Introduction

To stay competitive, you know how important it is to find new ways to streamline and save on your company’s operations.

Learning how leading companies handle commercial payments can give you deeper insights into where and how you can

improve. Help you understand how to run your Procure-to-Pay processes more efficiently. Enhance visibility into corporate

spend. Gain better control and compliance. And ultimately, help enable you to add more profit to your bottom line.

Visa commissioned Deloitte Consulting to conduct 90 in-depth interviews in with more than 60 global/multinational,

mid-size and large corporations as well as federal and local government agencies across the world. In 2010, Visa

commissioned Deloitte Consulting to update each of the following 28 Travel and Corporate Card Best Practices from the

comprehensive study to include current trends, updated case studies, and additional key findings. See the section entitled

“Study Methodology” for additional detail. The Visa Global Procure-to-Pay and Commercial Card Best Practices Study describes

how these organizations implement and optimize their Procure-to-Pay processes and commercial card programs. The

study gives you access to best practices for a variety of topics: Maximizing the benefits of purchasing and corporate card

programs. Streamlining travel and entertainment management. Taking advantage of the latest innovative best practices.

And automating the entire Procure-to-Pay process.

Each best practice is divided into three useful sections—a recommendation overview, a benefits outline and steps for

implementation—so you can quickly find the information you need. For more information on the Visa Global Procure-to-Pay

and Commercial Card Best Practices Study, contact your commercial banker.

Table of Contents

Evaluate Accounts Payable Automation Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Study Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Note: Survey results, research and practice recommendations are intended for informational purposes only and should not be relied upon for marketing,legal, technical, tax, financial or other advice. When implementing any new strategy or practice, you should consult with your legal counsel to determinewhat laws and regulations may apply to your specific circumstances. Visa is not responsible for your use of the information, including errors of any kind, orany assumptions or conclusions you might draw from its use. Much of the information contained in this document applies internationally, but a certainamount of information applies only to certain countries or regions. Although Visa tries to mark all country- and region-specific information with a countryindication, it does not warrant or represent that all information without indication applies internationally. You should check the applicability of anyinformation in this document to you or your organization.

Evaluate Accounts Payable Automation Solutions

Organizations that rely on manual systems within Accounts Payable often have to deal

with duplicate, inaccurate, late, or unauthorized payments as well as misappropriated

cost allocations. In addition, stricter regulatory and compliance standards such as

Sarbanes-Oxley in the United States and Basel II in Europe are increasing the

importance of timely and accurate financial reporting and control. Leading

organizations are addressing these inefficiencies and risks by maximizing the level of

automation within their Accounts Payable function.

A key component to an Accounts Payable automation strategy is the reduction of

paper in the invoice receipt-to-pay cycle. Leading organizations adopt technology

solutions that enable the receipt of electronic invoices, convert paper invoices into

digital images, store electronic invoices in a web-based repository, and extract key

data from the invoices to enhance reporting and approval and payment processing.

Leading organizations typically evaluate the following aspects of the Accounts Payable

function when identifying opportunities for automation:

• Invoice Receipt - Leading organizations automate the receipt of invoices through

EDI or solutions supporting Electronic Invoice Payment and Presentment (EIPP).

For more information on EIPP, please refer to the best practice Use Electronic

Invoice Payment and Presentment (EIPP) to Automate Invoice Receipt and

Payment (EIPP).

• Document and Data Capture - Organizations consider imaging or automating

the conversion and capture of paper documents into an electronic format.

Documents may include paper invoices and transaction-related documents,

such as proofs of receipt. Data can be indexed using document scanning and

data extraction tools which use bar codes or software to read and extract

relevant information from the invoice (e.g., Optical Character Recognition (OCR)

software)

• Content Storage and Management - Companies also automate the storage,

management, and retrieval of electronic documents and data. Given that the

data is stored electronically, backup and recovery options are considered as part

of an automation solution

• Workflow Management - Workflow management solutions allow invoices to be

automatically routed for appropriate approval. Best practice organizations use

software solutions to improve visibility into the tracking and monitoring of the

approval process.

Some companies choose to implement the process of Evaluated Receipt Settlement

(ERS) which automatically creates, approves, and pays an invoice based upon a

two-way match between the Purchase Order and the goods or services receipt. This

eliminates the need to receive and process invoices and supports automated payment

methods. For more information on ERS, please refer to the best practice Reduce Invoices

with Evaluated Receipt Settlement (ERS).

EVALUATE ACCOUNTS PAYABLE AUTOMATION SOLUTIONS

When automating

Accounts Payable

processes, multinational

organizations should

evaluate solutions to

ensure compliance to

local laws and

regulations.

1

• Payment - Organizations can automate the payment of invoices through ACH or

a commercial card solution. Technology solutions exist to integrate the

commercial card transactions into a company's Accounts Payable process. Third

party solutions allow companies to manage card transactions directly in the ERP

system and pay the Purchase Order with the card. For commercial card

solutions, there are generally two types of payment methods:

• Accounts Payable Card - Some organizations use a card assigned to either the

Accounts Payable department or a specific Accounts Payable employee who is

authorized to make payments to specific suppliers.

• Ghost Cards or Virtual Accounts - Some companies integrate ghost cards

assigned to specific suppliers into their ERP or accounting system to help

automate the payment and reconciliation process. These solutions are typically

offered through issuers, card providers, or third party technology solutions

• Reporting and Analytics - Automated Accounts Payable solutions enable the

analysis of payment process performance data such as the number of invoices

pending approval, unpaid invoices past due, and average invoice processing time

as well as the analysis of spend data for strategic sourcing purposes

Organizations find that the electronic receipt of invoices is a key enabler of an

automation strategy within Accounts Payable. One global media and communications

organization worked closely with its suppliers to increase the number of invoices

received electronically. The organization was able to receive 90 percent of its invoices

in electronic format through EDI or use of Evaluated Receipt Settlement (ERS). For

those invoices that were not received electronically, the organization employed an

image scanning and OCR tool to convert the invoices into an electronic format.

