Tag Archives: procurement automation

One Step Closer To Invoice Automation…

How can smart coding functionality take invoice automation one step further…?

Depending on your organisation, the maturity of your invoice processing is likely varied even across your own internal workflows for different invoice types.

And like many others in your shoes, your goal is to get those things as automated as possible – regardless of invoice type – and shoot for 100 per cent invoice automation. The good news is full invoice automation is an attainable goal with innovation available in e-invoicing solutions today like smart coding.

What is smart coding?

Smart coding helps customers further automate their invoice processing of non-PO invoices, going a step further towards touchless invoice handling. With smart coding, invoices that are not automated by purchase order matching, payment plans (schedule, budget or self-billing), or automatic coding templates can now be automatically coded with minimal human interaction.

Why should you care about smart coding?

Smart coding speeds up invoice processing and improves productivity.

Traditionally, non-PO invoices are automated with business rules that are very laborious to manage. Finding a correct cost allocation is typically a challenging task for employees who are not familiar with bookkeeping rules, especially when there is no purchase order to copy information from. It requires the AP clerk to spend a lot of focus on this type of invoices – researching the origination of the invoice, reaching out to others in the business to ask questions and making an educated guess as to the best place to code the invoice. All of this takes time and often delays payment of non-PO invoices.

Smart coding automates those manual steps, so employees can easily code an invoice with a click of a button to automate more of the process. The solution leverages big data to analyse historical transactions, ultimately providing a highly reliable recommendation to the user that can also be complemented with business rules. Not only does this simplify the process for the user and save time in processing the invoice, it also reduces the need for the AP department to rectify erroneous coding lines at month-end.

How does full invoice automation prepare me for the future?

Everyone is talking about machine learning and AI – and invoice automation and e-procurement are certainly areas of application for these emerging technologies. But there a couple of things you must do today to ensure you’re ready when those technologies become the new norm. Use smart coding to help you:

  1. Automate as much as possible: Machine learning and AI are layered over systems, so you want to be as streamlined as possible in preparation for those applications. To do this, set your goals on a high level of automation. And this doesn’t just mean adding technology over clunky processes. As you mature your systems and strategy, make sure you’re re-engineering processes where necessary so workflows are optimized too.
  2. Get financial data: One major benefit of full automation is the central collection of all your financial data in one solution. Data is what feeds technologies of the future. Machine learning and AI are not effective in purchase to pay without a complete, ever increasing source of financial data. If you want to embrace machine learning applications, capture every possible piece of financial data in your purchase-to-pay system today.

Basware has the most advanced invoice automation solution in the world and we’re constantly improving it. Based on 30+ years in the industry, we’re rolling out features and functionality that continue to deliver the ultimate efficiency benefit to customers. With the largest open network, we have the unique ability to capture the most data across customers and combine that with third party data to deliver what customers need now and in the future.

10 Questions to Ask in a Purchase-to-Pay Demo

$1 million is wasted every 20 seconds collectively by organisations around the globe. So, here are some areas to dig into and questions to ask during a purchase-to-pay demo. 

$1 million is wasted every 20 seconds collectively by organisations around the globe.

Yes; you read that correctly – organisations are losing money to the tune of $1 million every 20 seconds due to poor project management practices, according to a recent survey from Project Management Institute (PMI).

This same survey also reported that 52 per cent of projects in the last year experienced scope creep, with one of the main reasons being erroneous requirements gathering.

Seeing these stats and given my profession, I immediately thought of purchase-to-pay projects and how procurement and finance professionals can ensure they have what they need when evaluating purchase-to-pay solutions against their requirements document.

With over 7 years in the business, I’ve seen prospective customers led astray by solution providers making them unsure of exactly what they’re looking for in terms of functionality, and more importantly what they need to solve their business challenges.

Sometimes cleverly crafted demos can gloss over important nuances or mask inadequacies, which can cause major problems later during implementation – and the dreaded scope creep. So, here are some areas that I recommend digging into and questions to ask during a purchase-to-pay demo.

