This document summarizes a presentation about advancing e-invoicing. It discusses how e-invoicing can eliminate paper, errors and calls by achieving high supplier adoption. Supplier adoption is driven by offering value like a complete solution, covering all transaction types, interoperability, transparency, no supplier fees and financial benefits like dynamic discounting. Dynamic discounting allows buyers to pay early and save money while suppliers access cheaper financing. Case studies show dynamic discounting solutions generating high ROI for buyers through significant cost savings and high supplier enrollment rates. The vision is for buyers to have free e-invoicing and visibility while suppliers benefit at no cost, creating a win-win through increased profits and better relationships.
2. Agenda
• e-Invoicing - What Works and What Doesn’t
• Supplier Value Propositions
• Dynamic Discounting & Turning Issue Into Opportunities
• Real World Success Stories
• Questions
3. A simple chain
The ultimate goal:
Get rid of paper, manual keying, exceptions and calls
How to get there:
Receive e-invoices in a virtually perfect quality
How to achieve it:
Supplier adoption
What drives adoption:
Value for supplier
4. What is E-Invoicing?
Completely Sending and
Eliminating Paper Receiving Invoices
Electronically
E-Invoicing
Data Stays Data:
No Data Entry or
Correction
What e-Invoicing is Not:
o Scanned/imaged paper invoices
o OCR’ed paper invoices
o Emailed PDFs
5. Adoption of E-Invoicing in the Last Year
42%
29%
21%
8%
In Use Deploying Evaluating Not Planned
Source: PayStream Advisors, 2012
6. Paper Remains Dominant
64%
Methods Used to Trade B2B Invoices
13% 14%
9%
Fax Email E-Invoicing Paper
Source: PayStream Advisors, 2012
7. The e-Invoicing Challenge:
Replacing Paper
Customers:
o ERP Input formats are proprietary
o Cost and complexity of working with hundreds of suppliers
Suppliers:
o Cost and complexity of customizing for clients
o Billing systems output invoices in proprietary formats
8. E-Invoicing Adoption Barriers
Current processes work 23%
Lack of budget 18%
We do not think there will be an
16%
ROI
Lack of resources to manage
7%
automation
Lack of understanding of current
6%
available solutions
No executive sponsorship 6%
Source: PayStream Advisors, 2012
9. Supplier Value Propositions
1. Complete Solution Offering
2. Covers all Transaction Types
3. Interoperability
4. Transparent Vendor Portal
5. No Supplier Fees
6. Financial Value
10. Supplier Value Proposition 1:
Complete Solution Offering
Current New
o Focus on e-invoicing o e-invoicing, incl. flipping a PO
– Connectivity often one-way o Invoice status
street: “Incoming” only o Remittance/payment details
– No additional data on the o PO updates, confirmation & history
portal or network o Address changes, bank changes
o Online Dispute resolution
o Online W9/1099
o ….
11. Supplier Value Proposition 2:
Covers All Transaction Types
Current: New:
Scope limited to invoices Comprehensive visibility for
submitted through network all invoices
Network Network
or or
PAPER Platform
Platform
EDI
• Status? • Status!
• PO? • PO!
• Payment Details? ER • Payment Details!
S • History!
ERP ERP
12. Supplier Value Proposition 3:
Interoperability
Current: Supplier accesses each
New: One access point
platform used by its customers
Network
Network or
or Network API Platform
Network Platform
or or
Platform Platform
13. Supplier Value Proposition 4:
Transparent Vendor Portal
• Instant visibility into invoice status
• Payment certainty and details
• Easier and faster access to cash
• Online collaboration with your customers means
no more calls into AP
14. Supplier Value Proposition 5:
No Fees
• Simply put – suppliers will not use a platform that charges a fee
• More and more providers offer electronic invoicing free of charge to
suppliers
15. Supplier Value Proposition 6:
Financial Value
Top Two Supplier Pain Points
1. When will you pay me?
2. Can you pay me earlier?
16. Supplier Value Proposition 6:
Easier Cash for your suppliers
• Factoring market is growing 28.6%
annually and exceeds $2.3 trillion
• Credit Card: 15% industry average APR
• Banks are reluctant to lend to
SMB's, and often for steep rates
• Small business loans are effective for
large capital expenditures but are
generally not appropriate for day to day
operational expenses
17. Greater Supplier Value =
Greater Supplier Adoption
4.
3.
Transparent
Interoperability
Vendor Portal
2.
Covers all 5.
Transaction No Supplier Fees
Types
1.
Complete Supplier 6.
