I literally gave an elevator speech on an AP Supplier Portal and Dynamic Discounting the other week. Really – I was walking with a colleague, talking about Supplier Portals, and he really didn’t understand dynamic discounting. As we got on the elevator, I said “let me try to explain it by floor 8” (there were several people on, so I figured I had a stop or two). So here’s what it is, elevator-style:

You’re familiar with “payment terms” right? Something like “2% 10 net30” – what that means is a vendor says “here’s an invoice for the widgets you bought – if you pay it in ten days, you may take a 2% discount. Otherwise, it’s due in 30 days.”

It’s quite common in business. Well, dynamic discounting with an AP Supplier Portal is the same thing, but turned around. You, the customer (or buyer of the goods and services), have a supplier portal that most of your vendors have joined. This means they can submit invoices to you electronically.. So one day, you say “gee, it would be great if we could generate some extra cash this month… it’d be great if someone gave us a fat discount on the stuff we bought”. Conversely, (but unknown to you), your supplier – at that very moment – is saying “goodness, cash is tight, I am financing my AR and waiting to get paid – I wish someone would pay us now instead if in 30 days.”

So you decide to test the waters and put out a message on your AP Vendor Portal that your company has committed $10 million that you’ll pay RIGHT NOW to vendors, in exchange for a 10% discount (or whatever number – I’m trying to make the math work in my little story, as we’re on floor 5, where the perfume lady thankfully just got off). The vendors who could use the cash influx jump on it, and there you go – they got some badly money right now, and you get your bottom-line savings of $1 million via the added discounts you generated through a dynamic discounting program.

That’s it – that’s the whole thing, in its simplest form. Oh, indeed there are more facets to discuss, and we’ll be happy to go over them with you anytime you wish (just give us a call at 480.607.4027) or send us an email at info@icgconsulting.com and we would be happy to discuss this further with you. But really, as far as an elevator pitch, I pretty well covered all the bases – all before floor 8.

I was in one the big box home improvement chains the other day, buying a pack of screws. I found the size I needed, and went up front to pay. Now, this isn’t the grocery story – there is no express checkout line. I saw that the three registers open all had a decent size line… guess I have to wait.

But wait – I saw something new. The store finally installed a few self-service checkout lines. HOO-RAY! I went over, scanned my one item, paid with my credit card, and was out the door. Elapsed time? 35 seconds. Sweet.

I thought about it on my way home – that self-service checkout was awesome. It was intuitive, easy, and it did the job I needed to do. Plus, the store didn’t have to pay a cashier to ring up my package of screws. Win / win.

That got me to thinking about self-service in general. I love helping myself when at all possible. Especially if it’s intuitive and straightforward. And I think most people are like that – self-service rocks, whether I’m ringing myself out, or I’m checking the status of an invoice. And that’s where the argument for portals comes in.

Of course, customer and supplier self-service is just one aspect of why a company should invest in a portal. There are other reasons, like better service, more streamlined operations, and savings of millions of dollars (and I’ll talk about them all here at one point), but for now, the package of screws I rang out myself is a great analogy. People simply LIKE self-service. If you offer it to them, they will use it. And if they use it instead of calling you, well, that saves you money, because you aren’t paying someone to be on the other end of the phone.

Imagine if you have 100,000 invoices a month to pay (that’s a lot, but stay with me here). You can bet that anywhere between 1 and 5% of them will generate a phone call or e-mail of some sort from a supplier. That’s 1,000-5,000 communications. Divided by 20 workdays for the month, that’s 50-250 a day. That’s probably anywhere from two to ten full time people just to handle invoice questions. The invoice inquiry self-service of a Vendor Portal eliminates that almost entirely. Those people can work on something else, or be reduced from payroll. Your Portal likely paid for itself JUST by this one aspect.

Neat, huh?

That wraps up my Portal thought today – maybe tomorrow, something will strike me that reminds of those millions of dollars I mentioned (one can only hope, right!)

Unfortunately, there is no clear cut answer to which is the better option. So much depends on what the application is; the nature of the technology it is replacing, i.e., is it fully paid for already?; cost; stability of the provider; and many other factors. It is however worth the exercise to make those evaluations when considering software purchases. In many instances you may find that an SaaS based solution will help you to implement much needed software in your operation, which may pay for itself through resulting cost savings, without having to fight for those valuable capital dollars which are in such short supply these days. On the flip side, buying an SaaS solution to replace technology that is bought and paid for and fundamentally doing the job it was intended to do may not make economic sense and could add an unnecessary level of risk.

