Copyright © 2005 Accenture. All rights reserved. Accenture and its logo, and Accenture High Performance Delivered are trademarks of Accenture. Electronic

Copyright © 2005 Accenture. All rights reserved.Accenture and its logo, and Accenture High Performance Delivered are trademarks of Accenture.

Electronic Invoice &Settlement

NASACT Annual ConferenceAccounts Payable TransformationBill Kilmartin, Accenture

August 2006

Copyright © 2006 Accenture All Rights Reserved. 2

Finance & Performance Management


Agenda

1. Overview of Electronic Invoicing & Settlements Domain

2. EIPP Strategy and Approach

3. Example of EIPP Applied to a State

4. What does an EIPP Solution Look Like




EIS focuses on automating key transactional elements of both AP and AR, including the assembly, creation, transmission and receipt of invoices electronically.

EIS has a compelling value proposition to clients in three key areas:

1.Process automation and elimination of paper

2.Labor savings

3.Cashflow Optimization




EIS addresses key pain points within the financial value chain for both Buyers and Sellers

Recon &

Analysis

Collection

Invoice

AccountM

gmt

Offer &

Contract

Sales &

Marketing

Fulfil

Order

Manage

Order

ReceiveO

rder

Strategic Sourcing

Accounts Payable

Order Management

Strategy

Develop’t

Contract

SupplierM

gmt

InvoiceP

rocessing

Approval &

Query M

gmt

Paym

ent&

Analysis

Order

Origination

Order

Placem

ent

Receive

Accounts Receivable

Customer Acquisition

Order Fulfilment

Maximize Visibility and Compliance1-2% Savings

Operational EfficiencyImproved by 70%

Optimize Early Payment DiscountsCapture 2% discounts

The Procurementto PaymentOpportunity

Optimize Collections (Reduce DSO)Reduce DSO by 2-10 days

Operational EfficiencyReduce costs by 50%

Maximize Visibility and Buyer Compliance10% Revenue Growth

The Order toCash Opportunity




The Electronic Invoicing and Settlement Landscape

B2B: Electronic Bill Presentment and Payment (EBPP)

B2C EBPP

Addresses high volume, and/or high complexity bills Disputes managed on a by line item exception basis

rather than a by invoice basis Generally only touches outbound invoices, but can

integrate Proof of delivery documentation as well

Business-to-Consumer electronic bill presentment and payment

Transactions tend to be recurring (credit card statements, utility bills, etc.) but could involve a one-time-only transaction

Key industries: Utilities, Telecommunications (wireline, wireless) Insurance and Financing (credit cards), Government

B2B: Electronic Invoice Presentment and Payment (EIPP)

Focuses on supply chain interactions between businesses trading partners

Generally involves multiple documents: mainly invoices, but could also include PO’s, Change/Acknowledge Orders, Remittance Advice, etc.

Pay Anyone

Consumer transactions supporting one-time payments

Payment methods vary and include check, money wire, etc.

Examples include PayPal, C2It and Valid

Recurring Bills

(Simple)

Invoices

(Complex)

EBPP

EIPP

Pay Anyone

EBPPEBPP

Key industries: Utilities, Telecommunications, Insurance and Financing (credit cards and leasing) and Distribution, Health care, Government

Payment typically requires:1) matching (to PO, Invoice)2) reconciliation / adjudication3) approval and authorization

Key industries: Manufacturing, Wholesale, Retail, Government




AR Automation “EBPP”

AP Automation “EIPP”

The Electronic Invoicing and Settlement Landscape




Agenda

1. Overview of Electronic Invoicing & Settlements Service Domain



4. What Does an EIPP Solution Look LIke




What is the Prompt Pay Discount Opportunity?