Ensuring that the majority of invoices were in electronic format enabled the company

to maximize the benefits of other Accounts Payable automation technologies such as

automatic routing and approval, as well as storage and data reporting.

Some companies use tools provided by either their issuer or a third party to integrate

commercial card payment into their ERP or accounting system. One U.S.

manufacturing company used a solution provided by their issuer to integrate its

commercial card management system with their existing ERP system, enabling

Accounts Payable to automatically pay invoices with the commercial card. Once an

invoice was approved in the ERP system, payment via a ghost card that was assigned

to the supplier was automatically scheduled. In addition, this tool further streamlined

the Accounts Payable function by automatically reconciling commercial card

transactions which were then electronically fed into the ERP system for Accounts

Payable approval and audit.

To encourage suppliers to support the technologies that enable Accounts Payable

automation, companies develop a formal supplier communication plan. One U.S.

telecommunications company worked closely with its suppliers to gain their adoption

of its automation technologies which included EDI and EIPP tools. The company

presented the benefits of using the tools, such as improved payment cycles and

payment status visibility, to its suppliers. Communicating with the suppliers enabled

EVALUATE ACCOUNTS PAYABLE AUTOMATION SOLUTIONS

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their adoption of the technologies, reducing the number of paper invoices and

decreasing the number of supplier inquiries received by Accounts Payable.

One global energy company used automation within Accounts Payable to increase its

on-time payments to vendors. Invoices were received in electronic format or scanned

into the system by the organization. Once in the system, the approval routing process

was tracked. Late payments were recorded on a monthly basis and approval routing

information was used to identify the cause of the late payment. This process allowed

Accounts Payable to work with individual business units, managers, and suppliers to

resolve late payment issues which enabled the organization to achieve over 96 percent

on-time payments.

Options for Best Practice Adoption

There are a variety of approaches to increasing automation within Accounts Payable.

Leading organizations typically use a combination of the following options.

Option I Option II Option III

Options for Adoption Achieve Accounts

Payable automation

through front-end

image scanning

Achieve Accounts

Payable automation

through front-end

image scanning and

automated workflow

Achieve Accounts

Payable automation

through electronic

invoice receipt,

automated workflow

and electronic payment

Benefits• Reduces manual

invoice processing

Increases cost savings

and process efficiencies

through streamlined

invoice approval

Reduces processing

time for approvals with

workflow automation

• Maximizes cost

savings

• Provides fully

automated invoice

and payment

processing

Key Considerations• May require

evaluation of 3rd

party imaging

solutions or imaging

outsource providers

• May require

investment in

supporting

technology and

technology

integration

• Requires time and

resources to enroll

suppliers

• May require

investment in

supporting

technology and

technology

integration

Benefits

Implementing an Accounts Payable automation solution offers organizations a number

EVALUATE ACCOUNTS PAYABLE AUTOMATION SOLUTIONS

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of benefits.

Category Benefit Obtained

Control and Compliance Automation within Accounts Payable increases the accuracy of

payments.

Cost Savings and Process

Efficiency

Automation within Accounts Payable reduces paper invoices and manual

review processes which reduce costs. Automating the payment process

enables the company to make timely payments, improving an

organization's ability to take advantage of early payment discounts.

Supplier Management Automation within Accounts Payable increases spend visibility which

supports supplier optimization and enables improved supplier

performance tracking and evaluation.

Spend Visibility The electronic receipt and payment of invoices allows purchasing and

payment data to be electronically captured and analyzed.

Implementation Steps

There are a series of action steps which are necessary to successfully increase

automation within Accounts Payable.

# Description of Action Step

1 Evaluate the existing Accounts Payable process and identify areas / processes that are

candidates for automation. Consider process complexity and adoption readiness

2 Evaluate and select the appropriate technology solution(s). Develop a business case to

communicate the options and support the recommendation

3 Obtain support from senior management and key business unit stakeholders

4 Implement selected technology solution(s)

5 If applicable, enroll eligible suppliers in the solution(s), communicating the benefits and

new process requirements

6 Communicate process changes to employees

7 Continue to evaluate opportunities for Accounts Payable automation

EVALUATE ACCOUNTS PAYABLE AUTOMATION SOLUTIONS

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Study Methodology

The objective of the Visa Procure-to-Pay and Commercial Card Best Practices Study

was to better understand the changes in the segment and to gain a comprehensive

understanding of best practices across the Procure-to-Pay process and within the

commercial card program. Visa commissioned Deloitte Consulting to conduct 90

in-depth interviews in the summer of 2007 with more than 60 global/multinational,

mid-size and large corporations as well as federal and local government agencies

across the world. In 2010, Visa commissioned Deloitte Consulting to update each of

the following 28 Travel and Corporate Card Best Practices from the comprehensive

study to include current trends, updated case studies, and additional key findings. The

evaluation of the Procure-to-Pay process included sourcing, order placement, payment

and settlement, reconciliation, control and audit, and reporting activities. For the

commercial card management process, the assessment focused on practices related

to the purchasing and corporate card program strategy, management, and reporting.

Interviewees included Regional Controllers, Chief Procurement Officers, Directors of

Strategic Sourcing, Procurement Managers, Accounts Payable Managers,

Global/Regional/Local Commercial Card Program Managers and Travel Managers.

Study participants had a range of commercial card programs in place including

purchasing card, corporate card and commercial “one” card programs with each of the

top three card providers: Visa, MasterCard and/or American Express.

STUDY METHODOLOGY

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