SaaS solutions are here to stay and there is a place for them. But the simplistic claims on both side of this debate need to be fully vetted before you decide a direction to go for your solution needs.

One of the inhibiting factors to AP departments taking the next step has been budgets and visibility. Too often companies view their AP departments as necessary evils, a non-strategic cost centers. Managers and directors responsible for Accounts Payable can change this equation by bringing high-value solutions to senior financial management to change that perception. In a large distribution company, a very robust upgrade of AP department technology and processes was undertaken, funded, and paid for by the savings generated from a dynamic discounting program. Preceding this upgrade was the development of a long-term vision and a holistic approach to upgrading the department. Not only were all current processes and systems evaluated, but a vendor stratification exercise was undertaken to understand the make up of their vendor base. The information gathered through this process informed their decisions on technology and process change. For instance, they learned that while a large percentage of their spend came from those vendors who were taking advantage of EDI, a large volume of the transactions were still paper based because those vendors lacked the IT resources to participate in a formal EDI relationship. The company decided to implement an e invoicing initiative of those non-EDI vendors as part of their new approach. Today, over 3,000 invoices per week that used to come in via paper are now submitted electronically through a vendor portal.

One thing that all AP practitioners will agree on is that there is no “one size fits all” answer. The good news is if they step back, identify their goals, take a big picture view, and bring high-value solutions to the table, they can build a world-class organization that fits their company, industry, culture and vendor community. And do it far more efficiently than in years past.

Vendor or supplier portals have been around for a while and offer a variety of different functionality. Widespread adoption of these portal solutions had been limited to larger companies, and the functionality offered was missing key elements to addresses crucial and often industry specific needs. But that is changing. Gone are the days when the only options were closed end, fee based buying networks that offered limited functionality. Today, companies large and small can implement tailor made vendor portals that can offer basic functions like invoice inquiry and e Invoicing as well as more sophisticated functionality like collaborative dispute resolution and dynamic discounting. Vendor portals, like most portal solutions, take transactional activities that require significant manual processing on the buying companies end and transform those transactions into a supplier self-service model. And the best news of all is these solutions do not need to break the bank and can be implemented quickly either in-house or in a hosted or SaaS environment.

Other B to B portals that offer great productivity enhancements and big time return on investment include Vendor On-Boarding portals to turn the process of bringing on new suppliers and the products they offer into a supplier self-service model; Customer Finance portal where companies can offer their customer payment and finance opportunities that are electronic, secure, and available 24x7x365 anywhere in the world; and Contract Management portals to facilitate active collaboration and compliance in the contracting process.

Whether it is a supplier or customer portal, the benefits accrue to all parties, not just the owner of the portal. Providing ease of transactional activities, the ability for customers and suppliers to do business with you at their convenience, on-line collaboration, and speeding up the procure-to-pay and order-to-pay cycles benefits everyone’s cash flow.

Like many companies, we started a blog because it was a good way to get our thoughts out there, and keep our clients abreast of what’s going on in the world of ICG consulting. And there are all kinds of things to write about – portals, paperless technology, dynamic discounting, EDI, streamlining operations, Business Process Management (BPM), Financial Back Office issues, etc etc.

But, like many companies, without a dedicated blogger, the blog gets a few posts and then sits, then gets a few more six months later, then sits again. Rinse / repeat. Well, I’m going to rectify that. My name is Dan Mandelbaum and I help ICG with writing and the creative side of things. Of course, they pay me to do other stuff as well, but I’ve added “do a blog at least every month” to my long list of duties. And I’ll happily comply – I like writing, I like the things we do at ICG, and I like helping us reach our customers and peers. So it was a natural for me to do this blog. Well, either that, or I drew the short straw. So come on by every so often and see what I have to say, hopefully informative and optimistically somewhat entertaining.

One thing I plan on doing is to be the anti-corporate-language blogger. What I mean by that is I want to discuss the topics and what we do in an everyman tone. It’s how I write anyway, and I think in the world of technology, many people would rather read plain language, although nobody really likes to admit it (to give an example, years ago, I recall a fairly high level executive that didn’t know what ROI stood for, and was too embarrassed to simply ask anyone. For years, the poor guy would nod his head at the term, oblivious to the meaning… of course, today, he could Google it, but that’s not my point.) So we’ll discuss a lot of topics here, and I promise to keep the conversation engaging and interesting.

Anyway, it’s a pleasure to make your acquaintance, and we’ll be conversing again soon. Let’s start with short take on portals.

