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

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

Supplier Portal e-Invoicing Key Enabler for Efficiency, Cost Savings and

Discounts

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

Performance Metrics – Results!

As e-Invoices Increase, Payment Errors Decrease

…and Clerical FTE’s Decrease and Productivity Increases

…and On-Time Payments and Discount Efficiency Increase

And Early Payment Discounts Skyrocket!

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!

Choosing an e-Invoice Provider

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

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

dbs2@pge.com or

Ben.Shaffer@pge.com

415-973-9187

Questions ?