PayStream advisors: Get rid of paper from the source - sep2010

TECHNOLOGY
INSIGHT
REPORT
eINV
Electronic Invoice Management
No More Recycling: Get Rid of Paper from the Source

Featuring Insights on...

Making a Case for
Automation

Overcoming Barriers to
Adoption

eInvoicing and Discount
Capture

Convergence of eInvoicing
and Outsourcing

Learn from the Innovators

Selecting an eInvoicing
Solution

Sponsored by Verian Technologies

Q3
2010
www.paystreamadvisors.com

Executive Summary
Electronic
Invoice
Management
The Accounts Payable (AP) department has long suffered the stigma of being
called a “cost center” or “black hole” from which money is constantly flowing out.
Executive Summary Especially in recent times, with the spotlight turned on finance departments, the hole
has become more noticeable. But, just as every cloud has a silver lining, this added
emphasis on AP department operations has been instrumental in bringing about a
paradigm shift in traditional invoice and payment management process. Increasingly,
financially savvy managers have started viewing the AP department as having
tremendous potential to not only deliver tactical benefits like cost containment and
productivity enhencements, but also strategic benefits around supplier relations and
working capital improvements.
Traditionally, the enemy of radical improvements in the financial supply chain has
been an over reliance on people and paper-based processes, which result in lengthy
processing cycles, slow and delayed payments, and unhappy suppliers. However,
all this is changing. On the one side, heightened visibility has led to a growing
awareness among financial managers that things are changing, with or without their
approval. On the other hand, robust, and easy-to-use electronic invoicing (eInvoicing)
options, including shared networks and stand-alone portals, widely available in the
market today are opening the doors for innovative AP and finance departments to
take control of supplier invoices and payments and shine in the limelight.
PayStream has developed this Technology Insight Series report “Electronic Invoice
Management: Getting Rid of Paper from the Source” to provide an overview of
the electronic invoicing landscape and address the following questions generally
asked by finance managers:
• What challenges are organizations facing when it comes to manual invoice
and payment management processes?
• What factors are driving the migration from paper invoices to electronic
methods? What benefits does eInvoicing deliver?
• In spite of the widespread availability of eInvoicing solutions and their
tangible benefits, why are more than half of all B2B invoices traded in paper
format?
• What barriers are hindering further adoption of eInvoicing and how can they
be overcome?
• What related developments in the procure-to-pay space are impacting the
growth of electronic invoicing? Where does eInvoicing fit in a broader P2P
automation roadmap?
• What are the functional components of an eInvoicing solution? Who are the
key players in this space? What solution functionality is available from these
technology vendors?
• What are some of the best practices innovator companies are following in
order to streamline their invoice and payment management processes?

© 2010 PayStream Advisors, Inc. • info@paystreamadvisors.com • www.paystreamadvisors.com

i

Table of Contents
Electronic
Invoice
Management
Making a Case for Automation .......................................................... 1

Table of Contents
Overcoming Barriers to Adoption ..................................................... 6

eInvoicing and Discount Capture ..................................................... 8

Electronic Invoicing Universe ......................................................... 10

Convergence of eInvoicing and Outsourcing ................................ 12

Eight Building Blocks to IADM ........................................................ 13

What You Should Do Now! ............................................................... 16

Verian Technologies Profile.............................................................. 17

Learn from the Innovators ............................................................... 20

Selecting an eInvoicing Solution .................................................... 21

Evaluating the Vendors .................................................................... 24

Conclusion ........................................................................................ 26

About PayStream Advisors, Inc....................................................... 27


ii

Making a Case for Automation
Electronic
Invoice
Management
Challenges Faced in Current AP Operations
The idea of a paperless corporate America has filled the heads of futurists ever
AP Challenges
since information technology began to make big strides during the last millennium.
In the 1970s, many people looked ahead to the year 2000 and theorized that by Y2K
businesses would exchange information in a fully electronic manner. The evolution
and wide acceptance of the Internet further validated this theory.
However, this has not come to pass in the business-to-business (B2B) landscape,
particularly in the accounts payable world. In spite of the widespread availability of
eInvoicing solutions, more than half of all B2B invoices are traded in paper format,
resulting in a number of challenges in day-to-day AP operations.
The results of PayStream’s “Invoice Automation Adoption Survey 2010” leave
no doubt that paper invoices are the enemy of efficiency in the AP department.
When asked about the biggest challenges their organization faces in the invoice
management process, almost two-thirds of the companies (60 percent) that
participated in the survey stated that a high volume of paper-based invoices was a
major headache.
Receipt of invoices in paper format leads to a horde of other problems in the invoice
processing cycle. More than half the companies surveyed (51 percent) stated that
they were bogged down by manual data entry and inefficient processes. Almost
the same number of organizations (50 percent) are suffering from hassles around
manual routing of invoices for review and approval.
Other issues revolved around lost or missing invoices, high number of discrepancies
and exceptions, lack of visibility into outstanding liabilities and inability to capture all
discounts offered by suppliers.

Decentralized invoice
Figure 1 17%
receipt
CHALLENGES
IN THE INVOICE High number of discrepancies
MANAGEMENT 17%
PROCESS
and exceptions
An over-reliance Lost or missing
on people and 21%
paper-based invoices
processes
emerged as the Manual routing of invoices
biggest problem for approval 50%
plaguing AP
departments
Manual data entry and
51%
ine cient processes
Majority of invoices received
60%
in paper format


1

Electronic Renewed Interest in Automation
Invoice Automation solutions that enable trading partners – buyers, suppliers and banks
Management – to seamlessly exchange transaction-related information and funds are indelibly
changing the invoicing and payment landscape. A new crop of electronic invoice
Automation Interest networks are making significant inroads into reducing inefficiencies and driving costs
out of companies’ financial operations through the elimination of paper.
These new technologies have been given further impetus by the fact that the AP
department is no longer considered just a cost center. Innovative financial managers
are now recognizing AP automation as an area offering tremendous potential to
Impact of generate bottom-line improvements with processing acceleration and discount
Automation in management abilities, better ability to monitor and manage spend, strengthen
Accounts working capital positions, and build stronger trading relationships.
Payable Research by PayStream analysts suggests that these forces have done wonders to
Average time taken raise the profile of electronic invoicing and payment management solutions, which
to process a paper are viewed as aveneues for enhanced discount capture.The logic behind this is
invoice - from date simple. Electronic invoices eliminate paper processing times including mail latency
of invoice receipt to
approval - is 23 days.
and desk float. With faster approval times, finance managers have greater ability not
only to take existing discounts but to create new ones.
Best-in-class
companies that have Given these factors, it is not surprising that a number of organizations are taking a
automated invoice hard look at invoice automation tools and technologies. Based on survey results,
receipt and workflow
have been able to
implementing or increasing electronic invoicing emerged as the most popular option,
slash this time frame with a majority (40 percent) of companies stating that this was the top priority on
to as little as five days. their 2010 automation plan. This is a clear indication that organizations are no longer
interested in merely finding a better way to handle paper; rather they are looking to
remove paper from the source.
Automated approval workflow for invoices was another popular option with 21
percent of companies stating that they would focus their attention on this technology
for the year.

