Purchase to Pay can sometimes be a hard sell. In a highly siloed organization where purchasing and finance see themselves as different species, getting buy in to an end to end holistic approach to purchasing is virtually impossible. But without the holistic approach some serious stuff goes wrong. Below are to top 5 problems that occur when purchase to pay best practice is ignored. continue reading…

It is said that only half of advertising actually works, and you can never be sure which half. Better safe than sorry I guess. You don’t want to cut your advertising budget in half if you lose the half that works. But what about the other way round? What if you knew that 100% of your budget worked – but you chose to only spend half of it? That doesn’t make sense does it? So why then do you do it?

“Who? Me?” – Yes you! – Well perhaps you if you have anything to do with Purchase to Pay in your organization. continue reading…

The Wall Street Journal yesterday high lighted a very interesting trend that is emerging as the global economy considers how sustained the modest recovery is likely to be.  Like victims of some great natural disaster, peering through the rubble of what was once a thriving economy, some chief execs are, as the WSJ puts it, “ready to start spending the mountains of cash they have stockpiled over the past year, despite lingering worries ..”

Apparently, many companies, have hoarded cash as a cushion against continued economic turmoil. At the end of March, nonfinancial companies in the U.S. were sitting on $1.84 trillion in cash and other liquid assets, up 26% from a year earlier, the Federal Reserve reported. The question is, keep the cash stashed to hedge against further turmoil or, if not, what to spend it all on?

There are some obvious homes for all of this cash. Companies that may have been reluctant to court potential buyers for dear of not getting a good price may feel that now isa good time to reconsider and in some industries their could be some consolidation as cash rich companies could take advantage of their strong position.

Use dynamic discounting to apply excess cash to DPO to get a 30% plus return on capital

But for the cautious CFO,  there’s another alternative especially if they want to deal independently of their bank. And they might find an eager listening ear from their suppliers. Having lots of cash is great when times are uncertain but in 2010, when interest rates are virtually zero and the banks reluctant or unable to make working capital available, dynamic discounting offers a much more attractive proposition with a significantly greater return. In return for early payment, many suppliers will happily offer a discount and, depending on the details of the deal, it can deliver in excess of 30% return on capital.

Take a look at this video to see how it works.

Dolphin and Taulia today announce a strategic partnership to unveil a fully integrated solution that includes discount management, vendor portal and an accounts payable automation and optimization solution for the SAP environment. The SAP-certified solution enables corporations to reduce total spend, improve supplier relationships and optimize their Accounts Payable processes

Dolphin and Taulia today announce a strategic partnership to unveil a fully integrated solution that includes discount management, vendor portal and an accounts payable automation and optimization solution for the SAP environment.

Dolphin incorporated Taulia’s hosted vendor portal and dynamic discounting capabilities into Dolphin’s Process Tracking System for Accounts Payable platform. The result is a comprehensive solution that streamlines and optimizes the AP process, lowers total cost of invoice processing, and enables corporations to reduce total spend by taking advantage of early payment discounts.

Dolphin optimizes accounts payable processes for organizations using SAP solutions through its best-in-class capture technologies, process tracking and advanced analytics. Taulia’s Invoicement Suite adds an easy-to-use, SAP-integrated, web hosted (SaaS) vendor portal and immediate dynamic discounting capabilities. Suppliers can securely access the vendor portal to view invoice and payment status, download purchase orders and turn purchase orders into invoices. They also can opt for earlier payment of approved invoices against additional discounts.

The vendor portal is free for suppliers and delivers immediate ROI for corporate buyers, according to Brian Shannon, Principal for Business Process Management at Dolphin.

“Integrating Taulia’s suite into the Dolphin platform for AP optimization opens new opportunities to manage cash flow in the invoice-to-pay workflow,” Shannon noted. “Customers will benefit from easier vendor management through the vendor portal and position themselves to maximize the use of their capital through dynamic discounting.”

Taulia CEO and founder Bertram Meyer sees dynamic discounting as a new way for customers to “leverage AP automation and improve the overall business case.”

“The Taulia Invoicement Suite gives major corporations the agility they need to offer and take advantage of early payments – risk free and without additional effort. Significant savings result from the ability to capture a discount on all invoices,” Meyer said. “We’re pleased to partner with Dolphin, which has an extensive track record with major corporations and deep, SAP-focused expertise in financial process automation solutions.”

About Taulia

Taulia’s mission is to develop simple and straightforward solutions that help SAP customers fully realize the financial potential hidden within their supply chain. Taulia specializes in dynamic discounting and self-service vendor portals, which combined improve supplier relations and generate significant value for your AP department and company as a whole.

Headquartered in San Francisco, California, with a second office in Berlin, Germany, Taulia brings to the table a deep understanding of buyer-supplier processes and leading SAP expertise. As a certified SAP Partner, Taulia builds solutions that fully exploit your SAP system’s potential, rather than bypassing SAP and creating redundant functionality. For more information please visit www.taulia.com.