Employees Other Governments (grants etc) Recipients (such as Welfare, Unemployment, etc) Beneficiaries (such as Pension, Worker

Compensation) Health and human service providers (such as

Medicaid and social service provider organizations) Bond holders Customers receiving revenue refunds Vendor Trade Payables

Suppliers already agree to contractual terms and already accomplish prompt pay discount

Suppliers already agree to contractual terms but not accomplishing prompt pay discount

Suppliers do not yet agree to contractual terms, but probably would if requested

Major Payee Groups Vendor Trade Payables




Value Proposition of EIPP: Opportunity to Reduce Cost and Generate Hard Dollar Savings

Opportunity

Reduce Accounts Payable

Operating Costs

40-60%

Create value

through discounts

1.3%-2% of Spend

As-Is

To-Be

Use of electronic invoices

As-Is

To-Be

Supplier queries

Receive PostInvoice

ApproveInvoice

IdleTime Pay

% Discounts Opportunity

2

Days

Net terms – payment on time

No discount opportunity

2% saving on invoice if paid early

Day 10 Day 30

Incremental Savings Opportunity




Value Proposition of EIPP: Typical Process Challenges

Over 50% of invoices arrive at the Accounts Payable for approval after 1 Week.

Over 50% of invoices require 1+ weeks for approval.

65% of invoices are entered in the Payables within 1 week of arrival at the Accounts Payable.

Over 25% of invoices are paid after the due date.

Minimal use of suppliers with early payment discount terms.

Significant invoices paid early in advance of due date.

There are numerous pain-points within the financial value chain ... A holistic financial value chain solution has opportunity to drive benefits for buyers and suppliers.




SupplierBase

SuppliersWith

Negotiated Discount

Terms

SuppliersCurrentlyWithout

Discount Terms

Opportunity to negotiate more favorable & flexible discount terms

Improve process & realize terms Discounts not actively taken Payment outside discount

threshold due to inefficient internal process

Modify contracts and/or enable suppliers to take advantage of more flexible discount possibilities

Prompt Pay Discounts already

Realized

CurrentlyWithout Discount

Terms and Paid early

Invoice TransactionBase

Terms Adopted But Not Realized


Terms and paid in 30 days


Terms and paid late

80%

20%

1

2 ‘Low hanging fruit’

Could these transactions be paid early to earn discounts?

Assess rationale for late payment

1. Persuade & enable more suppliers to offer discounts

2. Equip the buyer with the ability to execute on and to control discounts

Value Proposition of EIPP: Discount Management Strategy




Value Proposition of EIPP: Strategic Discount Capture

CorporateP Card

Enforce discount terms through EIPP

Individually negotiate discountsEnforce through EIPP

Enforce discount terms

Through EIPP

Buyer Leverage

SpendSize

H

M

L

L M H

SupplierA

SupplierB

SupplierC

SupplierD

Group A

Group B

Group C

Manage and monetize discounts across addressable spend

L M H




Agenda




4. What Does an EIPP Solution Look Like




Example Executive Summary(Based on analyzed data set – 9 Month Period)

For the 9 month period of analysis

Conclusion 1: The State realized 1.38% of discounts on a spend value of $47.3M resulting in savings of $651K ($868 annualized)

Conclusion 2: Enforcement of existing terms with current vendors could realize an additional $3.7M in savings.($4.3M annualized)

Conclusion 3: Changes in procurement policy and targeting of additional vendors and spend categories could realize $21.7M ($28.2M annualized)