Outsource portions
of AP process 3%
Figure 2
TOP FINANCIAL ERP application
AUTOMATION upgrade 10%
GOALS FOR 2010
Implementing or Implement invoice
increasing electronic imaging
11%
invoicing emerged
as the top priority for Automate payment
this year
processing
16%

Approval work ow
21%
for invoices
Implement electronic
invoicing 40%


2

Electronic Factors Driving Interest in Automation
Invoice
While numerous AP automation options have been available for many years, a
Management
number of organizations, especially small and medium sized ones, are just now
Interest in starting to dip their toes in the automation waters. What factors are driving their
Automation interest in automating AP operations? Why does it make sense to automate now?
• Organizations that were initially skeptical about AP automation are learning
from the experiences of their counterparts that have already automated and
now see the tremendous potential of automating AP operations.
• An interest in transforming the accounts payable department from a cost
center to a profit center is driving organizations to seek out innovative means
to achieve this objective.
• A competitive business environment is prompting organizations, especially
smaller companies, to focus on reducing processing costs and increasing
efficiencies associated with invoices and employee expenses.
• Streamlining the AP process has become extremely important in a tough
economy where adequate cash flow and greater control over payables are
critical in maintaining liquidity and sustaining business operations.
• An increased interest in early payment discount capture is driving companies
to investigate tools and technologies that enable them to compress their
invoice receipt-to-approval cycles.
• The evolution of on-demand and Software-as-a-Service (SaaS) delivery
models has significantly lowered the upfront cost of implementing AP
solutions and reduced the hassle of maintaining them.
• SaaS solutions that defer solutions costs over a longer period of time
are becoming appealing to companies that find it easier to get budgetary
approval for operating expenses over capital expenditures.
• The convergence of electronic invoicing and front-end invoice imaging
presents organizations with a single, comprehensive solution that can
manage both paper and electronic invoices through a common process.
• Value added-services delivered by solution providers around supplier
recruitment have enabled buyer organizations to bring suppliers onboard
more quickly.

Buyer Benefits of AP Automation
Before implementing any technology, organizations need to understand what the
ROI is and where the savings would come from. While benefits vary with the type of
solution implemented and functionality being used, here are some of the common
benefits of AP automation solutions to buying organizations, based on the results of
PayStream’s “Invoice Automation Adoption Survey 2010”:
• The biggest benefit of workflow is quicker approval cycles for almost two-
thirds (63 percent) of companies.
• Forty six percent of participant organizations stated that they have been able
to significantly reduce staff and processing costs.
• Other significant benefits of workflow included increase in employee
productivity and improved visibility over liabilities, experienced by 37 percent
and 25 percent of respondents, respectively.


3

Electronic When invoices are routed electronically, they are immediately visible and actionable
Invoice to all relevant parties, irrespective of where they are located geographically. Further,
Management reminders and escalation procedures available as part of workflow solutions ensure
that invoices are processed in a timely manner.
Automation Benefits The relation between lower processing costs and automation bodes well for
companies that are shying away from automation because they believe that current
processes work or that there is no ROI to be achieved from automation. This should
make the skeptics take a second look at the range of options available in the AP
automation space today.

Improved Regulatory 10%
Figure 3 Compliance
BENEFITS OF AP Fewer Late Payments
AUTOMATION 17%
SOLUTIONS and Penalties
The benefits of Improved Visibility
AP automation 25%
are numerous Over Liabilities
including quicker
approval cycles, Increased Employee 37%
lower processing Productivity
costs and increased
employee
productivity Lower Processing 46%
Costs
Quicker approval 63%
of Invoices

Supplier Value Proposition of AP Automation
The buyer side of AP automation and its associated benefits receive a lot of
attention. However, significant education is still required in understanding the value
proposition to suppliers from adopting electronic invoice management solutions.
Given that one of the biggest barriers to eInvoicing and payments is supplier
adoption, rather the lack thereof, it is critical to look at automation from the supplier
perspective. Suppliers who have adopted electronic invoicing have reaped a number
of tangible benefits:
• Increased Efficiencies: Significant time is saved when employees do
not have to print paper invoices and mail them to their customers, freeing
up accounts receivable staff to focus on more value-added activities like
collections and customer relations.
• Lower Costs: Reduction in labor, material and postage costs are common
with all eInvoicing solutions. Our research reveals that suppliers who adopt
electronic invoicing can slash their invoice management costs by more than
50 percent.
• Error Reduction: Validation rules configured into eInvoicing solutions flag
errors at the time of submission itself and prompt suppliers to correct them,
reducing the number of exception invoices downstream.


4

Electronic • Faster Settlement: Electronic invoicing compresses the invoice processing
Invoice and approval cycle on the buyer side. This, combined with electronic
Management payments, ensures that suppliers are paid on time, or even early in some
cases.
Automation Benefits • Improved Visibility: Suppliers have real-time access to invoice and payment
status from a standard Web browser, reducing the number of calls and
emails to AP Help Desks.
• Better Cashflow Forecasting: Automating invoice processing and
payments reduces the uncertainties around payments. Consistency around
payment timing means that suppliers have enhanced ability to perform
cashflow forecasting.
• No More Reprint Requests: Electronic invoicing solutions drastically reduce
the number of lost and missing invoices, which means that reprint requests
from buyers will virtually be zero.
• Quicker Dispute Resolution: Suppliers now have the ability to view
disputed invoices at any time and provide supporting/backup documentation,
as needed, making dispute resolution a collaborative process as well as
accelerating resolution.
• Decrease Days Sales Outstanding: Dynamic discounting and supply chain
finance capabilities available as part of eInvoicing solutions allow suppliers to
decrease days sales outstanding (DSO) without adversely affecting customer
relations.
• Access to Cheaper Capital: Dynamic discounting delivers financing at more
attractive rates to suppliers than factoring or asset based lending.


5

Electronic
Invoice Overcoming Barriers to Adoption
Management
In spite of the wide-spread availability of electronic invoicing and payment solutions,
paper remains ‘the’ rule and not an exception in a typical accounts payable
Adoption Barriers department. PayStream research shows that more than half of all B2B invoices and
three-quarters of all B2B payments in the U.S. are traded in paper format? What
is the reason organizations still use paper invoices and checks so heavily? What
factors are holding back the adoption of AP automation?
Supplier Resistance:
Given the fact that eInvoicing expedites payments, it is surprising that supplier
resistance is one of the top barriers to the adoption of electronic invoicing methods.
Persuading suppliers to change their processes to align with buyers’ needs is a
costly and time-consuming process, and success depends largely on the buyers’
ability to present a compelling value proposition to suppliers. In many cases, buyers
have failed to effectively communicate the value of AP automation initiatives to their
suppliers, and as a result, struggled to generate the results they expected.
For the supplier, invoice automation should represent an opportunity to improve the
efficiency of its accounts receivable (AR) processes. Therefore, buyer organizations
need to be more proactive in providing supplier-driven visibility into the invoice
approval and settlement process. Given this scenario, technology providers that
deliver supplier onboarding services in conjunction with the solution itself are gaining
strong traction in the market.