About Dolphin

Dolphin makes crucial business operations like accounts payable, accounts receivable, order management, and data management run better and smarter for organizations using SAP solutions. Focused on improving business performance through and Information Lifecycle Management , Dolphin produces the right solution for each customer, faster, through its unmatched experience in SAP technologies and its proven best practices, tools and add-on applications for SAP solutions. Dolphin solutions improve business and IT performance, lower total cost of ownership and deliver high return on investment.

The company was founded in 1995 and has offices in Philadelphia, PA and San Jose, CA. Dolphin solutions are implemented across North America and around the world. For more information, visit www.dolphin-corp.com

What gets measured gets managed. It’s a slightly tired truism but it’s very relevant to Purchase to Pay and, sadly, often overlooked.

Most P2P (Purchase to Pay) projects are justified as a means to reduce cost. They introduce efficient processes that allows  purchasing payment and accounting functions to operate with fewer people. They create more responsive and agile purchasing environments and utilize leading edge technology to create synergy with suppliers. It is relatively rare that  P2P program is initiated in order to increase visibility of spend and deliver spend analysis capability. On the contrary, it is lack of visibility of spend that make the business case for P2P difficult to develop. If you don’t know how much you spend, with whom or how often you buy stuff, this makes it difficult to quantify the benefits of implementing P2P – and it’s a difficult sell to suggest that you need P2P in order to create the visibility you need to understand the benefits. It requires a leap of faith for a CFO to buy in to this type of justification.

Spend Analysis

Visibility, and the tools to understand what you see and interpret it, is crucial and with the prospect of a double dip recession, there is no time for complacency. A business will not exceed if it doesn’t know it’s competition. It won’t succeed if it doesn’t understand the changing needs of its customers. It won’t succeed if it doesn’t know how much capital it requires and it certainly won’t succeed if it doesn’t know how much it spends, with whom – and if it fails to understand, manage and mitigate the supplier risks in a recessionary and liquidity constrained stage of the economic cycle, it might as well give up now.

In a recent post by Jason Busch in Spend Matters he puts it very succinctly:

Make sure your spend analysis and P2P (including invoice automation) capabilities are fully in place and ramped up as soon as possible. If you don’t have visibility (both historic and forecast) into what you’re spending and who you’re doing business with, it’s not only impossible to act nimbly and take action when it comes to identifying at-risk suppliers, it’s also challenging to develop accurate forecasts into your current and future payment obligations — which directly impacts broader margin, EPS and financial forecasts

Companies across the globe are missing out on the opportunity to make huge financial savings by introducing efficiencies in accounts payable. There’s nothing new in that. But it’s not just the opportunity to save cash by using P2P efficiencies that is being missed. Current practices are contributing to significant losses of cash! Money that should be in the balance sheet is hemorrhaging from the company coffers because of human error, data inaccuracy and  and lack of integration between systems and the scale of loss should be cause for concern.

Basware, one of the leaders in Purchase to Pay solutions, has just published the results of some research into AP performance – the results are shocking and every CFO should be well aware of it. Despite the clear opportunities to make significant costs saving through the implementation of P2P process models current practice falls way short of what we might call “Best Practice Purchase to Pay”

Purchase to Pay – The Uncomfortable Truth

Basware talked to Accounts Payable heads in the USA, UK and Europe as well as Australia. There are 2 particularly interesting findings: 1. 30% of companies report missed early payment discounts and 27% incurring penalties for late payment; 2. 39% of companies manually match invoices with POs and only 5% use a Purchase to Pay (P2P) product to perform automated matching.

Is it just me or are these two findings connected in some way? Like cause and effect maybe?

This is a great research report and provides very clear evidence that the implementation of P2P doesn’t just help to provide a more efficient infrastructure. It doesn’t just provide a platform on which highly profitable techniques like dynamic discounting can be launched. It is invaluable tool in controlling leakage of cash.

The supply chain world is changing. The disruption in Europe recently caused by the grounding of aircraft as a result of the volcano in Iceland; the soaring labor costs in Asia and the far East; the green and ethical agenda that has taken hold in much of the developed world. Doesn’t it tell you something?

The New York Times published an insightful article on the impact of rising labor costs in China on Apple’s supply chain and the iPhone in particular. In response to cost increases Foxconn Technology is reported to be moving hundreds of thousands of workers away from this country’s dominant electronics manufacturing center in Shenzhen toward lower-cost regions far west of here, even deep in China’s mountainous interior. It was Foxconn who, in response to complaints about working conditions that had driven some employees to suicide, increased pay by 20% (The Guardian). It begs the question, how sustainable is the global sourcing model? At what point will consumers say “No” to Apple – even for the sexiest gadget on the planet. When will the cost of risk mitigation tip the balance towards local supplies. And when will there be another Eyjafjallajökull?

Changes in consumer demand, cost and supply chain models that are becoming non-viable and supply risks inherent in globally dispersed supply chains means that it’s time for sourcing to change its mind set: “Think Global. Act Local”