10 questions to ask in a purchase-to-pay demo:

  1. Does the e-procurement solution do line item requisition approval workflow? 

That’s a mouthful, so let’s break it down. Imagine you have a user that wants to buy three items requiring three separate approvers in the e-procurement solution. This person fills the virtual shopping cart with these items, just like on Amazon.

But unlike Amazon, these items need to be approved and POs issued before ordering happens. And because you want your users to get the items they need quickly, you want to make sure the e-procurement solution automatically issues POs and places orders as each individual request is approved without waiting for the other approvals – this is line item requisition approval workflow. The alternative is a linear approval workflow where each step is dependent on the previous step, meaning all the POs are held up until that approval workflow is complete.

This means all POs are reliant on the final approval in the linear chain and the entire process slows way down. Ultimately what happens in the latter scenario is your users get fed up with the slowness of the system and start purchasing outside the system – often referred to as maverick spending – so they can get what they need faster and more easily.

  1. Will I be able to create complex workflows? 

Related to the first question is the ability to create complex approval workflows. While the goal should always be to streamline approval processes, certain business scenarios and regulations call for more complexity, and you should not forgo that requirement because the system isn’t sophisticated enough to accommodate. Don’t let the solution provider try to oversimplify matters or sway you with a sharp user interface – what you need is flexibility. The tool should give you the flexibility to create comprehensive workflows that address all your needs – not create multiple work-arounds that you must maintain. You also should be able to configure the workflow once and leave it mostly intact – which is better from a compliance standpoint – instead of having to constantly adjust to meet business needs.

  1. Will I get budget visibility during the requisition or approval process? 

This is a biggie. Perhaps the greatest advantage of automating your procurement and accounts payable (AP) processes is the visibility you get across the entire buying process. But here’s the key – you need that visibility proactively, not reactively with month-end reports. A proactive approach gives managers the visibility to see how purchase requests impact budgets as the requests are being made in real-time, so they can make informed decisions as to whether to approve or deny the requests based on their budget amounts. If managers can only see how purchases impacted budgets at month-end after the money has been spent and budgets used up, that’s a reactive approach and it’s not good enough.

  1. Is the sourcing tool easy to use?

Most purchase-to-pay solutions now offer sourcing as part of the full suite. In terms of value, this helps streamline more of Procurement’s job so they can focus on suppliers and other strategic procurement initiatives. If you’re adding on this functionality to make someone’s day-to-day tasks easier, it should be user-friendly and not more cumbersome than manual sourcing activities.

  1. Can the system perform partial returns?

Say you get a shipment of 10 laptops and one is broken. You want to be able to acknowledge receipt of ten laptops in the system and note the return of the one broken computer. And, you want to be able to track that broken item through the return process. Returns and tracking returns should not be an all-or-nothing process.

  1. Can the invoice automation solution truly process ALL invoice formats?

Remember those cleverly crafted demoes and nuances I was talking about earlier – invoice automation is a landmine for hidden inadequacies. I often hear of solution providers try to mask solution shortcomings by harping on getting more PO-backed invoices, when in reality driving a higher PO percentage is not going to solve your problems. So, let’s be clear about a few things here: you will always have a certain percentage of non-PO invoices and paper/email invoices are not going away just yet, but there’s no reason you can’t automate the processing of those invoice types anyway.

Therefore, you should choose a solution that can truly ingest and process any invoice type automatically (paper, electronic, EDI/XML, PDF, etc. – covering direct, indirect, PO, Non-PO spending) and convert these documents into true e-invoices (i.e. – invoices with structured data formatting for machine reading without human intervention). Your suppliers don’t need to change how they operate today – if they send paper invoices, they can continue doing that – but you can still get an electronic invoice. Automation of this process is key. Leveraging automation should eliminate the need for your AP staff to key invoices into the solution. It should also automate approvals, handle exceptions like extra costs, create all book-keeping information automatically and map the spend accurately to correct categories, regardless of invoice quality and with zero change management for suppliers. This means there is no disruption in the supply chain and you can get 100 per cent of your supplier on-board.

