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

Reduce Invoices with Evaluated Receipt Settlement (ERS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Study Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

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.

Reduce Invoices with Evaluated Receipt Settlement (ERS)

Evaluated Receipt Settlement (ERS) is a business process used by best practice

organizations to eliminate the need for an invoice, which can result in a more efficient,

streamlined payment process. ERS allows organizations to conduct a two-way match

between the Purchase Order and the goods or services receipt to trigger the approval

for payment.

ERS streamlines the payment process as follows:

One large U.S. manufacturer established a goal of increasing automation in its

payment process. The company utilized ERS for its large, direct materials suppliers and

used the purchasing card to pay for its indirect spend payments. As a result of both

efforts, the company achieved 67 percent automation of its payment process.

Companies implementing ERS often begin with a pilot program with select suppliers.

The pilot program allows companies to work closely with participating suppliers and

internal employees to identify potential implementation and process issues related to

ERS. For pilot programs and initial ERS enrollment, best practice companies typically

select suppliers with current pricing agreements in place who provide direct or indirect

materials as the receipt of goods is a more straight-forward process than the receipt of

services.

Companies often communicate one-on-one with their suppliers to enroll them in their

ERS implementation. They ensure that suppliers understand that invoices must no

longer be sent as the goods receipt will trigger payment and that goods not matching

the ERS Purchase Order will be returned.

Some companies will use ERS for services as well; however, this requires that the

system be able to record the receipt of the service. A global energy company recently

completed an ERS expansion project, the primary driver for which was the elimination

of paper invoices. As a result of the expansion project, ERS payments accounted for 20

percent of the company’s total transactions. The company focused on implementing

ERS with strategic materials and service providers. The first phase of the project set up

REDUCE INVOICES WITH EVALUATED RECEIPT SETTLEMENT (ERS)

ERS helps eliminate

duplicate payments,

increase the amount of

discounts taken, improve

data accuracy, and,

reduce Accounts Payable

processing costs.

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material suppliers on ERS, the second phase was focused on service providers. In order

to implement ERS with service providers, the company developed a separate system

that created a pro forma service entry sheet to the client group to approve.

In order for ERS to work effectively, Procurement and Accounts Payable must clearly

communicate the new payment process to employees. Buyers must enter all

ERS-related Purchase Orders as ERS Purchase Orders in the procurement system, and

receiving employees need to ensure that they perform the necessary receipt validation

and quality/quantity review of the goods / services before logging acknowledgement

of the receipt since logging the receipt of the good/service triggers payment to the

supplier.

Options for Best Practice Adoption

Companies have several options in deciding upon an ERS adoption.

Option I Option II Option III

Options for Adoption Use ERS for select

direct material

suppliers

Expand use of ERS for

direct and indirect

goods/materials

Implement ERS for

direct and indirect

materials as well as

services

Benefits• Allows for adoption

of ERS to those areas

which will make the

highest impact

• Allows for adoption

of ERS to those areas

which account for a

large portion of total

spend

• Maximizes savings

from automation by

expanding use of

ERS for services

Key Considerations• Excluding indirect

materials and

services limits the

level of automation

of the payment

process

• Excluding services

limits the level of

automation of the

payment process

• Requires the ability

to automatically

confirm receipt of

the service

Benefits

Best practice companies use ERS to automate the payment process which not only

helps reduce the manual processing of invoices but it also provides increased control

over suppliers.

REDUCE INVOICES WITH EVALUATED RECEIPT SETTLEMENT (ERS)

"If you don’t do anything

else to automate your

Accounts Payable

process, do ERS."U.S. Aerospace and Defense Company

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Category Benefit Obtained

Control and Compliance The payment is triggered only upon the acknowledgement of the receipt

of goods which minimizes payment errors. The elimination of invoices

also reduces the risk of duplicate payments.

Cost Savings and Process

Efficiency

Not requiring an invoice helps reduce the costs associated with manual

invoice data entry and rework due to errors in the manual coding

process. In addition, the pay on receipt process helps reduce the

payment time period, allowing companies to take advantage of early

payment discounts.

Implementation Steps

Best practice companies can follow the steps below to implement an Evaluated Receipt

Settlement process.

# Description of Action Step

1 Verify that current technology (e.g., ERP system) supports ERS

2 Determine the supplier and/or spend categories appropriate for ERS

3 Identify receipt process for ERS spend categories

4 Document the ERS procedures by spend type

5 Inform the impacted suppliers that they will no longer need to send in paper invoices and

that all payments will be made in accordance with terms

6 Communicate the process to the buyer; goods / services must be rejected if there are

discrepancies with the Purchase Order terms

REDUCE INVOICES WITH EVALUATED RECEIPT SETTLEMENT (ERS)

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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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