Annualized Opportunity*

$868K

$4.3M

$28.2M

* 9 Month Analysis ; X 1.33 to annualise , assuming pro-rated spend

As-Is

Enforcement of existingTerms and

improvement in efficiencies

Extending terms and improvement

in efficiencies




Example Executive SummaryGraphical Summary of Analyzed Data

Transactions

12K

348K

Discount

$868K

$21.7M

Vendors

490

14,120

818

Spend

$47M

$1,585M80% of

transactions from 8.7% of

suppliers

20% of transactions

account for 73% of spend

As-Is Data set Opportunity

Vendors with Discounts Captured

Vendors with Discount Terms

Total VendorData set

Transactions receiving discounts

Total Transactions data set

Spendsubject to discounts

Total spend in data set

Discountsreceived

Discountsopportunity




Agenda




4. What Does an EIPP Solution Look Like




What a Typical EIPP Software Suite Does

SupplierManagement

Order Management

Invoice Management

Payment Management

Discount Management

Payment Approval

Remittance Processing

Payment Status

Funds Movement

Payment Audit

Supplier Payment Mgt

Payment Reports

ACH, P-Card , RPPS

P-Card Payables Acct

CTX Remittance

Garnishment Payments

Employee Expense Payments

PO Delivery

PO Acknowledge

Advance Ship Notice

Supplier Order Mgt

Order Mgt Reports

Contract PO Mgt

E-Invoice Capture

Invoice Validation

Routing & Approval

Dispute Mgt

2/3-way match

Attachments

Supplier Invoice Mgt

Approval Status

Invoice Reports

Paper Invoice Entry

Imaging Integration

EDI VAN Invoices

Goods Receipt

Contract Enforcement

Discount Program Mgt

Dynamic Discounting

(Pay Me Now)

Prorated Terms

Terms Capture

ERP Reconciliation

DPO Mgt Reports

Supplier Portal

Supplier Enrollment

Master Vendor Network

Supplier Matching & Activation

Private Supplier Entry




How An EIPP Solution Works

Buyer Supplier

Purchasing

A/P

MaterialsManagement

A/R

CitibankJPMorgan

ChaseWachovia

WellsFargo

NorthernTrust Disbursing Banks

Billing

Order ManagementOrder Delivery• Delivers Direct, Services, Blanket, and other order types• Acknowledgements and ASN support

Payment Management

Payment Processing• Authentication• Timing control

Remittance Processing• Format mapping• Email, EDI, FTP, CTX

Other

Invoice Management

Approval Routing• E-mail based• Auto routing/STP• Dispute management

Real Time Validation• Performed at submission• Business rule driven• Exception management

Invoice Capture• Web template, PO Flip• eFile/EDI• ERP invoice upload

Treasury Treasury

Advanced Discount Management

Program Management• Supplier groups• Program definition

Dynamic Capture• Execution engine• ERP synchronization

Terms Management

• Standard terms• Prorated terms• Pay Me Now™




Where are the discounts coming from?

Top Categories*• Industrial Equipment &

Supplies• Paper & Packaging• Engineering & Construction• Office Products• Facilities & Maintenance

Services Mix• 58% of suppliers• 26% of invoices• 46% of spend• 33% of discounts

Broad Participation• Suppliers large and small• Consider discount leverage

*Source: Xign network statistics, 2Q05 Discount Manager customers

Rank Category Suppliers Invoices Spend Discount APR1 Industrial Equipment & Supplies 44% 54% 36% 1.2% 35%2 Paper & Packaging 100% 96% 93% 1.7% 36%3 Engineering & Construction 28% 17% 6% 2.2% 30%4 Office Products 43% 81% 55% 1.7% 22%5 Facilities & Maintenance 50% 23% 18% 1.6% 46%6 Contractor 38% 23% 34% 0.9% 31%7 Miscellaneous 35% 33% 12% 2.2% 47%8 Transportation & Logistics 38% 28% 7% 2.2% 39%9 IT Services 55% 72% 15% 2.4% 39%

10 IT Hardware & Software 20% 10% 7% 2.1% 2%11 Fabrication 60% 50% 32% 1.6% 17%12 Medical Products & Services 16% 9% 0% 1.4% 4%13 Marketing & Advertising 26% 4% 3% 1.1% 14%14 Staffing Services 27% 14% 12% 1.3% 24%15 Printing 26% 8% 4% 1.6% 32%16 Package Delivery 40% 5% 12% 1.1% 38%17 Legal Services 33% 46% 39% 3.0% 54%18 Chemicals 25% 2% 2% 1.9% 20%19 Foodservice 38% 55% 10% 1.2% 24%20 Business Services 27% 9% 1% 1.2% 27%21 Retail 50% 13% 0% 2.7% 36%22 Consulting Services 12% 3% 0% 1.1% 23%23 Oil & Gas 0% 0% 0% 0.0% 0%24 Taxes 0% 0% 0% 0.0% 0%25 Telecom 0% 0% 0% 0.0% 0%26 Utilities 0% 0% 0% 0.0% 0%




Contacts

Bill [email protected]

Mark [email protected]

Documents

Copyright © 2005 Accenture. All rights reserved. Accenture and its logo, and Accenture High Performance Delivered are trademarks of Accenture. Electronic