This was a lengthy section of highlighting nuances, but it’s key to understand why this is so important. The point of achieving this level of automation and sophistication in your accounts payable department is to capture 100% of your enterprise spending data by automating all invoices – not just some – so ultimately you get 100% spend visibility.

  1. Can the invoice automation solution do split coding on invoices at the line and header level?

Let’s say you have a trade show coming up. The event is an investment for three departments: marketing, sales and pre-sales. When you’re coding invoices for the event, you want to have the capability to take the sum amount and split it between the three departments. If you can only split at the line level, you will have to split-code each line three ways and that gets to be time-consuming and inefficient.

  1. Does the analytics solution offer out-of-the-box reporting and customisable reports?

You don’t want to reach out to a customer service representative every time you want to see your own financial data in a certain way – that’s time-consuming, annoying and can be costly depending on your service agreement. Make sure the analytics tool offers configurable dashboards and reports that have standard views to provide a starting point for your analysis, allowing you to drill into the details when necessary, and also gives you the ability to easily create, configure and export your data in the format you need.

Analytics should make your life easier – not more complex.

  1. How are upgrades handled?

The advantages of using Software-as-a-Service (SaaS) technology are plenty, but to reap those benefits you have to be receiving upgrades regularly. Ideally, you want to be on a multi-tenant SaaS environment (if you want the real techy stuff, ask the head of your IT department – this person will know exactly what that means). But in short, this enables every customer in the environment to upgrade at the same time to the newest version.

Other environments stagger upgrades for customers, meaning that not everyone has access to the latest functionality and bug fixes (including features that ensure compliance) and worse, they fall behind on their upgrades. This begins to pose real problems due to fragmented support across various versions, some customers opting to skip upgrades and falling further behind and challenges maintaining the solution.

  1. What happens to custom fields during upgrades?

The custom fields you create and the data associated with those fields should remain intact when upgrades occur. You spend a lot of time and energy defining custom fields during implementation; there is no reason your solution administrator should have to go back in and do re-work every time an upgrade happens. This is a waste of time and you risk loss of data capture if those fields are not re-activated in a timely manner.

Let’s Get Internet of Things (IoT) Ready for Procurement!

What can the the Internet of Things (IoT) do for you and your procurement team? 

IoT is a big buzzword these days. From industry experts to academia to specialised thought leaders, everyone is talking about how IoT as a technology has the potential to disrupt not only the day-to-day workings of our companies, but also the lives of the individual.

Panchenko Vladimir/Shutterstock.com

The Internet of Things: A History

Let’s go back a bit and see how it all began. In 1999, Kevin Ashton, a British technology pioneer and cofounder of the Auto-ID Center at MIT, proposed the Internet of Things (IoT). It refers to gadgets and applications with built-in wireless connectivity that can harness great amounts of data from their surroundings and help monitor, control and organise things better. From home appliances to fitness gadgets to technology helping industries automate their processes, IoT can do it all!

And two decades later, IoT is the live wire. Smart homes, smart gadgets and smart cars- IoT has already given us a glimpse how is future going to be. But what does it hold for procurement?

Procurement and the Internet of Things

For Procurement particularly, IoT works as an enabler, empowering companies to gain visibility into their spend analysis and keep a vigilant eye on their consumers consumption pattern. The supply chain data generated is monitored continuously and analysed for behavioral sets to make better-informed decisions. Having a proactive overview helps companies to estimate the demand and supply statistics, as they are aware of the needs and usage pattern of their consumers. This empowers them to negotiate with supplier side in a more streamlined manner as they know in advance what material and what quality and quantity is required. All these factors combined contributes to cost savings and brings value for the procurement function.