Technical Challenges:
Until recently, a prevalent barrier to the adoption of eInvoicing applications was
concern around their ability to easily and cost-effectively integrate with existing AP,
AR, billing, cash management, supply chain, and other legacy systems.
However, state-of-the-art applications available in the market today that integrate
seamlessly with back-end systems and provide secure data transfer protocols
are enabling companies to overcome their initial resistance to automation. Most
applications integrate easily with systems on the buyer and supplier sides, resulting
in secure and seamless data transfer, as well as streamlined processes and more
efficient workflows. Adopters can expect faster approval and cycle times, as well as
better cash flow forecasting ability, and vendor relationships.
And for those companies concerned with the upfront costs of technology,
hosted solutions and Software-as-Service (SaaS) delivery models offer minimal
implementation costs, with technology providers responsible for maintenance and
upgrades. Last, but certainly not least, given the current emphasis on going green
– electronic invoicing and payments provide a substantial positive impact on the
environment. They save trees and energy, while reducing air pollutants and solid
waste.

Business Practices:
Electronic invoicing heralds a tremendous change in the way buyers and suppliers
conduct business. A natural barrier to adoption on the supplier side is the loss of
detailed remittance information. Many suppliers are concerned that if they switch
to electronic invoices and payments they will not get sufficient remittance detail,
which facilitates payment reconciliation. Unless ePayments transactions are properly
structured, transmission of usable remittance details is limited.


6

Electronic The recent emergence of invoice, payment and remittance advice consolidation,
Invoice however, is beginning to alleviate this issue. These services, provided by third party
Management invoice and payment networks and processors, collect detailed payment information
from buyers and make it readily available to suppliers in formats compatible with their
accounting systems. With many solutions, suppliers have multiple options in which
Adoption Barriers
they can receive detailed remittance information - email, fax or even direct integration
with their accounting systems.
Another reason why buyer organizations hesitate to make the move to electronic
payments is the perceived loss of mail float, which is inherent to paper checks.
However, the advantages associated with check float are quickly diminishing as a
result of electronic check imaging, which has accelerated check presentment to a
day in most cases. In fact, usage of purchasing cards delivers more float than paper
checks, when check imaging is factored in.
Further, the cost savings from electronic invoicing and payments typically outweigh
the benefits of check float, given current low interest rates and fast collection
environments. Finally, the functionality provided by eInvoicing solutions that allow
buyers to control settlement with specific payment dates make check float a moot
point.

Figure 4
REMITTANCE
INFORMATION
TRANSMISSION
WITH
ELECTRONIC
PAYMENTS
Auto-generated
email is the most
widely used method
of transmitting
remittance
information along
with ePayments


7

Electronic
Invoice eInvoicing and Discount Capture
Management
One of the major drivers for AP automation has been senior management’s emphasis
on improving visibility to payment liabilities. This has come to bear along with a strong
Discount Capture push toward increasing discount capture from suppliers. However, paper invoices and
checks significantly hinder working capital visibility. Research from PayStream shows
that the average invoice cycle time is 23 days from receipt to approval, with best-in-
class companies completing this cycle in 5 days.
Emerging Web-based solutions that address existing inefficiencies in the invoice
processing cycle are gaining popularity by offering advanced functionality around
(a) supplier on-boarding, (b) working capital management, (c) straight-through-
processing, and (d) vendor self-service.

Supplier Onboarding
Defining The biggest barrier hindering electronic invoicing initiatives is supplier adoption.
Dynamic Persuading suppliers to change their processes to align with buyer’s needs is a costly
Payables and time-consuming process, and success depends largely on the buyers’ ability
Discounting to present a compelling value proposition to suppliers. Many buyers have failed to
Solutions effectively communicate the value of AP automation initiatives to their suppliers, and
as a result, struggled to generate the results they expected from implementing e-
DPD solutions are invoicing solutions.
dynamic in more
ways than one. They In order to ensure the success of their AP automation efforts, buyer organizations
Allow suppliers to need to be more proactive in demonstrating the benefits of electronic invoicing and
control the timing of settlement to their supplier base.Given this scenario, technology providers that
payments; deliver supplier onboarding services in conjunction with the technology itself are
Calculate discount gaining strong traction in the market.
fees and payment
amounts dynamically
based on the Working Capital Management
number of days The concepts of Dynamic Payables Discounting (DPD) and Supply Chain Finance
remaining until the (SCF) have become hot topics within electronic invoicing circles. By providing an
due date; incentive to suppliers for early settlement, these working capital solutions serve the
Provide the ability to cash management needs of buyers and suppliers alike. While discounts have been
dynamically capture traditionally driven by suppliers as an incentive for securing early payment, enhanced
discounts as the
working capital visibility into invoice status is turning the tables and enabling buyer organizations to
needs dictate, rather proactively propose early settlement discounts to suppliers.
than having to
negotiate discounts With third-party financing, buyers can extend their payment terms through the
in advance; injection of third-party capital without adversely affecting supplier relations.
Allow trading Conversely, suppliers gain additional cash liquidity and stronger balance sheet
partners to tap into positions. These solutions also mitigate uncertainty surrounding payment timing and
an alternative source amount, allowing for superior cash flow forecasting capabilities for suppliers.
of working capital
with the use of third
party creditors who Straight-Through Processing
pay early on behalf Straight-through processing (STP) or touch-less processing facilitates the automatic
of the buyer. payment of “clean” invoices. This allows organizations to enhance discount capture
as well as frees up buyers and AP staff to spend more time on managing exceptions
and accelerating dispute resolution with suppliers. STP includes:
• Validation of invoices, at the time of submission, based on pre-configured
business rules and tolerance levels to correct any errors or exceptions before
the invoice even reaches AP and the clock starts ticking.


8

Electronic • Automated three-way matching of purchase orders, invoices and goods
Invoice receipt documents, so that invoices can immediately be scheduled for
Management payment. Some companies even allow a two-way matching success (PO and
invoice) to trigger the payment for a small set of trusted suppliers.
Discount Capture • Automatic approval of or fewer levels of approval for certain non-PO invoices,
especially when it comes to small dollar invoices or invoices from suppliers
with whom buyers have a long and strategic relationship.

Vendor Self-Service
Through the integration of self-service supplier portals, electronic invoicing solutions
can truly drive collaboration between buyers and suppliers. They accelerate the
exchange of information between trading partners and provide improved visibility
and control over financial transactions. Suppliers’ ability to upload, view and track
invoices in real-time as they make their way through a buyer’s workflow process,
strengthens the control they have over their receivables processes. Suppliers receive
notification immediately upon completion of the buyers’ invoice approval process,
allowing them to monitor and assess their receivables in real-time. And for the buyer,
this translates into a reduction in resources required to resolve discrepancies and
respond to inquiries. Both buyers and sellers receive payment data and remittance
detail electronically facilitating reconciliation of payables and receivables.

Electronic Settlement Payables Discounting
Increases the ability to make timely Provides a low-cost financing alternative to
payment and reduces the incidence of late suppliers and an additional income stream
Table 1 payment fees and penalties. to buyers.

BENEFITS OF Lowers processing costs by removing the Enhanced visibility into the timing and
ELECTRONIC need for printing and mailing checks and amount of payments aids in superior cash
PAYMENTS the incidence of fraud. flow forecasting capability for buyers and
AND DYNAMIC suppliers alike.
DISCOUNTING Supplier notification and vendor self-
service options reduce the number of Delivers better cash liquidity and stronger
supplier inquiries and exceptions. balance sheet positions for suppliers
without their having to rely on high cost
Online search and retrieval tools aid in financing alternatives.
payment verification and collaborative
dispute resolution. Buyers can extend their payment terms;
Suppliers can accelerate their cash
Aids in compliance with Sarbanes-Oxley conversion cycles.
and other regulatory requirements.


