Spend Matters Premium Content:
Invoicing and Finance

CPOs Owning Accounts Payable: Does Supply Chain Finance Make it Interesting at Last? [Plus +]

Historically, most CPOs and procurement leaders have not taken a huge amount of interest in the final stage of the end-to-end purchase-to-pay process. The mysterious land of accounts payable (AP) has been out of bounds to many of us in the profession. But that was, if we’re being honest, how we liked it. In my 10 years as a CPO in three organizations, I never had any desire to expend my empire in that direction. It didn’t look like a “mysterious” place in a good way; it was full of people doing what looked like pretty dull administrative tasks for a start — not what we wanted to be as we tried to build our procurement functions into strategic, business-focused powerhouses. So in the vast majority of organizations, procurement has been happy to let AP stay under the auspices of finance.

8 Quantifiable Levers Where Invoice-to-Pay Solutions Deliver ROI — Beyond Accounts Payable (Part 2) [PRO]

Invoice-to-pay (I2P) solutions can provide significant leverage for a range of business functions that extend beyond accounts payable alone. In Part 1 of this series, we introduced the topic of where to look for value levers and ROI outside of AP enablement alone from I2P solutions and explored the initial four levers to pull: managing, controlling and enabling visibility into 100% of an organization’s spend; providing a means of onboarding and actively managing suppliers; driving stakeholder collaboration; and technical and business integration support that makes AP a “hub” rather than a spoke.

As we conclude our analysis, we will explore four additional areas where I2P solutions deliver extended value and measurable KPI improvement beyond AP-centric metrics alone. These areas center on compliance enablement (business and regulatory), data analytics, EBITDA improvement and working capital enablement, and driving broader business objectives (while reducing the “cost to serve”).

Please note that a SolutionMap Insider companion research brief is also being published that will detail SolutionMap vendor performance for all of these areas, ranking how individual vendors perform against these requirements based on the Q3 2018 Invoice-to-Pay SolutionMap benchmark.

8 Quantifiable Levers Where Invoice-to-Pay Solutions Deliver ROI — Beyond Accounts Payable (Part 1) [PRO]

finance

Invoice-to-pay (I2P) solutions exist to serve the broader business, not just accounts payable functions. Spend Matters defines the I2P area as a combination of electronic invoicing (e-invoicing) and e- payments, which may leverage a supplier network model for connectivity and value-added capabilities.

I2P solutions not only reduce paper-based processes and increase efficiency (e.g., reduce cash disbursement costs per FTE) but also serve as a foundation for enabling finance organization improvements generally (e.g., by reducing late payments, optimized working capital and lowering non-compliance). The value-added capability of technology providers offer today can help procurement and finance to configure and deploy complex invoice workflow, matching, approvals, cash disbursements, trade financing options and better process management overall. ilities.

Yet all too often, these technologies are viewed as tactical and transactionally focused, when in fact they can deliver multiple strategic outcomes. Confining invoice-to-pay solutions to an AP-centric value proposition is a mistake that many organizations make when selecting technology. And it is one that that software providers also make when “under-selling” them into organizations. ilities.

This Spend Matters PRO research brief explores eight business levers that I2P solutions can pull to deliver return on investment (ROI), as defined by the functional requirements in Spend Matters SolutionMap. We have authored it to help organizations better quantify the extended returns they can realize from I2P solutions when building business cases and to help solution providers better sell the full business value of what they deliver. ilities.

Please note that a SolutionMap Insider companion research brief is also being published that will detail SolutionMap vendor performance for all of these areas, ranking how individual vendors perform against these requirements based on the Q3 2018 Invoice-to-Pay SolutionMap benchmark.

Best Practice Tips For Implementing Dynamic Discounting and Other Trade Financing Programs [Plus +]

In this Spend Matters Plus analysis, we investigate some of the key best practice tips for dynamic discounting implementation and trade financing programs. In a follow-up post, we will also share “worst practices” that far too many procurement and AP organizations are pursuing with dynamic discounting and trade financing programs because they don’t know better.

