The New World of Accounts Payable · or release any functionality mentioned therein. This document, or any related presentation, and SAP SE’s or its affiliated companies’ strategy

The New World of Accounts Payable: When Invoices Process Themselves

Michael Cerda, SAP Ariba

May 2018

2INTERNAL© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ

▪ What’s Driving The New World of Accounts Payable

▪ Reimagined Accounts Payable – Driving Digital Transformation Initiatives

▪ 5 Innovative Strategies and Case Studies for Achieving Excellence in Accounts Payable

1. Invoice Automation

2. Close the Loop to Capture Value

3. Increase Strategic Value

4. Transform from Cost to Value Center

5. Modernize Payment for P2P Adoption

▪ Wrap-up

Agenda – What We’ll Cover

3INTERNAL© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ3

What’s Driving the Digital Transformation?

World data doubles every

18 months

75 billion connected devices by 2020

1 billion people connected on

social networks

75% of IT spend will be cloud-based


Reimagined Accounts Payable - Driving Digital Transformation Initiatives

Enabling the Digital Enterprise

“Optimized and Networked”

1Open

• Any Vendor

• Any System

• Any Protocol

2Comprehensive

• All Suppliers

• All Collaborative business

processes

• All geographies

3 Intelligent

• Automated

• Contextual

• Real-time

• Big Data driven

Digital Core

Internet of Things Suppliers

CustomersWorkforce


Automation alone isn’t the answer.


Direct & Indirect

SuppliersERP

Dynamic Discounts

B2B Payment

The Power of Accounts Payables

Improved DPO

Connected Compliance

Smart Invoicing

buyer supplier

Strategy #1

Invoice Automation


Supplier Documents: Purchase Orders & Invoices & Payment Status

Invoice Automation – Digital Convergence of Accounts Payable Info

Business Network

Support, Innovation & Adoption

Technology & Systems

Source ContractOrder &

Invoice

Manage Information

Manage Vendors

Buying Portal

Integrated

Invoice Conversion

Service

Electronic

(option email or fax)

Electronic

T&E

HR

FI

MM

Global End User Community

Standardize

▪ Systems will look the same per country

▪ Consistent, streamlined workflow

▪ Global contract repository▪ Streamlined and reduced customizations

User Experience

▪ “Consumer-like” shopping experience

▪ Self-service reporting on centralized data

▪ Touch-less invoicing

Savings

▪ Drive greater price reduction

▪ Reduce supplier invoice errors

▪ Eliminate manual payments

▪ Reduce maverick buying

▪ Capture early pay discounts

▪ Lower cost of operation

Controls

▪ Build for trust, audit for fraud

▪ Prescriptive content and pricing▪ Tighter integration and transparency with suppliers


buyer supplier

Smart Invoicing – When Invoices Process Themselves

Invoice

ERP

Buyer

98% touchless

processing

SuppliersGST/VAT

compliance

PO & PO-line match

Buyer match (non-PO)

UOM & SKU change

Currency match

Sub total & total amount

PO-line change

Line & total consumptionthresholds

Shipping & tax thresholds

Account

coding

Workflow

Compliance

Invoice

number

Bill to /

ship to

PO

number

Requestor

(non PO)

Invoice

date

VAT / GST

IDs


Smart Invoicing in Pharma

Capturing Data & Automating Exceptions…

Strategy #2

Close the Loop to Capture Value


Siloed Processes

Analyze Source Contract Order

FulfillShipNotifyInvoice

Invoice receipt

ManageMatch & approve

Pay

Sourcing &

Procurement

AP

Supplier

Mail

Email

Fax

Mail

Scan

OCR


Supplier Portals

Analyze Source Contract

ShipNotify

ManageMatch & approve

Pay

Sourcing &

Procurement

AP

Supplier

Order

Invoice receipt

Invoice FulfillInvoice receipt

& status

Send PO


Business Network: Close the Loop to Capture Value

Ord

er

MatchManage/ approve

“Actual”

