Data & Documents Once you set the rules, all invoices must conform to them. Invoices that don’t are automatically flagged before they reach AP, and returned to suppliers for correction and re-submission. What results is a ‘smart’, largely touchless invoice process that drives productivity through the roof. Business networks also provide the ability to deliver electronic purchase orders, making it possible to generate an electronic invoice from the data on the PO and ensure that invoices comply with preferred suppliers and negotiated prices. While the ability to support compliance is not something that accountants typically pay close attention, it is essential to the business, as it ensures that negotiated savings actually reach the bottom line. What about management of non-PO invoices, which are often the most difficult and costly invoices to process? Here again, business networks can provide valuable support by allowing you to match the invoice against – or create an invoice from – a contract.
New approach to managing cash Beyond simplifying their day-to-day routine, business networks can also help accountants
assume a more strategic role by helping to manage cash better. To an organization that takes weeks to process an invoice, an early payment discount is the exception, not the rule. By streamlining invoice processing over a business network, however, organizations can capture virtually all available early payment discounts. In addition, business networks enable a new form of dynamic discounts, where pro-rated, sliding-scale discounts can be taken up to the due date of the invoice. Top performers following best practices are achieving $2 million to $3 million in early payment discounts for every $1 billion of spend, and providing suppliers with needed liquidity to help with their cash flow. Here’s how it works: In return for a discount, you accelerate payments for approved invoices to key suppliers. You earn an immediate – and better – return on your cash than you would by simply parking it in traditional, low-return liquidity vehicles. Your trading partners, in turn, can use the cash to fund their daily business needs and ensure they can meet your ongoing demands. To make this happen, accountants can be the catalysts, providing valuable
counsel to their treasury colleagues on the new opportunities to manage cash. Many treasurers are obsessed with delaying payments to preserve float, but today the earnings on cash balances are dismal. You can educate them, and others in the finance organization, on how early payment discounts can deliver double-digit cash returns, with no risk. How did we get from a discussion of risk and going green to cash management? Welcome to the new world of collaborative finance, where you and your suppliers can leverage the power of a business network to reduce risk, manage cash better, and give new meaning to the term ‘going green’. ABOUT THE AUTHOR: Chris Rauen is responsible for marketing programs at Ariba, Inc. that educate finance, procurement, supply chain, and other business professionals on the transformational potential of the Ariba Network and Ariba Financial solutions. Before joining Ariba, Chris spent more than 15 years in business-to-business marketing for technology innovators OpenVision, Documentum, and Xign Corporation. His published works have appeared in a variety of technology, trade, and business press, including Business Week, Fortune, Nation’s Business, Dow Jones Capital Markets Report, Enterprise Systems Journal, PC World, and Portable Office.
It’s not easy to stay on course. We can keep you in the right direction.
The technology and experience it takes to op mize your financial processes.
aocsolutions.com Financial Operations | SUMMER 2014 | www.financialoperations.ca
15