Exploring AP best practices trends for improved processing

“Exploring AP best practices & trends for improved processing in Oracle E-Business Suite” December 15, 2011

Agenda § § The challenges of efficiently processing invoices Invoice automation benefits Maturity of AP automation Automation best practice Mike Ventrella Director of National Oracle Sales recommendations and § End-user experience with Cliff Autin Manager of Oracle Consulting AP automation Services Read. Soft North America

Purchase to Pay and Order to Cash Purchase to Pay: Invoice processing Buyer areas Various departments Demand, need or requirement Create a requisition Supplier areas SALES PURCHASING Process incoming PO Create purchase order Purchase order Create a sales order Order confirmation LOGISTICS EXECUTION Deliver goods or services Delivery note ACCOUNTS RECEIVABLES Process incoming delivery notes ACCOUNTS PAYABLE Invoice Create outgoing invoice (bill) Process RA and find open items Clear open items Process incoming confirmation Remittance advice Payment Process incoming invoices Create remittance advice Pay invoice

Top pain points for AP processes Source: Pay. Stream Advisors Financial Automation Survey http: //www. paystreamadvisors. com/

What are the business issues we see? • Repetitive manual data entry – Line item matching – Low quality of data caused by human error • Cost control / high AP operational costs • Inefficient invoice storage & retrieval • Lost & fraudulent invoices, duplicates • Penalty for late payments • Poor supplier service levels • Challenges with financial reporting • Cash management • Corporate compliance / Sarbanes-Oxley AP Management

There is a lot you can do • • Manual keying: Eliminate Verification & validation: Reduce costs dramatically Registration & allocation: Reduce costs Personal copies: Eliminate Archiving: Reduce costs dramatically Late payment penalties: Eliminate Write-offs: Reduce Early pay discounts: Get them

Better control and security • Fast and simple electronic distribution • Full control of your document flow • Electronic account coding & payment authorization • Easily accessible information • High security • SOX compliance support • 40 -60% cost savings

Quantifying the benefits of approval workflow

research shows… – The use of electronic integration, messaging, reconciliation & reporting solutions in AP reduced transaction cost between 63% and 67%. – Most companies have moved to a shared services model to improve policy and process compliance. Yet, only 3% of AP processes reported having a high-level of automation. – 79% of AP managers see "automation" as the key enabler to future success. – The invoice reconciliation and payment solution framework addresses invoice receipt, approvals, reconciliation and payment considerations for solution selection. (From the Electronic Invoicing Solution Selection Report)

Automation Adoption Rates Climbing “Almost 80 percent of the executives surveyed said they had either already launched an invoice automation initiative or planned to within a year. ” - Invoice Automation Adoption Survey Report

Maturity of Processing Automation Accounts Payable Automation Maturity Model Strategic Efficiencies (Exponential ROI) Tactical Improvements (Immediate/Tactical ROI) • Key Invoice from • Invoice Scanning • Manual Indexing • Manual Approval Processing Image • Online Manual PO Matching • Automated Approval Processing • Activity Reporting • Automated Matching & Exception Handling • Conversion of Invoices from POs • Dispute Resolution Management • Enable Automation Across Inbound Channels for Maximum Efficiency & Savings (mailed, faxed, electronic, e mailed, P-Cards, etc…) • Supplier Self Service • Supplier On Boarding • Dynamic Discount Management • Integrated Purchase-to-Pay • Business Intelligence/Analytics Optimized Discount Capture & Improved Use of Working Capital

Best practice recommendations for streamlining AP § § § § Centralize invoice receipt Establish imaging early in the AP process Capture data from the images Leverage existing Oracle infrastructure and business rules Auto matching capability PO-based invoices Improve cycle times with integrated workflow/account coding Take advantage of early pay discounts Centralize visibility, control and reporting to manage and improve processes

Upgrading to EBS R 12 § EBS R 12 is the bridge to Fusion Applications. § If you are considering or in the process of an R 12 upgrade, be sure any vendor applications are validated through Oracle. § While still on EBS 11 i, consider adopting an R 12 compatible AP solution. § R 12 upgrade in your near future? Consider implementing AP automation simultaneously.

Oracle integration Business Needs Oracle Integration AP Best Practice Solution • Oracle validation for PO, supplier, site, duplicate invoice, contact person etc. • Use of E-Business Suite components such as legal entity, GL code combinations, users, employees, responsibilities, hierarchies, AP/PO options, Oracle standard workflow engine, profile options etc. More accurate information, using existing Oracle set-up: § Automatically assigns organization code § Automatically assigns supplier/site § Prevents duplicate invoices § Checks for valid PO § Uses existing COA, code combination, Hierarchies etc. § Uses Oracle standard workflow engine § Uses standard Oracle validation rules & hold codes

Single source vendor Business Needs One Stop Shop AP Best Practice Solution • Single OCR to Oracle solution for automated AP processing • Support provided for all areas of the solution § Adopt document recognition and Oracle workflow components from the same company: § Call one vendor for support § Same solution across the world, software, implementation & support § Upgrades guaranteed to work § No risk with multiple vendors § Product roadmap known

Invoice Automation Experiences World leader in fluid handling systems and compone Pain Points: Goals: – – Too much time wasted keying invoices Too many lost discounts Couldn’t locate invoices Low visibility – Increase processing speeds – Capture more discounts – Gain visibility & control over invoices in the AP process

Invoice Automation Experiences Implementation – Customizations around outdated, preexisting legacy system prolonged implementation – Dropped customizations in the end since the system was going away in the future Results: – Advice: Do your due diligence of what you really want & hope for beforehand – Initial goals set for two years were met within the first six months – More efficient use of people resources within the first four months – Average invoice processing time dropped from 24 days to 9 – 70% of invoices are not touched by staff – Faster and improved visibility over existing liabilities

Invoice Automation Experiences “We have really partnered more with buyers & planners in purchasing. ” “Another thing is that all the controllers are able to go in and look at the expense reports & invoices. At the end of the month they’re no longer calling us, and it doesn’t take any of AP ‘s time. ” Jewals Ubl, AP Manager, Graco Inc.

What can you LEARN from Graco’s experience? • AP process automation can pay big benefits with… – – – Thoughtful preparation Identifying needs and goals Assigning & empowering staff resources Consider implementation phases & schedules Be prepared to adapt and adjust, but… Always keep the scope of each phase as a touchpoint 19

Additional Automation Achievements • Vodafone – Processed 50% more invoices in 2 nd month after automating • Kellogg’s – 50% of PO-based invoices go from Scan to Post untouched • Green Mountain Power – Enabled to take early payment discounts, greatly reduced vendor calls, & majority of top vendors are now enabled to send PDFs instead of paper • Alcan – Significant reduction in manual processing, data entry, filing and retrieval; majority of PO-based invoices automated • Sheridan – 3 -month installation, including testing and go-live; able to negotiate significant discounts; able to process more invoices with fewer people; able to report in real-time on vendor spend

When Considering AP Automation… • Know the difference between “it can” and “it does” – Questions & dialogue with potential vendors – Was it designed to work in your environment? • Know yourself – Are you hands-on ready or do you expect turn key? – How involved in detail planning & process implementation can you/do you want to be? • Start with an assessment – Don’t underestimate the culture fit – Know where you are today and where you want to go 21

www. readsoft. com 888 -READSOF(T) mike. ventrella@readsoft. com cliff. autin@readsoft. com