Another area where Procurement can benefit significantly is in the tracking and monitoring of the movement of goods within supply chains. Deploying the right set of sensors, which are tracked remotely with an IoT-enabled device can identify equipment faults, stoppages and leakages in real time allowing service and maintenance teams to respond to issues more promptly and accurately. This also ensures diagnostic data is obtained in order to d

eploy the right set of technicians.

These factors directly impact the maintenance costs incurred by a company, contributing positively to the overall cost savings.

There is more that IoT can bring to the table for Procurement function. But to realise the utmost advantages, companies must ensure that they are investing in the right kind of technology, processes and people. They need to invest in setting up the infrastructure that will unleash the possibilities IoT has to offer. In short they need to be ‘IoT ready’.

If you are curious to learn more about how IoT will impact procurement, do join our upcoming webinar where our expert group of panelists will examine the practical impact of IoT on how our supply chains will work and what you will need to do to become IoT ready.

Webinar Speakers

  • Jon Hansen – Editor and Lead writer at Procurement Insights
  • Robert Handfield – Executive Director of the Supply Chain Resource Cooperative
  • Mark Hubbard – Managing Director at Smart Brown Dog Ltd

Webinar on ‘Getting Internet of Things (IoT) Ready for Procurement’ is on January 18, 2018 | Thursday. Register here for free to reserve your seat.

Automation: Who Says You Can’t Manage What You Can’t See?

If your business is engaged in international commerce, you’re probably struggling to toe the line with supplier risk management. Automation, alerts, and third-party data are your best defence.

Managing supply chain risk is no walk in the park. Exogenous events like the recent terrorist attacks in Barcelona have drawn attention to the EU’s rules to combat terrorism financing through stricter anti-money laundering (AML) regulations. These rules impact many companies that are increasingly added to the law’s scope: possibly yours.

Meanwhile, modern slavery violations can surprise even the most astute contract or supply chain managers who may have unknowingly relied on invalid or falsified information. In the U.K., The Modern Slavery Act 2015 includes a Transparency in Supply Chains clause, which requires companies operating in the U.K. to address modern slavery in their supply chains. If you’re at a big company, you’re probably on the hook to comply.

Once you add in the more common types of risk, such as the financial or credit health of your suppliers, changing markets, and natural disasters, the sense of how challenging it is to manage them all—in the age of digital disruption with fast-paced change and volatility—can quickly become overwhelming.

Fortunately, there is technology and automation to help you maintain control, gain visibility into your supply chain, and mitigate much of these risks. The right technology can help you proactively steer your organization clear of minefields that can damage everything from reputation to sales. And it’s only getting better.

 Start with real-time monitoring and alerts

The first step is to identify the most likely disruptions to the supply chain, like a natural disaster or a work stoppage at a supplier’s supplier. One way to deal with this type of risk is with real-time monitoring. Real-time monitoring of your suppliers means that you can receive an alert whenever there is a potential for disruption. Such alerts can help you find an alternative source of supply, maintain production, and avoid missed deliveries or even a plant shutdown.

Real-time alerts should be an extension of an overall solution consisting of a platform and business network. This is the ideal foundation to set up, monitor, and manage a portfolio of suppliers to ensure that all essential documentation about labor practices, certifications, certificates of insurance, and so on, is in place before you start doing business.

Integrate third-party data sources

Documentation and data about your suppliers can come from many sources, not just what you gather during an onboarding, contracting, or surveying exercise. There are plenty of third-party sources that have standalone solutions and open APIs or integrations into supplier management platforms that let you address various dimensions of supplier risk and to set up corresponding alerts.

