P2P and Payables Breakthrough: Five Proven …...P2P and Payables Breakthrough: Five Proven...

November 12-14, 2017

Bellagio Resort & Casino, Las Vegas

P2P and Payables Breakthrough:

Five Proven Strategies for Achieving Accounts Payable Excellence

Chris Rauen, SAP Ariba

Hanif Dhrolia, BC Hydro

November 13, 2017



Rethinking your payables process in the digital economy



What’s driving the digital transformation?

World data doubles every

18 months

75 billion connected devices by 2020

1 billion people connected on

social networks

75% of IT spend will be cloud-based



Invoice processing performance:

fair or foul

90:10



Embracing the digital supply chain



Automation alone isn’t the answer



Direct & Indirect

Suppliers ERP

Dynamic Discount

s

B2B Payment

The power of payables

Improved DPO

Connected Complianc

e

Smart Invoicing

Strategy #1

Be smart about invoice automation



Smart invoicing

Invoice

ERP

Buyer

98% touchless

processing

Suppliers GST/VAT

compliance

PO & PO-line match

Buyer match (non-PO)

UOM & SKU change

Currency match

Sub total & total amount

PO-line change

Line & total consumption thresholds

Shipping & tax thresholds

Account

coding

Workflow

Compliance

Invoice

number

Bill to /

ship to

PO

number

Requestor

(non PO)

Invoice

date

VAT / GST

IDs



Smart invoicing at BC Hydro

Automating exceptions and driving straight-through processing



Smart invoicing at BC Hydro

• $1.4 B Enabled Invoice Volume

• 1,150 Suppliers moved

off paper

• >$1M AP cost savings

• 100k Invoices per FTE

Strategy #2

Close the loop to capture value



Siloed Processes

Analyze Source Contract Order

Fulfill Ship Notify Invoice

Invoice receipt

Manage Match & approve

Pay

Sourcing &

Procurement

AP

Supplier

Mail

Email

Fax

Mail

Scan

OCR



Supplier Portals Analyze Source Contract

Ship Notify

Manage Match & approve

Pay

Sourcing &

Procurement

AP

Supplier

Order

Invoice receipt

Invoice Fulfill Invoice receipt

& status

Send PO



Business Network: Close the Loop to Capture Value

Ord

er

Match Manage/ approve

“Actual”

spend

data

Pa

y

Supplier

Fulfill Ship Notify Invoice PO AR

Perfect

PO

Defined & approved

catalog content

Payment visibility,

execution &

remittance

Perfect invoice

Order acknowledgement

& ship notice

Source Requisition Contract Analyze

Catalogs

Invoice receipt



Close the loop to capture value

How an airline company’s P2P value took off

Strategy #3

Increase strategic value



Payment terms

Discounts Invoice

automation

Strategic initiatives to achieve accounts payable excellence

Funding Sources

Suppliers Buyers

Supplier Values

• Optimize DSO and A/R management with early payment or financing options

• Utilizing dynamic discounting and supply chain Finance

• Lower costs and enhance overall access to capital

• Visibility to approved invoices, eliminating invoice status calls

• Payment visibility and access to remittance information

Payment Processing

• Mitigate liquidity risks • True multi-funding options • Low rate funding

• Optimize the payment process • Electronic payments meeting

regulatory compliance

New capabilities to monetize trading collaboration

Buyer Values

• Extend days payable 0utstanding (DPO) - unlocking millions in free cash flow

• Increase EBITDA with dynamic discounting

• Strengthen and tighten relationships with strategic suppliers

• Reduce risk with outsourced supplier bank account info and e-payments

• Increase A/P management efficiency providing visibility through vendor portal and outsourced payment services

Cloud Network



Strategic initiatives to achieve accounts payable excellence DPO and payment terms rationalization and extension

• Ensures paying suppliers to term and enhancing free cash flow

• Review multiple supplier segments for inconsistencies

• Drives consistent supplier payment experience

• Delivers DPO improvement and uplift adoption for early pay program

• Aligns DPO with industry peers

• Rationalized across all suppliers

• Positions extended net terms to specific suppliers / categories

DPO benchmark

Free cash flow - Every $1 billion of targeted spending extended 15 days = Estimated $40 million in

free cash flow



Strategic initiatives to achieve accounts payable excellence Supply Chain Finance – Strengthen your Payment Terms Strategy

Buyer electronically

transmits payables data to

the system. No change to

existing invoice approval

process.

At invoice maturity date,

Buyer funds Buyer

controlled clearing

account. The system

executes payment

instructions to pay…

…the Funder, if supplier

has sold receivable

…the Supplier, if supplier

has not sold receivable

Supplier views

receivables via web. Has

option to sell receivables

and determine their

collections date or wait

until maturity.

1 2

3 Funder(s) receives and

processes early payment

requests - provides

funding to Supplier.

4

Supply Chain Finance

Suppliers

Funders

Buyers

Payment terms

Discounts Invoice

automation

Cloud Network



Increase strategic value

Home building materials retailer keeps on building…

Strategy #4

Transform from cost to value center



Strategic initiatives to achieve accounts payable excellence Discounting – Drive ROI while focusing on your core business

Current DPO

Automate to minimize

missed discounts 1

Day 10

0%

0.5%

1.0%

1.5%

2.0%

2.5%

Day 30

$$

Pro-rate discount to cover

remaining missed opportunities 2

$$

Ad Hoc captures “as needed” acceleration

for net term suppliers 3

• Available to some or all suppliers

• Delivers client savings and improves ROI

• Improves EPS

• Dynamic / Pro-rated discounts to be earned

at any point up to the invoice maturity date

• Buyer initiated

• Optional program suppliers can use to

manage their liquidity

• Applies to some or all invoices

Discounting Benchmark

Net Income - Every $1b of targeted spend = Estimated

$1 - $2M in discounts



Transform from cost to value center

How BC Hydro supports supplier cash flow

Strategy #5

Modernize payment for P2P adoption



Big Blue, Batman, Betamax & B2B Payments



Buyer

Supplier

Buyer

Bank

Supplier

Bank Credit

B2B payments past: 1970’s innovation

80-140 Characters 80-140

Characters

Connect Data to Payment



Buyer

Payment instructions

Rich remittance

Track and trace payment status

Bank account management

Invoice status

Purchase orders, invoices,

contracts, and receipts

Supplier

Buyer

Bank

Supplier

Bank

Debit Credit

Integrate Payment with Data

PO’s, Invoices, Contracts, Receipts

B2B payments future: Connecting the credit contextually



Improving P2P adoption with payment

Why A cell phone network spells P2P backward



Be Smart about Invoice Automation

Close the Loop to Capture Value

Increase Strategic Value

Transform from Cost to Value Center

Modernize Payment for P2P Adoption

Five proven strategies for achieving

accounts payable excellence



Thank you.

Chris Rauen, SAP Ariba

[email protected]

Hanif Dhrolia, BC Hydro

[email protected]

mailto:[email protected]

P2P and Payables Breakthrough: Five Proven …...P2P and Payables Breakthrough: Five Proven...

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