buyer Initiated Payment

Presented by:Daron W. Whisman, CPSM

P2P Process Considerations

• Single or multi channel• Funding versus processing• Current payment terms• Avg. Payment Size• New vendors• Contract renewals• Supplier Rationalization• Non-Compliance

– Reverse handling charge– Extended terms (stages)

Questions to consider

• How much control do we want over payments?

• How much disruption can our business partners handle?

• What is the benefit for those involved?• Where do you think the landscape is

going?• How is your accounting process changed?

Payment Options

• ACH or Wire• Commercial Cards

– Backbone is Visa/Mastercard network

• Buyer Initiated Payment– Allows release of funds once all approvals received

• Dynamic Discounting– Allows supplier to control payment timing – Discount amount is calculated dynamically based on the number of days remaining until the

due date. – Discounts do not need to be negotiated in advance, rather can be taken dynamically as

working capital needs dictate. – Trading parties can tap into an alternative source of working capital with the use of third party

creditors whom pay early on behalf of the buyer.

5

Customer needs will drive different payment trigger pointsCustomer needs will drive different payment trigger points

Payment Trigger Points

InvoiceInvoiceReceipt (IR)Receipt (IR)

PurchasePurchase OrderOrder

GoodsGoods Receipt Receipt (GR)(GR)

RequisitionRequisition

Pay onPay on

InvoiceInvoiceReceiptReceiptShipShipOrderOrder

Efficiency Control

BUYER

6

SUPPLIER

INVOICE

Goods Receipt

(GR)

BIP – How it Works

ERP Portal

Buyer Initiated Payments

Motivations to acceptance (research brief Glenbrook 2009)

Vendor Comparison

Stone and Chisel Kindle

Excel Implementation Tools

Spend Analysis ProspectiveWeekly Control Tools - Retrospective

ApdVendor VName Ven_Class Dollars100000001 Vendor A SUP 9,663.85100000002 Vendor B SUP 1,703,951.65100000003 Vendor C SUP 1,453,868.08100000004 Vendor D SUP 416.25100000005 Vendor A SUP 2,667.89100000005 Vendor B SUP 1,666.11100000006 Vendor C SUP 524.00100000009 Vendor D SUP 1,336,347.74100000010 Vendor A SUP 10,575,173.25100000012 Vendor B SUP 5,896,246.63100000015 Vendor C SUP 863.43100000017 Vendor D SUP 379.58100000018 Vendor A SUP 1,430,020.75100000022 Vendor B SUP 3,458.00100000026 Vendor C SUP 1,336.86100000028 Vendor D SUP 40,098.59100000031 Vendor A SUP 4,951,991.15100000035 Vendor B SUP 2,354.00100000059 Vendor C SUP 8,886.95100000060 Vendor D SUP 2,060.93100000065 Vendor A SUP 72.59100000066 Vendor B SUP 15,264.98100000080 Vendor C SUP 1,158,529.90100000084 Vendor D SUP 404.26100000087 Vendor A SUP 3,964.75

Excel Implementation Tools

Supply Chain Management

Financial Services Information Systems Invoicing Payment Vendor

VP Supply Chain Services: Executive Champion for P2P Initiative

VP Financial Services: Executive Champion for P2P Initiative

VP Information Systems: Executive Champion for P2P Initiative

Sales: Campaign management for sales/ contracting with the service

Sales: Campaign management for sales/ contracting with the service

Controller/ CFO: Decision to commit to electronic process.

Director of Finance for Supply Chain: Set programmatic strategy for P2P program. Escalation of tactical issues within Supply Chain Management.

Director of Accounts Payable: Set programmatic strategy for P2P program. Escalation of tactical issues within Finance Department.

Director of Business Solutions: Set programmatic strategy for P2P program. Escalation of tactical issues within Information Systems Department.

Project Management: Program management for on-boarding, training and setup of vendors with the system.

Program Management: Program management for on-boarding, training and setup of vendors with the BIP system.

Local/ National Sales: Coordinate key relationships within vendor company and champion the program internally.

Manager of Data/ Contracting: Manage GHX data exchange. Manage data reconciliation of hospital contracts with Vendor.

Facility Directors of Finance: Training/ stewardship of invoice approval through workflow system for facility personnel. Setup of Approval Limits and workflow.

Manager of Business Solutions: Manage Lawson and Ascend systems, direction for programming solutions for data flow to/from , , Lawson and Ascend.

Web form/ Customer Support: Vendor ticket support and training for web-based invoicing

Vendor ERP systems management: Setup of technical submission of invoices, UOM validation

Manager of Purchasing: Leadership/ training of purchasing staff regarding / process. Manage PO Vendor Master in Lawson.

Accounts Payable Clerk (2): / : Steward electronic invoices through workflow system or Lawson to voucher creation. Manage AP vendor Master in Lawson

Programmer Analysts (2) (Lawson): Create and monitor payment instruction files to , PO detail to , invoice data and images from , invoice status file to for vendor inquiry. Handling of EDI 810 invoices and ACH payments

Integrated Solution Implementer: Vendor invoice file mapping and setup for high volume vendors providing invoice file uploads

Manager of Accounts Receivable: Training of AR personnel regarding electronic invoicing/ payment. Work closely with sales and contracting to escalate invoice discrepancies.

VHA Project Manager: P2P program management for on-boarding, training, and setup of vendors with electronic invoicing/payment.

Applications Analyst (2) (Ascend): Maintain and monitor non-PO invoice data routing;; setup of workflow approval limits; setup of Construction and AP staff workflow access.

Systems Implementation: Technical setup of hospital system and integration

Local/ National Contracting Department: Manage data reconciliation of vendor contracting information with hospital

Financial Analyst (2): ; Training/ Implementation of the P-Card Program; analysis of payment reconciliation

Programmer Analyst (FileNet):, Maintain And monitor invoice images sent to Document Imaging system

Customer Service/ Order Fulfillment: Conform to order confirmation process. Training of process of invoice submission.

Key Lessons Learned

• Strategic and repeated simple communication• Centralized feedback loop

• quickpay@memorialhermann.org• einvoicingquestions@memorialhermann.org• econstruction@memorialhermann.org

• Electronic payment set up first – funding creates buy in• Electronic invoicing is carrot for vendors• Get high level buy in, continually revisit • Determine early – best of breed or all in one• If best of breed – do vendors collaborate well?• Use staged implementation for IT resources and project management• Use collaborative and honest approach with vendors• Use coordinated but distinct approaches for electronic invoicing and

payment• Segment, review and update vendor list repeatedly, contact list quality

vital to success –vital to success• Always present program as an integrated process• Use multi-disciplinary team• Technology landscape changes very quickly (i.e. cell phone evolution).• Provide A Players opportunities first to help with retention.