“Exploring AP best practices & trends for improved processing in Oracle E-Business Suite”

December 15, 2011

Agenda

The challenges of efficiently processing invoices Invoice automation benefits Maturity of AP automation Automation best practice

recommendations End-user experience with

AP automation

Mike VentrellaDirector of National Oracle SalesandCliff AutinManager of Oracle Consulting Services ReadSoft North America

Purchase to Pay and Order to Cash

Payment

Remittance advice

Purchase order

Invoice

Order confirmation

Delivery note

PURCHASING

Buyer areas

Demand, need or requirement

Pay invoice

Create remittance advice

Process incoming invoices

Process incoming delivery notes

Process incoming confirmation

Create purchase order

Create a requisition

LOGISTICS EXECUTION

ACCOUNTS PAYABLE

Various departments

ACCOUNTS RECEIVABLES

LOGISTICS EXECUTION

SALES

Supplier areas

Create a sales order

Create outgoing invoice (bill)

Process RA and find open items

Clear open items

Deliver goods or services

Process incoming PO

Purchase to Pay:Invoice processing

Top pain points for AP processes

Source: PayStream Advisors Financial Automation Survey http://www.paystreamadvisors.com/

What are the business issues we see?

• Repetitive manual data entry– Line item matching – Low quality of data caused by human error

• Cost control / high AP operational costs• Inefficient invoice storage & retrieval• Lost & fraudulent invoices, duplicates• Penalty for late payments• Poor supplier service levels • Challenges with financial reporting• Cash management• Corporate compliance / Sarbanes-Oxley

AP Management

There is a lot you can do

• Manual keying: Eliminate• Verification & validation: Reduce costs dramatically• Registration & allocation: Reduce costs• Personal copies: Eliminate• Archiving: Reduce costs dramatically• Late payment penalties: Eliminate• Write-offs: Reduce• Early pay discounts: Get them

Better control and security

• Fast and simple electronic distribution• Full control of your document flow• Electronic account coding & payment

authorization• Easily accessible information• High security • SOX compliance support• 40-60% cost savings

Quantifying the benefits of approval workflow

research shows…

– The use of electronic integration, messaging, reconciliation & reporting solutions in AP reduced transaction cost between 63% and 67%.

– Most companies have moved to a shared services model to improve policy and process compliance. Yet, only 3% of AP processes reported having a high-level of automation.

– 79% of AP managers see "automation" as the key enabler to future success.

– The invoice reconciliation and payment solution framework addresses invoice receipt, approvals, reconciliation and payment considerations for solution selection.

(From the Electronic Invoicing Solution Selection Report)

Automation Adoption Rates Climbing

“Almost 80 percent of the executives surveyed said they had either already launched an invoice automation initiative or planned to within a year.”

- Invoice Automation Adoption

Survey Report

Accounts Payable AutomationMaturity Model

Optimized Discount Capture & Improved Use of Working Capital

• Invoice Scanning• Manual Indexing• Manual Approval Processing

• Key Invoice from Image• Online Manual PO Matching• Automated Approval Processing• Activity Reporting

• Automated Matching & Exception Handling• Conversion of Invoices from POs• Dispute Resolution ManagementM

atu

rity

of

Pro

cessin

g A

uto

mati

on • Enable Automation

Across Inbound Channels for Maximum Efficiency & Savings (mailed, faxed, electronic, e- mailed, P-Cards, etc…)• Supplier Self- Service• Supplier On- Boarding• Dynamic Discount Management• Integrated Purchase-to-Pay• Business Intelligence/Analytics

Tactical Improvements(Immediate/Tactical ROI)

Strategic Efficiencies

(Exponential ROI)

Centralize invoice receipt Establish imaging early in the AP process Capture data from the images Leverage existing Oracle infrastructure and business

rules Auto matching capability PO-based invoices Improve cycle times with integrated workflow/account

coding Take advantage of early pay discounts Centralize visibility, control and reporting to manage and

improve processes

Best practice recommendations for streamlining AP

Upgrading to EBS R12

EBS R12 is the bridge to Fusion Applications. If you are considering or in the process of an R12

upgrade, be sure any vendor applications are validated through Oracle.

While still on EBS11i, consider adopting an R12 compatible AP solution.

R12 upgrade in your near future? Consider implementing AP automation simultaneously.

Oracle integration

Oracle Integration

Business Needs AP Best Practice Solution

More accurate information, using existing Oracle set-up:

Automatically assigns organization code Automatically assigns supplier/site Prevents duplicate invoices Checks for valid PO Uses existing COA, code combination, Hierarchies etc. Uses Oracle standard workflow engine Uses standard Oracle validation rules & hold codes

• Oracle validation for PO, supplier, site, duplicate invoice, contact person etc.

• Use of E-Business Suite components such as legal entity, GL code combinations, users, employees, responsibilities, hierarchies, AP/PO options, Oracle standard workflow engine, profile options etc.

 

Single source vendor

One Stop Shop

Business Needs AP Best Practice Solution

Adopt document recognition and Oracle workflow components from the same company:

Call one vendor for support Same solution across the world, software,

implementation & support Upgrades guaranteed to work No risk with multiple vendors Product roadmap known

• Single OCR to Oracle solution for automated AP processing

• Support provided for all areas of the solution

 

Invoice Automation Experiences

World leader in fluid handling systems and components

– Increase processing speeds– Capture more discounts – Gain visibility & control over invoices in the AP process

Goals:

Pain Points: – Too much time wasted keying

invoices– Too many lost discounts– Couldn’t locate invoices – Low visibility

Implementation – Customizations around outdated, pre-

existing legacy system prolonged implementation

– Dropped customizations in the end since the

system was going away in the future – Advice: Do your due diligence of what

you really want & hope for beforehand– Initial goals set for two years were met within the first six

months– More efficient use of people resources within the first four

months– Average invoice processing time dropped from 24 days to 9– 70% of invoices are not touched by staff– Faster and improved visibility over existing liabilities

Results:

Invoice Automation Experiences

“We have really partnered more with buyers & planners in purchasing.”

“Another thing is that all the controllers are able to go in and look at the expense reports & invoices. At the end of the month they’re no longer calling us, and it doesn’t take any of AP ‘s time.”

Jewals Ubl, AP Manager, Graco Inc.

Invoice Automation Experiences

What can you LEARN from Graco’s experience?

• AP process automation can pay big benefits with…– Thoughtful preparation– Identifying needs and goals– Assigning & empowering staff resources– Consider implementation phases & schedules– Be prepared to adapt and adjust, but…– Always keep the scope of each phase as a touchpoint

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Additional Automation Achievements

• Vodafone– Processed 50% more invoices in 2nd month after automating

• Kellogg’s– 50% of PO-based invoices go from Scan to Post untouched

• Green Mountain Power– Enabled to take early payment discounts, greatly reduced vendor

calls, & majority of top vendors are now enabled to send PDFs instead of paper

• Alcan– Significant reduction in manual processing, data entry, filing and

retrieval; majority of PO-based invoices automated• Sheridan

– 3-month installation, including testing and go-live; able to negotiate significant discounts; able to process more invoices with fewer people; able to report in real-time on vendor spend

When Considering AP Automation…

• Know the difference between “it can” and “it does”– Questions & dialogue with potential vendors– Was it designed to work in your environment?

• Know yourself– Are you hands-on ready or do you expect turn key?– How involved in detail planning & process implementation

can you/do you want to be?• Start with an assessment

– Don’t underestimate the culture fit– Know where you are today and where you want to go

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www.readsoft.com 888-READSOF(T)

mike.ventrella@readsoft.com cliff.autin@readsoft.com