9

Electronic
Invoice Electronic Invoicing Universe
Management
Electronic invoicing solutions streamline the invoice receipt-to-pay cycle by enabling
organizations to electronically exchange purchase orders and invoices, use
eINV Universe sophisticated workflow tools for approval processing and make electronic settlement
against approved invoices.
Supplier Recruitment & Enrollment: Recruitment activities typically start with
supplier segmentation analysis and identifying those vendors to target first for on-
boarding. Solution providers add value to the equation by leveraging proven best
practices to develop various activation campaigns – email, phone and direct mail
– for different supplier groups. The solution offers functionality to allow suppliers
to enroll themselves by logging into the application to provide bank account and
registration information. Alternatively, buyers can manually enter supplier information
or import the same from their ERP or AP systems.
Invoice Generation & Delivery: Electronic invoicing solutions facilitate the
exchange of invoices between buyers and suppliers by supporting several methods
of accomplishing this (flipping POs to invoices, blank Web forms, extracting
templates from buyers’ ERP systems, etc.). Solution providers also offer more
advanced file connections via EDI, XML, CSV etc. for high volume suppliers or those
that prefer a more hands-free approach. Some solution providers offer options to
handle paper invoices as well. Each invoice, whether submitted electronically or as
paper, is typically converted into a common document type for querying and filtering.
Exception Handling: Validation of invoices is a critical step to ensure that only
clean invoices are viewed by the AP department. Invoices are routinely checked
for duplicity and mathematical integrity. An additional layer of validation is provided
by checking invoices against a set of buyer-defined criteria. This process identifies

Figure 5
ELECTRONIC
INVOICING
UNIVERSE
Electronic invoicing
solutions improve
the invoice-receipt
to payment cycle
by streamlining
how organizations
receive and approve
invoices and make
payments


10

Electronic errors and exceptions in the invoices proactively at the time of invoice submission
Invoice itself and notifies the infringing party to correct those errors before the invoice can be
Management accepted and routed. These validation rules and tolerance levels can be configured
and changed, as needed.
eINV Universe Workflow & Dispute Management: This is the process that buyers follow to sort,
route, review, dispute, and approve invoices for payment. Electronoc invoicing
solutions support multiple levels of approval and include the ability to configure
reminders and escalation procedures, if no action is taken on pending tasks in a
specified period of time. The systems also allow buyers and suppliers to investigate
and collaboratively resolve disputes and exceptions. The solutions support
configurations that dictate a manual or automated workflow process for approval,
dispute resolution, escalation procedures, and authorization protocols.
Payment Processing: The steps that buyers take to initiate, post, and execute
payment, including preparation, processing, and submission of the payment file
to the bank. Most solutions offer multiple payment options and allow buyers to
configure payment types at the supplier level. This stage also includes integration
with and posting of the payments to buyers’ ERP and accounting systems. Some
solutions also offer dynamic payables discounting functionality allowing buyers to
configure multiple discount schemes and enabling suppliers to discount all or any of
their receivables at any time, up to the maturity date.
Reporting & Analytics: This includes the ability of the solution to generate standard
and custom queries and reports and provide visibility across transactions to buyers
and suppliers. The solutions also provide comprehensive audit trails of all actions
taken within the system and vendor self-service options. Recent advancements in
analytical capabilities allow managers to examine spend at various levels, including
type of expense, employee, department and region. This wealth of information
gleaned form the procure-to-pay process, can not only be used to comply with
regulatory requirements but also to provide valuable business intelligence for
strategic spend analysis.

Figure 6
ELECTRONIC
INVOICING
PROCESS FLOWS
Electronic invoicing
solutions provide
robust functionality
from invoice
delivery to payment
processing and
vendor self-service


11

Electronic
Invoice Convergence of eInvoicing and Outsourcing
Management
One of the major barriers hindering electronic invoicing initiatives is gaining supplier
adoption. Suppliers do not want to change the way they currently process and
Key Insights!
submit invoices to buyers, unless they see the value proposition in electronic
invoicing. Large buyer organizations are in a position to leverage their size and
purchasing power to migrate suppliers from paper-based processes to electronic
invoices. Small and medium enterprises, however, do not have this luxury and
cannot dictate terms to their larger suppliers.
One option that these organizations can pursue to overcome challenge of supplier
adoption is utilizing outsourcing services in conjunction with electronic invoicing
initiatives. Under this scenario, suppliers that are reluctant to join an eInvoicing
network, continue to send paper invoices. But instead of mailing them to the buyer’s
AP department, suppliers send these invoices to a processing center managed
by the eInvoice solution provider. At these processing centers, the documents
are scanned and data is extracted from the paper invoices and converted into an
electronic format. Data from both the paper and electronic invoices is then available
for processing through a single unified platform.

Benefits of Outsourcing Imaging and Data Capture
• Buying organizations receive all their invoices in an electronic format, from
day one, without having to wait to onboard a critical mass of suppliers on the
eInvoicing network.
• The AP department receives all invoices in a common format, irrespective of the
channel of entry. The same robust validation rules that are applied to electronic
invoices can be used to validate paper invoices as well.
• Buyer organizations can see a reduction in FTE and processing costs that
were originally associated with imaging and data entry from paper invoices, an
extremely valuable benefit for SMEs.
• Most third party outsourcing providers guarantee a 24 hour turnaround for
invoice entry, which significantly compresses the invoice receipt-to-pay cycle,
thereby allowing organizations to capture more early payment discounts.
• Fewer supplier inquiries into invoice and payment status, with increased supplier
visibility into the process, translates to freeing up of AP resources that can now
focus on value-added activities like spend management or supplier recruitment.
• Requires minimal changes to the supplier-side process; Suppliers only have to
change the address to which they mail in the paper invoices.
• Electronic invoicing, combined with outsourced data capture, compresses the
approval cycle, ensuring that suppliers are paid on time, or even early in some
cases.


12

Electronic
Invoice Eight Building Blocks to IADM
Management AP automation – including Invoice Automation and Discount Management (IADM)
initiatives need a framework to ensure that programs are approached on a strategic
Key Insights! basis, which bridges the supply chain, accounts payable and finance functions.
PayStream’s analysts have introduced such a framework to help enterprises
implement “integrated” IADM and maximize its benefits. To achieve the long-term
value of IADM, organizations need to adopt a strategy involving both procurement
Key to AP and finance and therefore initiatives should be approached at an enterprise level.
Automation Our most recent research shows that many enterprises are still implementing
Success electronic invoicing or stand alone discount management or supply chain
A solid framework, finance programs, and not truly integrated projects. So far, only a limited number
which bridges of enterprises have stepped up to this challenge and are implementing what
accounts payable,
PayStream Advisors calls “integrated” IADM optimization. However, this number
procurement, supply
chain and finance is steadily rising, as corporate enterprises begin to achieve benefits in their first
functions, is the key attempts at IADM and realize what really needs to be done.
ingredient to the
success of any AP Based on in-house research, PayStream estimates that:
automation initiative. • Nearly 30 percent of surveyed enterprises have plans that would fit the
integrated IADM description.
• Approximately 50 percent of those are planning a Level I approach (not
integrated).