spend

data

Pay

Supplier

FulfillShipNotifyInvoice POAR

Perfect

PO

Defined & approved

catalogue content

Payment visibility,

execution &

remittance

Perfect invoice

Order acknowledgement &

ship notice

Source RequisitionContractAnalyze

Catalogues

Invoice receipt


Close the Loop to Capture Value

How an Airline Company’s P2P Value Took Off…

Strategy #3

Increase Strategic Value



Funding

Sources

SuppliersBuyers

Supplier Values

▪ Optimize Days Sales

Outstanding (DSO) and A/R

Management with Early

Payment or Financing Options

▪ Utilizing Dynamic Discounting

and Supply Chain Finance

▪ Lower costs and enhance

overall access to capital

▪ Payment visibility and access

to remittance information

▪ Visibility to Approved Invoice

and Payment Status

Payment

Processing

• Mitigate liquidity risks

• True multi-funding options

• Low rate funding

• Optimize the Payment

Process

• Electronic payments meeting

regulatory compliance

New capabilities to monetize trading collaboration

Buyer Values

▪ Extend Days Payable

Outstanding (DPO) –

unlocking Free Cash Flow

▪ Increase Return on

Investment (ROI) with

Dynamic Discounting

▪ Strengthen and tighten

relationships with strategic

suppliers

▪ Reduce risk with outsourced

supplier bank account info

and e-payments

▪ Increase A/P management

efficiency with visibility

through vendor business

network and outsourced

payment services


Increase Strategic ValueDPO and Payment Terms Rationalization and Extension

▪ Ensures paying suppliers to term and enhancing Free Cash Flow

▪ Review multiple supplier segments for inconsistencies

▪ Drives consistent supplier payment experience

▪ Delivers Client DPO improvement & uplift adoption for early pay program

▪ Aligns DPO with Industry Peers

▪ Rationalized across all Suppliers

▪ Positions extended net terms to specific suppliers / categories

DPO Benchmark

* Based on sample results from customers

using SAP Ariba solutions. Results may vary.


Increase Strategic ValueSupply Chain Finance – Strengthen your Payment Terms Strategy

Buyer electronically

transmits payables data to

the Business Network. No

change to existing invoice

approval process.

At invoice maturity date,

Buyer funds Buyer

controlled clearing

account. The system

executes payment

instructions to pay…

…the Supplier, if supplier

has not sold receivable

…the Funder, if supplier

has sold receivable

Supplier views receivables via

the Business Network. Has

option to sell receivables and

determine their collections

date or wait until maturity.

1 2

3 Funder(s) receives and

processes early payment

requests - provides

funding to Supplier.

4

Suppliers

Funders

Buyers



A Home Building Materials Retailer keeps on building…

Strategy #4

Transform from Cost to Value Center


Transform from Cost to Value CenterDynamic Discounting – Drive ROI while focusing on your Core Business

Current DPO

Automate to minimize

missed discounts1

Day 10

0%

0.5%

1.0%

1.5%

2.0%

2.5%

Day 30

$$

Pro-rate discount to cover

remaining missed opportunities2

$$

Ad Hoc captures “as needed” acceleration

for net term suppliers3

▪ Available to some or all suppliers

▪ Delivers client savings and improves ROI

▪ Improves EPS

▪ Dynamic / Pro-rated discounts to be

earned at any point up to the invoice

maturity date

▪ Buyer initiated

▪ Optional program suppliers can use to

manage their liquidity

▪ Applies to some or all invoices

Discounting Benchmark

* Based on sample results from customers

using SAP Ariba solutions. Results may vary.


Transform from Cost to Value Center

How a National Retailer Grew AP into a Profit Center…

Strategy #5

Modernize Payment for P2P Adoption


The Evolution of Payments – A Brief History

▪ Fast forward to the NOW………..

▪ In 1997, soft drink vending machines in Norway could be used with

a mobile phone

▪ EDIFACT standards began in 1985

▪ ACH was started in 1972 and adopted by banks in 1978

▪ Credit cards arrived in 1946

▪ Wire transfers were invented by Western Union in 1872 on their

telegraph lines

▪ Checks arrived circa 1700 AD

▪ Currency was invented by the Chinese circa 800 AD

▪ We all started with Shekels 3000 BC


Buyer

Supplier

Buyer

Bank

Supplier

BankCredit

B2B Payments Past: 1970’s innovation

80-140

Characters 80-140

Characters

Connect Data to Payment


Buyer

Payment

instructions

Rich remittance

Track and trace

payment status

Bank account

management

Invoice status

Purchase orders, invoices,

contracts, and receipts

Supplier

Buyer

Bank

Supplier

Bank

Debit Credit

Integrate Payment with Data

PO’s, Invoices,

Contracts,

Receipts

B2B Payments Future: Connecting the Credit Contextually


Improving P2P Adoption with Payment

Why a Cell Phone Network Provider Spells P2P backwards…

Wrap-up


Now What… “Playbook” to Getting Started…

Step1: Define Initial “Size of the Prize!” to educate and excite your Stakeholder Teams

▪ Estimate in “Outcomes” and “Financial Terms” i.e. Growth, Innovation, Efficiency, and Financial - Balance

Sheet, Income Statement, Cash Flow Impact of “$X”, etc.

Step 2: Governance: Who is the Executive Sponsor? “Day-to-Day” Lead?

▪ Bring together leads from Shared Services / Accounts Payables, Procurement, IT, Treasury, and Risk

Management

Step 3: Distribute Agenda for initial Cross-Functional Team Meeting

▪ Why is “our organization” thinking about Invoice Automation and Strategic Payables Working Capital?

▪ What is Invoice Automation and Strategic Payables Working Capital?

▪ How does Invoice Automation and Strategic Payables Working Capital impact / benefit “our organization?”

▪ Who is impacted and how? Shared Services / Accounts Payable, Procurement, IT, Treasury, Risk

Management, Operations Team, and Suppliers

▪ Alignment and Next Steps: Are People Supportive of Developing Invoice Automation and Payables Working

Capital Strategies?

▪ Next Steps: Defining the Invoice Automation and Strategic Payables Working Capital Priorities for “our

organization”

Thank you.

Michael Cerda

Director, Network Executive

Email: [email protected]

Cell: 650.823.9507

mailto:[email protected]

© 2018 SAP SE or an SAP affiliate company. All rights reserved. 32Public

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