If your company is engaged in trade and has a 10,000-euro or more money transfer in any way, it will need to comply with the EU 4th AML Directive. In addition to digitally onboarding your supplier base, you may want to automate KYC / KYB (know-your-customer, /-business), AML (anti-money-laundering), and EDD (enhanced due diligence) requirements. These steps will help you comply with the directive

One provider that is using cutting edge technology like distributed ledgers is Austria-based Kompany. Their counterparty verification data allows users to streamline the supplier verification process at the point of onboarding (and continually) with up-to-the-minute alerts on any material changes to supplier vitals. Their information comes directly from the commercial registers. Kompany even includes PEP (politically exposed person) screening and sanction lists.

Who says you can’t manage what you can’t see?

Other popular sources of company and industry data include Moody’s (credit ratings), EcoVadis (sustainability scorecards and ratings), riskmethods (transparency into risk exposures in 1-n tier supply chains), and Made in a Free World (visibility into modern slavery), to name a few. These data sources can help you continuously monitor for risks and evaluate your risk portfolio during the sourcing process.

Through technology and regulatory technology systems like those described above, you can design an automated, customized, and intelligent risk management strategy. In turn, this can boost trust between you and your suppliers and you can plan more confidently in an environment full of uncertainty.

What Procurement Needs to Know About Robotic Process Automation

Just what is Robotic Process Automation? And what should procurement know about it before putting anything in place?

Robotic Process Automation (RPA) vendors emphasise their product’s capacity to replace human operators, using phrases like “digital workforce.” In simple terms, RPA is a software application that runs on an end user’s computer, laptop or other device, emulating tasks executed by human operators.

Its purpose is to integrate or automate the execution of repetitive, rule-based tasks or activities. RPA does not require development of code, nor does it necessitate direct access to the code or database of the applications.

Current Robotic Process Automation Use

Most current RPA implementations are in industry-specific processes such as claims processing in insurance, and risk management in financial services. These processes, and their associated tasks, are usually high-volume, structured, repetitive and implemented on old technology.

Normally, the processes are extremely stable. There is no technology migration or modernisation roadmap involved, and IT-led integration would be difficult and expensive.

At present, the leading non-industry-specific RPA application is the financial close and consolidation process. According to our purchase-to-pay research, 23 per cent of companies are at the earliest stages of adoption, i.e., either in a pilot or with the technology partially rolled out (Fig. 1).

Robotic Process Automation
Fig. 1 – Robotic Process Automation Trends in Purchase-to-Pay

The remaining 77 per cent have no immediate plans for Robotic Process Automation adoption. Despite the low take-up level today, 45 per cent of purchase-to-pay organisations believe RPA will be one of the areas with the greatest impact on the way their work gets done in the next decade.

The Best Processes for RPA

It is not the type of business process that makes for a good candidate for RPA, but rather the characteristics of the process, such as the need for data extraction, enrichment and validation.

Activities requiring integration of multiple screens, as well as self-service inquiry resolution, are also ripe for RPA. The key is that RPA is best deployed in a stable environment where no changes to the systems are on the horizon.

Other possible choices include processes requiring multiple software applications to execute different, but repeatable, activities and tasks.

RPA Pricing Trends

The pricing model for RPA is still evolving. Today, vendors are pricing RPA based on the cost of the full time equivalent (FTE) staff member it is replacing. For example, an RPA vendor may quote a price per robot that is one-third the cost of an offshore resource doing the work.

Onshore FTE pricing is being quoted closer to one-ninth, or 11 per cent, of the cost. This pricing model, developed to compare the cost of outsourcing a process versus automating it with RPA, essentially positions Robotic Process Automation as a service, not a software solution.

In our view, this model is inconsistent with industry standards governing the way software is typically priced. Therefore, we encourage buyers to seek an alternative gainsharing model where possible. This will both mitigate the risks of early adoption, and provide a strong incentive to the supplier to deliver results.

Patrick Connaughton is the Senior Research Director, Procurement Executive Advisory Programme at the Hackett Group. He has published groundbreaking research in areas like spend analysis, contract life cycle management, supplier risk assessments and services procurement. You can contact him via email or on Procurious.

You can also learn more about Hackett’s Procurement Executive Advisory Program here.