Figure 7
EIGHT BUILDING
BLOCKS
OF INVOICE
AUTOMATION
AND DISCOUNT
MANAGEMENT
A strategic
framework required
for the success
of your invoice
and discount
management
initiatives.


13

Electronic • Less than 20 percent are planning an integrated approach, which brings
Invoice together buyer/supplier collaboration with electronic invoicing.
Management • More than 15 percent are considering global initiatives to inject third party
financing into their supply chains.
Key Insights! Integrating invoice automation and advanced finance tools such as dynamic
discount management or supply chain finance is not easy. It requires a multi-
disciplinary vision and leadership to drive a focus on unleashing working capital from
the trade invoices and receivables; otherwise it will remain fragmented. It involves
difficult changes to processes, and involvement of external organizations, namely
suppliers, that can make implementation difficult. Further, organizational and cultural
barriers that exist between supply chain, procurement and finance managers make
clear thinking on IADM difficult.
On the other hand, though the technology support seems easy, that is not always
the case. Technology staff must grapple with the challenges of getting invoices
approved faster, multi-channel alignment, and systems integration. Even if the CFO
accepts the need for enterprise-level IADM, the quarterly demands of procurement
and working capital targets, especially in delicate economic conditions, make IADM
one of the most important challenges facing the finance organization, but not the
most urgent for the CFO. This typically results in a focus on tactical “quick wins” until
conditions are better.
The main reason enterprises are not implementing integrated IADM is an inability
to see the big picture and understand what is involved. Just as a map helps you
understand the context of your journey (the roads you need to navigate and
alternative routes), so the PayStream IADM framework helps enterprises make
decisions about the best route and objectives for their situation.
Following an analysis of several large corporate enterprises, PayStream Advisors
has created a IADM framework, or map, called “The Eight Building Blocks of Invoice
Automation and Discount Management” (See Table 2) to help enterprises see the
big picture, make their business cases and plan their implementation.

TABLE 2: EIGHT BUILDING BLOCKS OF INVOICE AUTOMATION AND
DISCOUNT MANAGEMENT
1. Purchase-to-Pay Vision
a. Leadership and senior management buy-in
b. Cross-functional alignment and support
c. Clear understanding of the value proposition
2. Purchase-to-Pay Strategy
a. Clear and concise objectives and goals
b. Multi-year automation roadmap
c. Documented metrics to measure progress
3. Supplier Interaction
a. Defining buyer-supplier collaboration goals
b. Vendor segmentation and adoption planning
c. Supplier communication and recruitment strategy


14

Electronic d. Payment and discount terms configuration
Invoice e. Incentives/penalties to drive supplier behavior
Management
4. Culture and Change Management
a. Inter-departmental collaboration and shared risk/goals
Key Insights!
b. IT resource allocation and training
c. Incentive compensation based on goals achieved
d. Cash management flexibility
5. Process Management
a. Enhanced invoice visibility and accurate accruals
b. Cash conversion cycle and DPO goals
c. Improving processing efficiencies and accelerating approval cycles
6. Purchase-to-Pay Information
a. Identifying efficiency metrics that need to be improved
b. Leveraging external benchmarking data
c. Visibility across transactions and access to data dashboards
7. Automation Technology
a. Front-end imaging and approval workflow solutions
b. Electronic invoice submission and receipt applications
c. Automated workflow and dispute resolution
d. Seamless integration with ERP and accounting systems
8. Value-Added Services
a. Multiple delivery models including hosted and SaaS
b. Supplier recruitment and on-boarding
c. Availability of third party credit and financing
The above framework can be used for internal education and debate in developing
the IADM vision and strategies. It can then be the basis of an assessment of the
enterprise’s current and required capabilities, to help understand its current position
and future strategy.


15

Electronic
Invoice What You Should Do Now!
Management
There is a strong business case for Invoice Automation:
The clearly definable benefits electronic invoicing solutions offer provide a compelling
Key Insights! case for consideration, especially given the tangible ROI for both small and large
organizations.
Taking the next step:
But getting rid of the paper can be an intimidating task. A first step for many
organizations is determining just how efficiently they manage their invoice-to-pay
cycles.
The Paper Invoice Quotient (PIQ), a score developed by PayStream from a
Find out your standardized survey that represents dependency on paper in accounts payable, is
PIQ fairly representative of processing efficiency. An organization’s PIQ is determined by
www.paystream dividing the percent of electronic invoices (whether EDI, invoice network, p-card, or
advisors.com/ conversion of paper invoices by automated data capture) by the average number of
content.cfm?id=728
approval days, from invoice receipt to approval, as shown in Table 3.
PayStream counsels its clients to work towards a PIQ ratio of at least three or more,
either by increasing electronic invoice receipt to drive efficiency or accelerating
processing speed to improve organizational effectiveness.

PERCENTAGE OF ELECTRONIC
10% 24% 40%
INVOICES
Table 3
CALCULATING APPROVAL TIME (NUMBER OF
YOUR PAPER DAYS FROM INVOICE RECEIPT TO 28 24 14
INVOICE APPROVAL)
QUOTIENT

PAPER INVOICE QUOTIENT 0.4 1.0 2.9

Don’t fall behind:
Companies that rely on traditional invoicing, payment and financing practices, which
are burdened by many inefficient, manual tasks, will find themselves at a competitive
disadvantage to companies that have automated this process, and can therefore
better manage their spend and vendor relations at all levels.
Lots of qualified choices, but many options can be confusing
Our analysis of qualified solution providers revealed a surprising array of
relatively easy-to-implement and feature-rich tools. When considering an invoice
management solution, however, most companies should first evaluate their
existing IT infrastructure against the business landscape in which they operate.
Leveraging existing assets is prudent if they include the necessary expertise,
features and technology to achieve the desired results. Supplementing existing
processes and technology with best-of-breed or bolt-on applications, however, can
provide significant benefits while also serving as a bridge to a fully integrated and
comprehensive invoice management solution set.


16

Electronic
Invoice Verian Technologies Overview
Management Verian Technologies began operations in 1997 as a healthcare consultancy focused
primarily on the procurement process. Two years later, the company launched its
Solution Profile flagship product, ProcureIt to handle materials management and procurement for the
healthcare space. Over the years, Verian grew horizontally and acquired clients in a
number of other industries including retail, energy, public and industrial sectors. The
company also introduced its Invoice Automation solution to handle the invoice receipt
and approval process for both PO and non-PO based invoices.
Today Verian is a leading provider of procure-to-pay automation solutions designed
for the mid-market. In addition to its ProcureIt and Invoice Automation applications,
Verian offers Expense Manager for expense reporting and Asset Manager to manage
the complete lifecycle of assets. As all the different solutions reside within the same
software suite, clients can capture 100 percent of their non-payroll spend via a single
platform, enabling them to reduce costs, demonstrate compliance with regulations
and enforce all spending policies from a single source.

Founded 1997

Headquarters Charlotte, NC

Other Locations N/A

Employees 50+

Revenues N/A
Table 11
Customers 150+
VERIAN
COMPANY AND End Users 130,000+
SOLUTION
INFORMATION Annual Transaction
N/A
Volume
Healthcare, retail, oil and gas, government/non-profit, financial
Industry Segments
services, industrial.