Want to Buy a Contract Management System? Here Are a Few Questions You Need to Ask [PRO]

Buying a Contract Lifecycle Management (CLM) application can seem daunting. There are so many stakeholders who touch contracts. We can’t imagine any more foundational commercial business application than contract management that affects so many stakeholders. And at the same time, there are so many market choices.

Trust us, we live these every day. We have over 50 functional requirements within our CLM SolutionMap evaluation database, and there are many requirements that are simply table stakes: version control, role-based access, contract renewal alerts, contract templates, and even basic clause libraries are becoming commodity functionality.

However, there are only a handful of decision points in the decision tree to get down to the few providers that will meet your needs.

First, you have to decide whether you need just pure buy-side capabilities or whether you also need sell-side capabilities and support for employee contracts as well (i.e., whether you really need truly enterprise-wide CLM). If you need strong sell-side functionality, then you’ll immediately be able to knock out some buy-side players, even some of the main procurement suite players.

Next, you’ll need to decide on whether to go with a broader suite or a “mini-suite” provider, or whether you only need just core CLM capabilities. A “mini-suite” can take many forms. Some providers combine CLM plus some sourcing functionality, and others combine CLM with supplier management capabilities (and some have even broader risk/compliance functionality). For practitioners that want to look at some custom combinations of providers, we now support custom SolutionMaps that cross multiple areas so that you can create a true custom SolutionMap rather than just our persona-based maps for various solution types. Contact me if you’d like to discuss this.

And there’s always the issue of whether your IT department prefers the solution to run on existing application infrastructure, whether it’s your ERP system or a SharePoint platform. Hopefully these aren’t hard constraints because there’s only so far that you’ll get with a document-centric approach! You can get to a certain level of capability by adding metadata to contract documents, but until you can model the contract data itself, you’re only going to get so far.

Finally, there’s a handful of unique detailed functionality that really separates the various players. Some of these areas will become more commoditized in the next few years, but others are not so easily solved by marching through the “Feature 500” list. Although the rest of this analysis is for Spend Matters PRO level members only, we welcome our Spend Matters Plus practitioner subscribers to contact us and we’ll send you a copy of this full analysis.

10 Reasons For Procurement to Work With Payments (Part 2) [Plus +]

e-invoicing

In the first installment of this series, we explored several arguments in favor of why procurement should get closer to the actual settlement process and cash flows of the final step in procurement transactions: payment. Today, we move into reducing supplier risk, capturing savings and reducing contract/compliance leakage through closing the transaction, invoice, and payment loop, and the importance of greater visibility into supplier engagement models and supplier network fees (amongst other reasons).

10 Reasons For Procurement to Work With Payments (Part 1) [Plus +]

Sometime shortly after the phrase “P2P” was born, we managed to collectively forget what the second “P” meant. As a friendly reminder, it stands for “pay.” Rather than spanning the length of a transaction from an initial order to payment to a vendor, P2P became known (while companies wrote RFPs for solutions and as vendors marketed tools) as the combination of e-procurement and e-invoicing. This duo, while extremely valuable, doesn’t exactly impact payment all that much (if at all).

But payment matters much more than most folks we talk to in procurement think. By taking control of payments, we can, for example, do an end-run around the administration hassles and supplier headaches that poorly run accounts payable (AP) functions create. And this is just one reason to consider getting more involved in payment strategy and execution. In fact, we can think of at least 10 reasons that should factor into a business case for procurement to seize control and initiative around payments.

An Opportune Time for Collaboration: Procurement and Accounts Payable (Part 1) [Plus +]

Historically, procurement and accounts payable have been slightly awkward bedfellows in many companies. They’ve been loosely coupled through the front-end (e.g., vendor on-boarding, registration process) and the back-end (e.g., approvals, dispute management, discounting, payment, invoice auditing) in both online and offline worlds for various aspects of supplier engagement and management.

Yet in the past decade, procurement as a role and business focus (not always as function, mind you) has garnered greater respect as a means of driving bottom line savings — often identified, not always implemented. It has still been one part of an odd couple, unfortunately, but the lesser odd partner. But that’s the subject for another post, let alone a volume of books. More important, for our purposes, accounts payable has not garnered the same level of interest, and has truly remained an odd cost-center and stepchild under the broader finance umbrella.

