Reducing Friction: Driving AP Efficiency Straight-through-processing: Save time and money with reduced invoice exceptions

Alfred WilliamDirector, Client Relationship Management

Cristian LazarProcess Owner, Purchase to Pay

Introductions

Alfred William Cristian Lazar

Agenda

• Facing the facts

• Defining straight-through-processing

• Sanofi’s STP Strategy

• Tungsten’s suite of services

• What it takes

• Case studies

Facing the facts…

Average time taken to handle an exception?

1-2 days

AP’s clerk worst nightmare? Multiple

PO Invoices

What does this translate into $$?

1st time = 1

2nd exp= 8 x more

3rd exp = 23 x

more

Invoice Processing Stats

• Companies with relatively low automation and 250-500K invoices annually requires ~75 FTEs to process and resolve exceptions

• 75% of companies asked agree that PO exceptions are the biggest sources of friction between AP and Procurement

• The top-three causes of exceptions are

• Price/quantity discrepancy

• No valid PO on invoice

• No goods receipt

• Despite the negative impacts of invoice exceptions, the majority of organizations do not formally track exception trends and causation

Straight Through Invoice Processing or Touch less invoice processing can be defined as the process of receiving Invoices electronically and integrating them into the AP workflow/ERP systems right up to the point of making the Invoice document

ready for payment without any human intervention

Defining Three Flavours of STP

At Tungsten Network, we know STP can mean different things to different organisations (and different things to different people). Therefore, we define 3 flavours of STP with the 3rd being the ultimate goal for Tungsten Customers:

Straight-through to AP

Straight-through to exception Handling

Straight-through to payment

Sanofi E-invoicing

Straight-through Processing Strategy

Sanofi targets 80% STP at Invoice Booking Level

Sanofi’s definition of STP is 2-fold:

1. Invoice booking STP = invoice booking is created without human intervention based the data file received from the supplier through Tungsten

2. Invoice matching STP = invoice perfectly corresponds with PO/GR

Friction

less B

oo

king

How it works at Sanofi…Invoice Booking STP

• Based on external benchmarks and exchanges with other companies we understood that o STP at invoice booking is the main

element to drive efficiency in AP o 80% STP is realistically achievable across

Europe within 3-4 years

• In order to achieve our target we have set a team of 2 FTEs in our SSC dealing with e-invoicing and spending ~70% of their time investigating causes of non-STP invoices bookings and driving towards improvement

Invoice Matching STP

• We have various initiatives to drive up the invoice matching STP likeo Increase of PO coverageo Decrease of free text orders / increase of

catalog usageo Decrease the number of vendors /

increase usage of consolidators (e.g. Amazon Business, Meplato etc.)

o Push suppliers to use the PO flip option

A Great Start in UK/IEWe started in UK/IE in Jul 2016, went live with DE, NL, BE, CZ, HU in Feb – Mar 2017 and are preparing for Nordics and further South and Eastern European countries later this year

UK/IE Achievement – 72% after 10 month DE, NL, BE, CZ, HU – 19% after 2 month

STP is integral to Sanofi achieving the business case for vendor portal project

Our Challenges…Main Non-STP Reasons

1. Line number/UOM mismatch between PO and invoice – 56%

2. System cannot determine the tax code for invoice posting – 29%

Tax/deductibility complexities observed in the newly live (mainly Eastern European) countries including limited matching of PO and invoice lines may prove to be a challenge in increasing the STP rate in this geo-location to emulate the early successes in UK/IE

Our focus:• Capitalise on Tungsten’s role as the central point of data harbour and explore increased tax

related validations and improved matching • Continue with our vendor education to ensure comprehension of customer specifics• Simplify business process to enable a more seamless flow of data, minimising complexities

Tungsten Suite of ServicesDriving higher straight-through processing

Tungsten’s STP Driven Services

• Tungsten Network Workflow

• Tungsten Network Invoice Data Capture (IDC)

• Tungsten Network e-Invoicing

• Tungsten Network Purchase Order Services

Tungsten’s STP Driven Services

• Tungsten Network Workflow

• Tungsten Network Invoice Data Capture (IDC)

• Tungsten Network e-Invoicing

• Tungsten Network Purchase Order Services

Tungsten’s STP Driven Services

• Tungsten Network Workflow

• Tungsten Network Invoice Data Capture (IDC)

• Tungsten Network e-Invoicing

• Tungsten Network Purchase Order Services

Tungsten’s STP Driven Services

• Tungsten Network Workflow

• Tungsten Network Invoice Data Capture (IDC)

• Tungsten Network e-Invoicing

• Tungsten Network Purchase Order Services

Highly-Effective ‘Touchless’ Technology

PO Validation

Mandatory PO Convert

Invoice Augmentation

Core TN Engine

Non PO Routing

PO Delivery

Tungsten Buyers

Tungsten Euphemism…Bad data

STP Takes Careful Planning

• Define your strategy and KPI

• Communicate and engage

• Track progress

P2P Process Owners

• Paper rejection

• Consistent message

• Objectivised and empowered

Accounts Payable • Bought-in and

promulgate

• Bilateral value realised

• Drive PO-backed volume

Procurement

STP Takes Active Participation

Vendors

- Share the onus

- Education is key, learn

the process

- Engage with Tungsten

Tungsten Network-- Communicate your initiative

- Support your goals

- Educate stakeholders

- Drive higher adoption

- Push for continual

improvement

Buyer

Tungsten

VendorAligned and Accountable

Final Thoughts…

Source: Ardent Partners.

Real Facts…

Real Facts…

Real Facts…

Q&A