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Time for Change ? A Guide to Reevaluating and
Selecting a New e-Invoicing Solution
Ben Shaffer, Director of Payment Services Pacific Gas & Electric
Today’s Discussion
About PG&E
History of AP Automation at PG&E
Supplier Portal e-Invoicing – Key Enabler for Savings
Performance Metrics – Results!
Choosing an e-Invoice Provider
Key Points to Take Home
Questions
About PG&E
• Incorporated in 1905
• Headquartered in San Francisco, CA
• Provide natural gas and electric service to approximately 15 million customers
• Service area covers 70,000 square miles in northern and central California
• Approximately 23,000 employees
• 2015 revenues of $16.8 Billion
History of AP Automation at PG&E
1990 - 1999
1990 • EDI for PO Invoices • Direct Interface for Freight
Invoices
Mid 1990’s • P-Card • Additional Interfaces • Positive Pay
Early 1990’s • Integrated Suppliers with
Online Catalogs, EDI and 2-way Match
1996 • SAP with Integrated Imaging • Almost All Goods and Services
Converted to PO’s • Freight Invoice Payments
Outsourced to Auditors • Electronic payments
2000-2009
2002 • Internet Based e-Invoices
with Xign
2003 • Concur with Credit Card
and Receipt Imaging for T&E
• Dynamic Discounts for PO e-Invoices through Xign
2004 • Web Form Buyer Side for
Non-PO Invoices with Approval Work Flow
2004 - 2010 • New Electronic Interfaces • Credit Card e-Payments • Consignment Inventory • Automated Wire Transfers
1980s
Mid 1980’s • Automated PO Invoice
Approval • Electronic Interfaces for
Tree Trimming, Telephone Billing, Claims, Workers Comp
2010 – today
2011-today Taulia Portal and Certified SAP Add-On For e-Invoices • No Supplier Fees! • Dynamic Discounts for
ALL Invoices • Single Supplier Portal • OCR for Paper PO Invoice • P-Cards into Concur
Key AP Automation Items for Invoices
• 1980’s • Automated PO Invoice Approval
• Purchase Approval with PO Creation
• Invoice approval with PO Match
• 1990’s • EDI for PO Invoices
• SAP with Integrated Imaging
• Almost All Goods and Services Converted to PO’s with automated invoice approval
Key AP Automation Items for Invoices (cont.)
• 2001 - 2004 • Internet Based e-Invoices with Xign
• Dynamic Discounts through Xign
• Buyer-Side Non-PO e-Invoices
• 2011 - Today • Taulia Portal and Certified SAP Add-On for e-
Invoices
• Dynamic Discounts – for All Invoices
• OCR for remaining paper
Invoice Volumes
(
PO Invoices 2012 Pct 2015 Pct Paper 55,661 14% 1,619 0%
OCR 10,053 2% 21,624 5%
Traditional VAN EDI 80,916 20% 0 0%
E-Invoice Portal / Network 256,003 64% 459,253 95%
Total 402,633 100% 482,496 100%
Non-PO Invoices
Paper 3,222 10% 0 0%
Buyer Side E-Invoice 29,298 90% 34,905 100%
Total 32,520 100% 34,905 100%
*Electronic Interfaces 373,200 372,289
Online Employee T&E 86,503 111,147
P-Card Transactions 522,228 552,348
Total 981,931 1,035,784
AP Total 1,417,084 1,553,185
*Excluding ESP’s & CEER
What’s an e-Invoice?
Ben’s definition: Invoice received in an electronic format that can be automatically entered, processed and approved through the buyer’s AP system without manual intervention
Examples:
• Traditional VAN or point to point EDI • Direct electronic interfaces • Scan and Capture (outsourced data entry) • Scan and OCR (Optical Character Recognition) • ERS (Evaluated Receipts Settlement) • Consignment Inventory • Internet based web portals and networks
•They’re all electronic to Accounts Payable - but they’re not all equal !
OCR – Does it work?
• Yes & No - Depends on what you want !
• Very good for invoice header records
• PO number, vendor name, invoice number, invoice date, invoice total, sales tax, freight
• Non-PO if you can capture approver ID or other “key” to route electronically for approval
• Not very good for accurate invoice item records
• Invoice items do not match PO line items – many to many
• Invoice items do not have PO line item numbers
OCR – Does it work? (cont.)
• Use data extracts or directs reads from PO, vendor, and other data files along with algorithms to build machine readable item records
• PG&E achieved 50% STP using a single item PO unit of measure algorithm
Benefits of Internet based e-Invoices over EDI, Scan & Capture and OCR
Buyer Benefits
• Easy and low cost to implement – SaaS vs. Build & Maintain
• Eliminates Invoice Exceptions - Validate data at point of entry - Make suppliers resolve errors before submitting
• Lowers AP costs – reduces data entry, discrepancy resolution, payment error rework, and supplier inquiries
• No testing – all e-Invoices the same – fast supplier ramp
• Shortens approval cycle time increasing discounts
• Provides infrastructure for Dynamic Discounting
• Link with e-Payments to eliminate paper checks
• High supplier adoption and acceptance – particularly if free!