United States Postal Service, Caterpillar dealerships, Boeing,
Key Accounts REI, Universal Studios, Allstate, PETCO, Macy’s, Price Chopper,
Kennedy Krieger Institute, GNC

Awards/ Top 100 technology companies for 7 straight years by Supply &
Recognitions Demand Chain Executive Magazine

Partners/Resellers Wellpoint Systems, P2E, ReadSoft, Zensar

Solution Overview
The Invoice Automation solution allows clients to process all their invoices – whether
associated with a purchase order or not – through a single system, which leverages
a common platform and user interface. The solution is available as licensed software
as well as a hosted service, depending on what clients require. It can integrate
seamlessly with most ERP and legacy systems via file-based transfers or real-time
via APIs, or a combination of both, based on customer requirements, data points and
system integrations.


17

Electronic Supplier Recruitment
Invoice Verian has made a decision to support supplier recruitment in one of two ways.
Management Companies may choose to deploy a client specific supplier portal, internally
developed by Verian or choose to leverage a public supplier network into which
Solution Profile Verian offers advanced integration capabilities. Verian takes a collaborative approach
to supplier recruitment using proven best practices. The supplier portal Verian offers
to its clients has a number of capabilities built in to support supplier enablement,
including e-mail and hard-copy letter templates that can be sent to suppliers
encouraging them to come onboard the solution. Verian can also support the email
and direct mail campaigns with phone calls, if required.
Electronic Invoicing
Multiple methods of submitting electronic invoices – EDI, XML, purchase order and
work order flip, Web forms, and batch Web upload – are available as part of the
Verian supplier portal, with suppliers having the flexibility of choosing the means most
suited to their business processes. One of the more interesting features of the Verian
solution is the availability of out-of-the-box invoice masks or templates for different
types of invoices and simple, menu-driven functionality to maintain and edit these
templates.
Further, Verian can accept invoices generated by external supplier networks or
imaging solutions as well. Imaging and data extraction can be performed in-house
or can be outsourced and these invoice images and data can be brought into the
Invoice Manager application. Verian has industry partnerships for imaging and data
entry and the company also has partnerships to provide outsourced data capture
services as part of its solution portfolio.
Validation of invoice data can vary depending on how the invoice enters the system.
If the data is uploaded through the supplier portal, Invoice Automation’s built-in
validation rules engine will check for invalid or missing data, notifying suppliers of
the exception via the online portal and e-mail. When scanning is involved, Verian’s
partners’ business interaction server notifies suppliers via e-mail messages.
Approval Workflow
Workflow is designed specifically for invoice processing. Invoices with purchase
orders can be automatically matched (two-, three-, and four-way) and put through
an approval process. Purchase order data and receiving information can be pulled
from whatever systems are being used to store these documents – whether they
are part of the Verian application or not – and invoices go through the matching
process specified by the client. The system recognizes both financial and receiving
exceptions, sending the invoices in question to appropriate parties for reconciling the
discrepancies. Once exceptions are resolved, the invoices are posted for payment.
The functionality to handle routing and approval of non-PO based invoices is equally
robust. The Invoicing tab of the solution displays the different steps an invoice can
enter as it moves along the processing lifecycle. A split screen view displays the
invoice image and the captured information side by side, including both header and
line item information. Users can perform GL coding and expense allocations and add
notes or attachments as well and either approve/reject the invoice or forward it to
other users who need to review.
Working Capital
At this time Verian does not offer dynamic discounting capabilities. However, it allows
clients to increase the capture of pre-negotiated discounts by delivering robust
workflow and notification functionality to ensure that invoices with discounts are


18

Electronic processed within the discount window.
Invoice Electronic Payments
Management Post approval, invoices are seamlessly transferred from the Verian system to clients’
ERP or accounting systems, from where payments can be made to suppliers.
Solution Profile
Reporting and Analytics
Verian offers a library of performance indicators and works with clients to build
customized dashboards showcasing relevant business information. In addition, the
application provides more than 140 parameter-driven standard reports, including
spend by vendor, invoice process metrics, discounts by region, discounts lost
because of late payments, etc. Further, an easy-to-use report wizard is available
to walk users through the process of creating ad hoc reports, which can then be
saved as templates. Reports can be exported as Excel or PDF files, and all data can
be downloaded into third-party reporting tools for additional analysis. A scheduling
feature is incorporated into the report engine, allowing users to select report
frequency and format, and if desired, to set up automatic e-mail delivery to other
users as well as to individuals outside of the system.
Pricing and Implementation
The average implementation length ranges from weeks to months and varies
with number of modules that need to be implemented, complexity of business
requirements, number of back-end systems that have to be integrated, size of
customer and the pace at which the customer is able to move. The licensed model
requires an upfront purchase plus implementation and maintenance fees. The
subscription model is a monthly charge plus the cost of implementation.


19

Electronic
Invoice Learn from the Innovators
Management With so many sophisticated invoice and payment management solutions and
services available in the marketplace today, why aren’t companies making headway
Key Insights! in better managing their AP processes? Why aren’t more companies able to remove
paper from their organizations, decrease processing costs and increase discount
capture? The answer lies in execution. Our latest research indicates that the
difference between a winning AP automation initiative and a failure comes down to
the ability to execute such programs.
This section endeavors to identify the secrets of successful invoice and payment
management with a look into the best practices of the innovators. What techniques
have they employed to streamline their processes? How do they monitor their
programs? In short, what are they doing that you could be doing.

• Increasing transactions processed on purchasing cards translates to a
reduction in invoice volume - paper or otherwise - and the paperwork that
is associated with invoices. Increased p-card volume also results in higher
rebates for the buying organization.
• Centralization of the receipt invoice process ensures that the AP department
and senior management have instant visibility into the company’s outstanding
liabilities. A formal policy mandating that all invoices should be sent to the AP
department is the first step in streamlining invoice management processes.
• Front-end imaging ensures that invoices enter the system quickly and are
processed faster. Further, moving imaging to the front-end of the process
delivers all the benefits of back-end imaging (faster search and retrieval),
plus additional advantages in terms of making invoices available to all the
parties immediately, irrespective of where they are located.
• Combining automated data extraction tools like optical character recognition
(OCR) and intelligent document recognition (IDR) with imaging reduces
the amount of manual data entry required to extract information from paper
invoices and minimizes data entry errors.
• An electronic invoicing solution goes a step further by applying a set of pre-
defined validation rules to ensure that all the required information and only
accurate information is submitted on the invoices, making sure that only
clean invoices enter the AP processing queues.
• Leveraging an automated workflow solution ensures that once invoices enter
the solution, they will be routed to the required approver automatically, based
on pre-defined business rules. The business logic is typically configured at
the time of solution implementation and can be updated as needed.
• Organizations that do not have the in-house resources and capital required
to bring a critical mass of suppliers onboard an automation solution are
leveraging the expertise and value-added services provided by their
technology vendors to achieve this.


