The Finance Category

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.

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Italy and the Real-Time VAT Control Big Bang

Electronic invoicing is on the decline — and rapidly so. No, I don’t mean companies have started exchanging fewer invoices in electronic format. I mean that the domain that we have in the past 15 years called “e-invoicing” is converging with the broader VAT compliance domain. Together, the two are morphing into what might be called “VAT compliance v2.0.”

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.

Intuit’s QuickBooks Brings Small Businesses and Independent Contractors Closer at Tax Time — and More

Financial software giant Intuit announced Wednesday that it is adding two new tax-related features to its QuickBooks products. The release of two features might seem like small potatoes, but we’ll elaborate on why that’s not quite true. The new features benefit both small businesses and their contractors, which could be considered the core of the expanding gig/freelance/self-employed economy, where Intuit is nurturing a growing, cloud-based software and services ecosystem.

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 1) [Plus+]

finance

Much has been written about the need for procurement and finance organizations to better align with each other, in particular how the two functions can best integrate purchasing and payables into an end-to-end purchase-to-pay (P2P) process. The opportunity for aligning these two functions, however, is much greater than simply improving transaction efficiency. Unfortunately, the various sources of misalignment that plague procurement and finance prevent many businesses from identifying these opportunities in the first place.

The sad part of this story is that the two functions share many common traits. Both seek to:

  • Elevate their value propositions as enabling business partners by providing compelling service offerings — and overcome their perception as bureaucratic corporate overlords
  • Maximize enterprise value and profitable growth through disciplined spend management
  • Spend not just less but better in terms of process efficiency and process effectiveness
  • Use new techniques and technologies to help the business make better decisions that support the above goals
Additionally, these functions should in theory strive to serve each other as internal customers while also enabling the other to deliver higher value to their own internal (and external) customers. Unfortunately, theory has rarely translated into reality, and the result is that each function is leaving money (and risk) on the table.

Procurement can certainly help finance get more value from its suppliers, but it can also help finance improve service delivery in areas such as FP&A, treasury, tax, financial accounting, risk and compliance, commodity management and even accounts payable.

On the flipside, finance can help procurement in multiple ways, namely to help procurement on value-adding activities — including helping finance. This is a classic “help me, help you” moment. If procurement can help finance help procurement (and help finance help itself), then procurement’s value potential can be truly unlocked.

Supplier Retention Seen as Increasingly Important to Businesses, But What About Screening?

suppliers

For today’s executives, achieving supplier retention is increasingly seen as vital to the business. When the payables automation provider Tipalti surveyed executives on issues related to supplier payment, 68% of respondents said that maintaining long-term business relationships with their payees is critically important.

5 Best Practices to Improve Accounts Payable Processes

invoice

Spend Matters welcomes this guest contribution from Steve Johansson, director of marketing at iPayables.

The act of processing your invoices and handling your accounts payable has traditionally been considered a reflexive function of business, but in today's digital age it can become more strategic. Automated accounts payable solutions have undergone a significant evolution regarding efficiency and functionality, primarily through software that streamlines the entire process to ensure that best practices are being implemented consistently. The following is a list of methods you can use to within your accounts payable team to streamline your business and maximize the benefits of digital technology.

How Blockchain and Bitcoin Can Disrupt the AP Process — In a Good Way

blockchain

Spend Matters welcomes this guest contribution from Laurent Charpentier, chief innovation officer, Yooz Inc.

Blockchain. Cryptocurrencies. Bitcoin. These are certainly hot topics in today’s daily business news. It’s all still a bit of a mystery to most of us. It started with bitcoin (a cryptocurrency) in 2013 and the idea of a digital currency used to buy anything from music to cupcakes couldn’t have been more exciting — or more timely — as technology continues to advance at lightning speed. And blockchain is the platform used for verifying and recording transactions that’s at the heart of bitcoin, and is considered as having the potential to reshape the global financial system, among other industries.

3 Routes to Strategically Linking Procurement and Accounts Payable

When it comes to managing accounts payable processes, leading procurement organizations know that invoicing, supplier management and payments present both serious risks and strategic opportunities for the business. But while identifying risks is a logical first step to elevating the charter of accounts payable from back office workflow to strategic capability, best-in-class organizations know they must push the envelope of what AP can offer to truly enable long-term business success. To do that, procurement must ditch last century’s manual, paper-based processes and embrace an automated approach.

Dhatim Conciliator: Vendor Snapshot (Part 3) — Summary & Competitive Analysis [PRO]

For most procurement organizations, artificial intelligence (AI) technology in 2017 is similar to what online marketplaces and B2B exchanges were to purchasing teams in 2000. In other words, more of a curiosity — and a place to potentially make investments — than a proven thing. But the similarity ends there.

AI is very much real — and early adopters in procurement, finance and supply chain are already taking advantage of its benefits. And perhaps most important for skeptical procurement functions more interested in containing technology risk than fully embracing digital capabilities, there is no chance that the AI movement will implode, like the majority of B2B exchanges from the turn of the last millennium — it’s too far along for that already and the benefits are all too real.

If you’re not yet convinced, use cases from providers like Dhatim will help you make you a believer. While not a traditional source-to-pay modular or suite provider, Dhatim brings adjacent AI-led spend, invoice, broader P2P and payment classification, analytics and proactive opportunity identification capabilities that are complementary to existing systems and the data they produce.

Today’s third and final installment of this Spend Matters Vendor Snapshot covering Dhatim provides an objective SWOT analysis of the provider and offers a competitive segmentation analysis and comparison. It also includes recommended shortlist candidates as alternative vendors to Dhatim and offers provider selection guidance. Finally, it provides summary analysis and recommendations for companies considering the vendor. Part 1 provided an in-depth look at Dhatim as a firm and its specific solutions, and Part 2 gave a detailed analysis of solution strengths and weaknesses and a review of the product’s user experience.

Dhatim Conciliator: Vendor Snapshot (Part 2) — Product Strengths & Weaknesses [PRO]

“Cognitive” procurement has a ring to it. Enough so that any CPO who works for an organization with a broader digital transformation mandate just might pick up the old handset when a new technology provider that uses artificial intelligence (AI) in new ways decides to call. And Dhatim’s Conciliator, one of the first entrants into the cognitive sourcing market that uses AI and customized learning models to identify and predict savings opportunities, classification errors, and even individual (and theoretically supplier/vendor) performance/quality, may very well be the one on the other end of the line.

Conciliator is not the first “next generation” integrated AI-based solution that we have seen with true cognitive procurement (or sourcing) capabilities. LevaData (see our Vendor Snapshot series here, here and here) takes that prize. But Conciliator is one of the first true cognitive platforms on the market with an ability to do deep predictive analytics on certain categories in certain verticals in ways that go beyond basic AI applications to spend classification, fraud detection, predictive risk scoring and other established use cases alone.

This Spend Matters PRO Vendor Snapshot explores Conciliator’s strengths and weaknesses, providing facts and expert analysis to help procurement organizations decide whether they should consider the provider. Part 1 of our analysis provided a company and detailed solution overview and a recommend fit list of criteria for firms considering Conciliator. The third part of this series will offer a SWOT analysis, user selection guide, competitive alternatives, and additional evaluation and selection considerations.