Benefits of Internet based e-Invoices over EDI, Scan & Capture and OCR
Supplier Benefits • Easy and Low Cost for Suppliers to Implement & Use
• Minimal or No Technical Expertise Needed
• Low cost or Free – depending on e-Invoice Provider
• Provides Real Value to Suppliers
• On-line Visibility to Invoices and Payments
• Accepted Invoices Always Posted to Buyer’s AP
• Ability to Initiate Early Payments with Dynamic Discounts
• Ability to Automate Accounts Receivable Process
• Ability to Automate Order Entry Process
PG&E Key Internet e-Invoicing Benefits
Validate Invoice at Point of Entry: Make Suppliers Resolve Errors Before submitting
Shortens Approval Cycle Time Increasing On-Time Payments and Discount Capture Percentage
Fast deployment – All e-Invoices the same – just sign up the Supplier and go
Supplier has Online access to Invoice Status and Payment History – Self Service!
Enables Dynamic Discounting
Reduces AP Costs!
e-Invoice Market and Range of Solutions
• Competitive market today with many viable solutions and
wide range of options and pricing
• Solutions address both PO and Non-PO invoices
• PG&E evaluated eight options in 2010
• Contacted by other providers too late to be included
• Several new providers in the market since 2010 – and some withdrawn
• Most solution providers have experience and installed customers
• But don’t be afraid to evaluate and consider new solutions!
e-Invoice Provider Selection Process
• Develop requirements and solution description
• Research and identify several potential providers
• Have solution providers demonstrate their application in detail and show how it meets your requirements. Show not Tell – See the application, not a PowerPoint show!
• Research and interview reference clients
e-Invoice Provider Selection Process (cont.)
• Incorporate your requirements, solution description, service level agreements, post implementation support structure and cost, into your purchase contract
• Incorporate an exit / off ramp option into your contract
• Ask solution provider to install and execute “live” pilot before final agreement
• Everything is Negotiable!
Implementing & Maintaining an e-Invoice Program
• Solution provider should do most of the work
• Solution provider should have implementation experience and provide a fixed implementation cost
• Solution provider should have a standard, working, integration methodology that fits YOUR system and technical environment. You should not have to build this!
Implementing & Maintaining an e-Invoice Program (cont.)
• Your ongoing internal technical support should be minimal
• PG&E Taulia implementation - Start to go live in 3 months!
• No additional internal resources
Effort and cost to change Providers It’s not that hard!
• Existing e-Invoice suppliers are already using an e-Invoice portal
• Changing the tool but not the process
• New system should have equal or better supplier functionality and ease of use
• Communicate and educate in advance – Suppliers & Internal
• Emphasize new features and benefits if possible
• Make supplier enrollment and conversion as simple as possible
• Have solution provider manage supplier conversion & support - and make sure they have a track record doing it!
• PG&E Conversion - 6 weeks for 600 suppliers!
• Over 1,000 suppliers enrolled 1st Year – currently 2,500 submitting invoices and 3,600 enrolled
Effort and cost to change Providers It’s not that hard! (cont.)
Key Points to Take Home e-Invoices
e-Invoices are an essential enabler to reduce AP costs and increase discount capture efficiency Internet based e-Invoice web portal is required for supplier initiated “Pay Early” dynamic discounts - 35% of PG&E Suppliers initiated Pay Early dynamic discounts in 2015 Early Payment Discounts generate huge Savings – and can easily pay for all Implementation and ongoing program costs
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Key Points to Take Home e-Invoices
4 Rapid deployment and value realization •Start to go-live in 3 months for Taulia conversion •6 weeks to convert 600 suppliers •No additional PG&E resources needed to implement, maintain or expand
Avoid supplier fees to maximize supplier adoption •Fees are a barrier to adoption and incentive to exit
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Key Points to Take Home e-Invoice Providers
e-Invoice Market is Competitive with a wide range of Solutions
Make the Solution Provider do the work! •Requirements & Solution Description •ERP Integration •Trial Pilot •Supplier Adoption/Conversion & Ongoing Support •Buyer Operational Support
It’s Not that Hard to Convert Changing the Tool – not the Process!
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Key Points to Take Home e-Invoice Providers
Incorporate solution description, service level agreements, post implementation support structure and cost into your Purchase Contract !
Incorporate and exit / off ramp option into your contract
Everything is Negotiable !
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Ben Shaffer
Director Payment Services
Pacific Gas and Electric
415-973-9187
Questions ?