20

Electronic
Invoice Selecting an eInvoicing Solution
Management Every solution profiled in this report is designed to help buyers and suppliers
move their invoicing and payment related activities from a paper environment to
Solution Selection an electronic one. Suppliers seek to streamline and accelerate the order-to-cash
process, while buyers want to transform the procure-to-pay cycle. However, not
every solution provides equal functionality for suppliers and buyers to achieve these
goals, so financial managers should understand the differences between the various
eInvoicing solutions currently available.

eInvoicing, ePayments or More?
“Where to start?” is one of the first questions to ask when investigating accounts
payable automation. Accounts payable professionals must decide whether a tightly
focused or a comprehensive end-to-end solution would better meet their needs. Our
analysts believe that technology buyers should keep the following factors in mind
when making this decision:
Financial Automation Goals: Organizations that have been slow to adopt other
financial automation technologies but want to take an incremental step forward
should consider adopting just eInvoicing as a starting point. On the other hand,
organizations that are comfortable with technology and want to accelerate the pace
of improvement in their invoice receipt-to-pay cycle should think about an application
that delivers full circle procure-to-pay functionality.
Adoption Readiness: Every organization does not stand an equal chance of
succeeding with automation. Differences in culture, financial resources and human
capital and level of senior management support mean that certain organizations are
more likely to succeed. Organizations investigating AP automation should determine
how their organizations stack up in each of these areas before determining what
solution to implement.
Process Complexity: AP professionals should consider the number of suppliers
and invoice formats they receive, as well as their overall invoice volume and the
complexity of their average invoice when evaluating eInvoicing solutions. The
structure of their AP operation (i.e. decentralized vs. centralized) and the steps
required to process, approve, and pay invoices are also critical and will have a direct
bearing on the choice of solution.
Accounts Payable Department Size: Large organizations can focus on the process
improvements and resulting ROI an investment in eInvoicing will deliver, regardless
of the number of staff that are performing invoice and payment processing activities.
However, small and mid-sized organizations do not always have that luxury. In these
cases, firms looking to automate the AP process should be looking for vendors that
can deliver a foundational solution, or one targeted very specifically to their needs.
Accounting Software Infrastructure: ERP and accounting systems can deliver
varying levels of functionality around invoice and payment management. One of the
key reasons a market has developed for best-of-breed eInvoicing solutions is the
lack of sophisticated workflow and dispute resolution capabilities offered by ERP
and accounting software. A major consideration for determining an organization’s
selection of an eInvoicing solution should be the process gaps or system weaknesses
that are inherent to the AP or ERP software currently in use.


21

Electronic Software Solutions Or Software-as-a-Service?
Invoice Organizations investigating eInvoicing must consider whether a software solution
Management
or a Software-as-a-Service (SaaS) option would be more suitable to meet their
requirements. A strong case can be made for software solutions, which are
Solution Selection implemented inside the company’s firewall, as ownership provides a high degree
of control, flexibility, and security. For example, customers can modify or customize
the solutions to meet their business requirements, control the platforms, and adjust
security parameters to their preferences.
Another option available to organizations evaluating eInvoicing is a SaaS model,
where the system is hosted and maintained by the solution provider. A major benefit
lies in the fact that they usually require minimal upfront investment because the buyer
organization does not need to pay to license and install software. Some technology
vendors charge a small amount up-front to cover implementation costs and other
professional services then charge recurring fees based on the transaction volume,
while others operate entirely on a per-transaction pricing structure.
As a service delivered over the Internet, SaaS solutions may be deployed more
rapidly and cheaply than software solutions that require extensive integration with
enterprise and legacy systems. This is an important consideration for buyers who
are eager to bring the benefits of automation into their organizations as quickly and
painlessly as possible. Another compelling advantage of SaaS solutions is that
the client is not burdened with the periodic expense and effort of upgrading to new
versions of the solution and paying annual maintenance fees.

Portals Vs. Networks
Electronic invoicing solutions are available in two models. First, there are direct
solutions or stand-alone portals, which enable either the buyer or supplier to control
the invoicing and payment process from their own systems. When they are controlled
and managed by the buyer, they are referred to as buyer-direct or buyer-centric
solutions. On the other hand, solutions controlled and managed by the supplier are
known as supplier-direct or supplier-centric solutions.
Buyer-centric eInvoicing portals involve one buyer providing an interface for many
suppliers to present invoices and receive payments electronically. The buyer
maintains an Internet presence, provides instructions and capabilities for suppliers
to register and asks them to post and monitor their invoices online. Supplier-centric
portals, on the other hand, link one supplier with many buyers for invoice delivery and
payment. In this case, it is the supplier that deploys the invoicing solution and sends
invoices to multiple buyers through the solution.
The other option is an electronic invoice network or exchange, which involves a third-
party processor or bank acting as an invoice consolidator. The consolidator provides
a network with a Web-based interface that allows many buyers and suppliers to come
to one location to transact with one another. The network acts as an intermediary,
collecting invoices and facilitating payments from multiple buyers for multiple
suppliers, eliminating the need for point-to-point connections.
This model not only has all of the robust features of a buyer or supplier-centric portal,
but also provides additional value through the shared supplier network, open to
suppliers and buyers alike. Both may participate in the network, but neither controls
it. Instead, buyers ask their suppliers to present invoices through the network, and
suppliers ask their buyers to view and pay invoices through the same network.


22

Electronic Integrated Solution Vs. Portfolio of Options
Invoice The electronic invoicing universe as we have defined in this report comprises of
Management
a number of functional components, namely electronic invoice submission, paper
invoice conversion, workflow for invoice approval and discrepancy resolution, working
Solution Selection capital management and electronic payments. Organizations that are considering
automating the entire invoice receipt-to-pay cycle have two options. One option is
to look for a single technology vendor that offers all the integrated components of
eInvoicing through a common, integrated platform. The alternative is to create a
custom portfolio of various best-of-breed solutions.
An integrated solution means dealing with one single vendor and the fact that
users have to learn how to use just one system proficiently. Another advantage
of an integrated solution is that integration with the ERP or back-end accounting
applications is simpler. On the other hand, when an organization is working with a
number of bolt-on applications (different vendors for electronic invoicing, document
conversion and workflow, for example) initial integration efforts and future solution
upgrades are more complicated.
But a combination of best-of-breed solutions also has its benefits and is appropriate
in certain cases. One of the primary benefits of this approach is the availability of the
most advanced functionality for each process. Another situation where this makes
sense is for organizations that have already invested in certain AP automation
technologies (front-end imaging, electronic payments or workflow, for example).
Such operations will be better off by incrementally adding the missing solution
functionality, instead of replacing what they already have with a completely new end-
to-end solution. Or companies that prefer to use the functionality offered by their ERP
solution for certain parts of the invoice receipt-to-pay cycle and rely on best-of-breed
applications for other portions may find this option appealing.

What’s the Right Answer?
Each of the options outlined above has its advantages, disadvantages and
associated costs. It would be narrow-minded to believe in the existence of a silver
bullet to the questions around type of solution. The solution of choice depends
entirely on the individual organization’s requirements. However, two factors are
critical when deciding on a solution, financial stability of the vendor and the total cost
of ownership. The total cost of ownership includes implementation and integration
costs, functionality fit, ease of use and the ability to adapt to a constantly evolving
business landscape.


23

Electronic
Invoice Evaluating the Vendors
Management Selecting the right eInvoicing vendor can be tricky. It is critical to look at what various
technology vendors offer and how exactly each solution’s functionality lines up with
Vendor Evaluation specific business needs. Below are some questions that can help organizations find
the eInvoicing solution provider whose offerings best suit their needs.