In fact, as many procurement organizations have been able to make the business case for more strategic resources based on quantifiable value (e.g., cost reduction, risk analysis/reduction) in the past decade, accounts payable has faced a near constant pressure to cut costs through reduced resources based on various automation schemes — internal shared services, business process outsourcing (BPO), technology or a combination thereof.

Procurement has not been overly keen on taking ownership of accounts payable, either. This goes back a long way. One of my favorites comes from Spend Matters UK/Europe Managing Director Peter Smith. Below, we feature his story and view into accounts payable from a CPO perspective.

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 3): The Top 10 Impact Areas for Procurement’s Involvement in FP&A [Plus +]

invoice

In the second installment of this series, we discussed procurement’s role in helping finance professionals and budget owners use spend data to improve the FP&A process and general business planning. Now in Part 3, we get specific about how to tackle this beast with some specific recommendations that we’ve seen proven out at both advanced firms and at firms that are further back in the bell curve of procurement maturity.

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 2): Spend Planning and Analysis [Plus +]

e-invoicing

In the first installment of this series, we discussed ways to align procurement with the finance function, starting with financial accounting and then moving into cost accounting. Although cost accounting has one foot in the financial accounting world in terms of tracking costs and having them flow to the general ledger (GL), the more important side of cost accounting is its part in managerial accounting and total cost management.

Managerial accounting is about analyzing financials to make good business decisions. It includes analyzing historical costs and spending, but only in the context of improving future spending and reduce total economic costs. One aspect of economic costs is opportunity costs, and procurement must work hard with finance to understand the procurement ROI that comes from strong management of external spending led by the procurement organization. This ROI is measured in triple digits but must be demonstrated with hard numbers.

More importantly, however, procurement’s ability to partner with finance to better influence future spending is the most practical way to influence financial and business results. This comes from procurement aligning well with finance within the financial planning and analysis (FP&A) processes that occur in finance. Hopefully, FP&A is more than just basic budgeting at your organization. Done well, it provides the critical linkage to not only financial planning but also strategic and operational planning that drive success for budget owners, broader stakeholders and shareholders.

Given the importance of FP&A, we’re going to focus on this collaboration area and how to apply it to spend management, which you can think of as “spend planning and analysis” before the spend actually occurs, as opposed to traditional “spent analysis” of spend that already happened. This focus upstream is fundamentally about transformation and changing procurement’s role in the planning and budgeting process. Luckily, this area creates much higher quality of spend influence, which drives proven levels of spend savings.

The Consequences of Eliminating Purchase Orders (POs) [Plus +]

finance

Should procurement eliminate purchase orders (POs) entirely? This is a daring concept in theory, provided an organization has the right processes and systems to control internal purchasing and buying activities and to protect against mistakes suppliers might create, accidentally or otherwise, for unsuspecting purchasing and accounts payable organizations to correct. These errors could include duplicate invoices, use of substitute products or materials, wrong line-level pricing, invoices based on the wrong quantities and invoices impacted by escalation/de-escalation clauses that are tracked incorrectly.

But procurement has been trained (mostly by control-crazy finance) to require the PO. In fact, think about CPOs touting 100% “no PO, no pay” policies.  Yes, it’s highly controlled, but does it make sense? Are the purported controls worth the cost and risk (in the form of time not monitoring other more important risks)? Procurement and AP organizations considering a “no PO” policy not only need to find ways to protect against these types of errors and mistakes, as well as outright fraud, either supplier-driven or internal. They also need to consider other side issues where key workarounds are necessary

Supplier Onboarding: Linking Design With Action (Part 2) [Plus +]

You’ve defined a strategy for supplier onboarding and given full consideration to all of the elements that make your requirements unique. You’ve fully considered which internal stakeholders besides procurement need to be included in the process of supplier onboarding and management. And you’ve mapped specific initiatives to onboarding requirements. But now it’s time to define specific supplier onboarding workflows, fully linking design with action.