Solution Adoption Financial Value
Offering
18. There Remains Another Problem…
Banks Benefit – Not Buyers or Suppliers
LARGE BUYER SUPPLIER
Invoice Approved on Day 5 Invoice-Net 60 Invoices Buyer
BANK
Buyer earns 0.5% Suppliers Factors
annual interest until at 20% APR
due date
19. Status Quo is Ineffective
Cash as % of Assets
Buyers Have Record
Amounts of Cash 2002 2006 2012
6% 8% >10%
4-Week Interest Rates
2002 2006 2012
1.7% 5% 0.1%
Days Until Approved Payment
2002 2006 2012
20 days 30 Days 45 Days
20. The Solution: Dynamic Discounting
• What is it: expanding beyond the typical 2% net 10 discount terms to capture more discounts
• The Benefit: greater returns on cash and increased supplier adoption of granting discounts
21. Dynamic Invoice Discounting
Represents a Win-Win
• Enables large companies (“Buyers”) to save money
and improve return on cash by paying suppliers early
• Enables smaller companies (“Suppliers”) to access
less expensive financing alternatives by accepting
time-variable “Dynamic Discounts”
Imagine…paying your suppliers less
and having them thank you
22. Turning Issue to Opportunity
Suppliers are willing to offer attractive discounts for early payment
- Integrity and Reliability ensured
Terms (days):
Payment
Invoice Approval Opportunity 120 Anheuser-Busch
(due date)
60 Hertz
56 Industry Average
0 15 60 days 45 Apple
23. Will Buyers Generate Acceptable ROI?
$31.4m “This Solution has
saved us more
Dynamic Discounting Solution Deployed ➘
money quicker than
anticipated”
$10m - Ben Shaffer, PG&E
$5.8m
$3.9m
Economics for PG&E:
Break-even: 6 weeks after go-live
ROI: >2000% in first 12 months
24. Will Suppliers Actually Enroll?
110%
Results:
• Go-live 3.5 months after contract
88% signature:
• 45% of previous networked suppliers
66% converted within 1 week
• 99% converted within 5 weeks
44%
• Now enrolling non-previous networked
suppliers: 30% of invited enrolled within 1 ½
22% weeks
• $5M in discounts/Billion in spend
0% • 7 Employees in AP department
Go-Live Week 1 Week 3 Week 5 Week 7
Taulia Previous solution
25. Is the Process Timely?
“Since go-live 3 months ago we’ve saved $140K – that’s more than
$500K in annual savings – and that’s just the tip of the iceberg. We
expect to achieve annual savings of $1.5 – 2 million. For a program
with minimal up-front investment that’s given us a very rapid return
on our investment.”
And furthermore, “we’ve been surprised how enthusiastic our
suppliers have been.”
- Robert Locke, Director of Strategic Sourcing and Supplier Diversity
26.
27.
28.
29. Our Vision of Tomorrow for You
as a Buyer
Free E-
invoicing and Free for your Suppliers and free for you
Visibility Portal
Increased
profits From Dynamic Discounting
Start electronic Onboarding Guarantee
immediately
Great supplier Much better Supplier Value
relationships at no cost = win-win
Key Insights • eInvoice adoption showed modest growth• Demand for control and visibility appears to continue to be the main driver for adoption Electronic Invoice Adoption Shows Mild Growth In each of the survey areas that relate to the adoption of eInvoicing, the results showed a 1 percent increase over last year. (See Figure 3). Participants that donot use an eInvoicing solution and have no plans to implement one decreased from 32 percent to 29 percent. In addition, a moderate 29 percent of survey respondents reported they are currently utilizing or deploying an eInvoicing solution within the next six months, and 42 percent are currently evaluating the usage of a solution. The Evolving Benefits of Electronic Invoicing The number of respondents indicating that “improved visibility of transactions was the key benefit of electronic invoicing,” dropped from 47 percent to 38 percent.(See Figure 4). Several other benefit areas also decreased, including “fewer lost invoices,” decreased 12 percent, “reduction in exceptions” decreased 15 percent and “improved vendor relations” decreased 3 percent, when compared to last year. Notable increases in realized benefits included a reduction in Full Time Equivalent (FTE) costs (up 6 percent,) increased on-time payments (up 7 percent) and quicker approval times (up 4 percent.)
Paper Continues To Dominate The methods for receiving or sending invoices are still heavily dominated by paper, despite the inherent challenges that a paper-based process creates. Not onlydoes paper increase the need for manual processing, but it is also the enemy of productivity. With many organizations implementing “green” initiatives, the factthat paper accounts for 64 percent, down from 68 percent in 2010, of all methodsof invoice exchange is a strong indicator that organizations are entrenched in their current workflow process and may be unable or unwilling to rely on electronic means.
Key Insights Perception that current processes work is the key barrier to the adoption of eInvoicingA continued reliance of paper creates a substantial barrier Senior leadership is critical for an organization’s advancement in eInvoicingsolutions The three main barriers to eInvoicing, as indicated by the survey are: (1) the current processes work, (2) a lack of budget, and (3) a lack of confidence in the return on investment. (See Figure 5). While a lack of executive sponsorship was listed as a barrier in only 6 percent of responding organizations, compared to 21 percent in last year’s report, PayStream Advisors believes that executive sponsorship is critical for an organization to take the first steps towards investigating an eInvoicing solution and to removing any internal adoption barriers. Only 6 percent of survey respondents indicated that the “lack of understanding of current available solutions” was a barrier to the adoption of eInvoicing, down from 12 percent in 2011. This proves that solution providers are being effective in increasing awareness and educating their customer base and prospects on the many benefits of eInvoicing. Respondents indicating a “lack of budget” as a barrier dropped from 27 percent to 18 percent this year, which suggests that companies are beginning to recognize the cost-reducing benefits of a streamlined and automated invoice process.
Scope limited to invoices submitted through network