Company and Product Reputation
In addition to learning how long a company has been in business, it is helpful to know
whether eInvoicing is a core offering for the company and to understand the growth
plans and future vision of the service provider.
WHAT TO ASK...
• How long the company has been in business? Since when has it been
offering eInvoicing solutions?
• What percentage of its business/revenue comes from these solutions?
• How is it funded; if it is a public company, look at the prospectus?
• How many customers it has and who they are?
• How does it plan to grow and if there are any mergers or acquisitions on the
horizon?
• How it will manage growth and the resulting increased customer demand on
its systems?

Performance and Value
The vendor must be able to deliver on its promises regarding systems, scalability,
security, service, and support.
WHAT TO ASK...

• What security measures are in place to protect the integrity of client data?
• Where will client data be stored and who has access to this?
• What training and ongoing support are provided as part of the solution?
• Does the vendor promise an ROI?

Solution Delivery Model
Since eInvoicing providers have different delivery models for their solution, it is
important to look at exactly how the solution is delivered and how well it meets each
company’s needs.
WHAT TO ASK....
• Does the vendor offer the solution as licensed software or a SaaS model or
a combination of both?
• What are the different modules of functionality available?
• Does the vendor offer any configuration and customization of the solution, as
needed?
• How does the solution integrate with existing ERP/accounting applications?


24

Electronic Solution Functionality
Invoice It is important to understand the specific capabilities that will be delivered as part of
Management each module that will be implemented.
WHAT TO ASK....
Vendor Evaluation
• Is a supplier network part of the solution? Is it a shared supplier network?
How many suppliers are enrolled on the network for eInvoicing and for
dynamic discounting?
• What value added services and best practices does the vendor provide
for supplier recruitment and enrollment? What are the vendor strengths in
onboarding international suppliers?
• What are the different forms of electronic invoicing supported? What are the
different validation criteria that can be configured to check invoices at the
time of submission?
• For suppliers that send paper invoices, does the solution provide outsourcing
services for scanning and data extraction?
• How robust is the workflow functionality? Can it support the processing of
both PO and non-PO based invoices?
• Does the solution deliver dynamic discounting capabilities? Does it support
both recurring and one-off discounts?
• Is the solution flexible to support both a buyer-funded model and a third
party-financing model?
• What working capital management functionality is available as part of the
solution?
• What reporting and analysis capabilities come bundled with the solution?
Does it offer any executive dashboards?

Implementation and Pricing
How long it will take for the solution to be implemented and the pricing model are
critical factors in evaluating vendors.
WHAT TO ASK....
• What are the typical steps in the implementation process? Can the
implementation be completed in phases?
• How long is the average implementation? What are the main factors that
define the length of the implementation process?
• What is the pricing model? What are the different price components a client
would have to pay?


25

Electronic
Invoice Conclusion
Management The accounts payable automation landscape, particularly the electronic invoicing
market, is constantly evolving. This is validated by the fact that electronic invoicing
Conclusion emerged as the top financial automation goal for 2010 in PayStream’s surveys.
PayStream analysts believe that the following factors will shape the evolution of this
marketplace, and organizations contemplating an invoice automation solution will
need to take them into account:

Convergence of electronic invoicing and front-end imaging. Electronic invoicing
solutions were explicitly designed to facilitate external buyer-supplier interactions,
while imaging & workflow automation (IWA) solutions evolved to meet organizations’
internal needs around invoice receipt and management. Over the last three years,
we have seen a convergence in this market with both types of providers partnering
or developing functionality to offer comprehensive solutions covering both paper
and electronic invoices and incorporating better options for invoice receipt, approval
processing, and discrepancy resolution.

Organizations will seek ‘straight-through-processing’. As automation moves to
the front-end of the AP process, organizations will seek to leverage straight-through
processing, so that AP staff and approvers can focus on more value-added tasks
than reviewing invoices. Demand will increase for solutions that facilitate this by
delivering strong functionality around automated invoice matching and automatic
approval of “clean” invoices as well as strong functionality around approval workflow
to manage exceptions and dispute resolution in a collaborative manner.

Impact of AP automation on working capital management. Until recently,
automation efforts in AP were focused on the operational benefits of technology.
However, all this is changing. Increasingly, savvy finance managers are considering
the strategic impact of AP automation on the financial supply chain and the working
capital improvements it can deliver. Innovative solutions are emerging to meet
organizations’ strategic objectives by offering solutions, which unlock significant value
from the financial supply chain through advanced features like vendor self-service,
supplier on-boarding and dynamic settlement.

Multiple solution models will co-exist. There is not a single model for an AP
automation solution. Solutions are available in software form, as well as via SaaS
models. Likewise, some vendors emphasize a modular “mix and match” approach
while others concentrate on providing a set solution. There is also tremendous
variability in terms of solution focus. Some vendors focus tightly on specific aspects
of the invoice receipt-to-pay cycle, while others strive to provide AP automation
functionality as part of a larger procure-to-pay offering. Industry consolidation
notwithstanding, this diversity will continue.

Impact of regulatory compliance on interest in automation. As organizations are
beginning to realize that regulatory compliance is an ongoing rigid process and that
everything they do going forward will be subject to close scrutiny, they are turning
to technology and automation to alleviate some of the pain. We believe technology
solutions that can facilitate the compliance process and reduce its cost, by providing
comprehensive audit trials and simplifying the auditing of internal controls, will gain
popularity.


26

Electronic
Invoice About PayStream Advisors, Inc.
Management
PayStream Advisors is a technology research and consulting firm that improves
the way companies plan, evaluate, and select emerging technologies to achieve
PayStream Advisors their business objectives. PayStream Advisors assists clients in sorting through the
growing complexities of IT applications related to business process automation with
the goal of making objective, analytical, and actionable recommendations. Wherever
business process automation technology is an issue, PayStream Advisors is there to
help. For more information, call (704) 523-7357 or visit us on the Web at
www.paystreamadvisors.com.

About the Analyst
As Research Director, Sush Koka manages PayStream Advisors’ overall technology
research effort. She writes research reports, leads client briefings, and participates
in consulting engagements in the purchase-to-pay and order-to-cash functional
areas. Her deep experience both as a market analyst and a consultant enables her
to analyze trends in financial services automation, assess feasibility of products
and drive research activities. Her areas of focus include invoice and payment
management, travel and expense management and business process automation.
She has extensively researched and written reports in the above areas and her
work has also been published in trade magazines such as Supply & Demand Chain
Executive and DOCUMENT magazine.

Online Resources Advisory Services
• Free Reports • Assess your current state
• Software Directory • Develop your business case
• Technology Solution Profiles • Create and manage your RFP
• End-User Case Studies • Review and select the perfect vendor

Search for Accounts Payable Solutions!
www.paystreamadvisors.com/solutions
SEARCH BY FUNCTION:
• Free, Online Service.
Business Process Management
Business Process Outsourcing
• It’s built upon
Dynamic Payables Discounting
PayStream’s proven,
E-Procurement in-depth research.
Supply Chain Management
Enterprise Content Management • Receive a CUSTOM
Imaging/Workflow/Document Mgmt. Buyer’s Guide packed with
Purchasing Card (P-Card) industry trends, selection
Recovery Audit Services/Solutions tips, and in-depth solution
Supplier Electronic Payments profiles of qualified
Contract Management/Payment Review vendors.


27

PayStream advisors: Get rid of paper from the source - sep2010

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