Portals offer more than the obvious – like customer service perception.

If you’ve been reading this blog, you know all about portals and the savings they can represent. From dynamic discounting to better logistics in the paper trail, portals ensure that business is fast, efficient, and (largely) error free (I say “largely” because in many cases, a person is still inputting data, and it’s easy to hit a 6 instead of a 7… we haven’t figured out how to stop that yet).

But there are other advantages a portal can give you that you may not be aware of. We’ll talk about one today – the perception of customers, especially pertaining to customer service.

I don’t know about you, but as a consumer, I really don’t like it when I need to contact a company, and the best I can do is fill out a form. A form that seems to generate something, but I really don’t “know”. At least when I send an e-mail, I know I sent it. But the form? How do I know the ‘submit’ button actually works? Does it actually submit something, or is it like the darkness control on a toaster – i.e. completely meaningless?

But if you have a customer service portal… well, that’s different. I can log in, submit a ticket, check on my ticket, see if someone else looked at/responded to my ticket, etc. In other words, I’m assured that my request actually was logged and is in the system. That makes me feel good, whether I’m a vendor and have a question on a million dollar order, or I’m a consumer complaining about the wrong color shoelace. And a customer feeling good is, in the long run, a profitable situation. Personally, I do business with companies that I like, whether I’m buying groceries or an automobile.

In the end, beyond the contracts and numbers and companies, we’re all people, and we like certain things. And I, for one, like portals (well, I suppose I should, huh?)

Let me know what you think. Talk to you again soon – Dan “The Man” Mandelbaum

A business process is any set of activities that an organization uses to accomplish a specific goal. If you break it down, a business process is really just a series of individual tasks that, when executed in a specific order, achieve a larger goal. For example, a vendor selling an item to a customer is a business process that is achieved through several smaller steps: the vendor offers the customer inventory, the customer sends a purchase request, the vendor quotes a price, the customer sends money, and the vendor sends the item. This is a very simple and common business process, and as you can probably imagine, there are an infinite number of larger, more complex business processes that occur every day at a given company.

Role of a Business Process Management

Business Process Management Business Process Management (BPM) can be accomplished manually, by attempting to align all aspects of your organization with your clients needs for example. In other words, ensuring that all of your business processes are meeting your clients’ needs in the most efficient and effective way possible.  But software and business rules engines can help you accomplish such tasks more efficiently and in operate in highly complex environments. You may think that automated BPM is too expensive, or that you can handle all of the your business processes on your own, but the truth is that automating BPM will save you money in the long run, and free up your time to focus on other projects.

Business process management has become one of the latest trends in business because companies have learned that, whether manual or automated, BPM will drive business performance improvement in individual departments as well as across an entire enterprise. But BPM won’t just help your business run more smoothly and keep your clients and suppliers happy, it will also save you money in operational costs by cutting unnecessary programs, reducing the working hours of current employees, and possibly even eliminating the need for hiring future employees as your business grows, The list of potential benefits goes on and on.

Simply put, BPM is key when it comes to maximizing your organization’s return on investment. As today’s business world calls for better organization of business practices, more and more companies will be looking to Business Process Management as an effective way to increase productivity and reduce costs.

By Brad Kuhn for Financial Operations Matters (a publication of IAPP)

The long, slow road to short, fast payables

Money for accounts payable automation was scarce during boom times, when companies focused their resources on growth and sales. For the past couple of years, money for automation has been scarce because, well, money has been scarce.

Consultants are optimistic that 2011 will see a groundswell of automation spending as CEOs and CFOs look for operating efficiencies to protect margins from flat or falling revenues.

In a tight-money economy, there is growing pressure on CFOs to automate payments. But old habits die hard, and technology investments have a history of not living up to expected returns on investment.

With only about 5 percent of the world’s invoices truly automated end-to-end, the potential for AP automation is high. How much will the picture change in 2011? We asked some experts, and though their crystal balls were a little foggy, they did offer interesting insights drawn from their experience in the trenches. Here, then, are their predictions, placed in the context of recent studies of AP automation practices.

High potential
Electronic data interchange, the paperless exchange of business information, is generally thought to have first gained traction during the 1960s as U.S. railroads looked for ways to become more competitive by accelerating information exchange and streamlining processes. The movement spread in the 1970s and 1980s as global competition squeezed margins in the automobile, pharmaceutical, grocery, and banking industries.

Companies focused inward, seeking operational efficiencies, in lean years, and outward, on growth and sales, in boom years, according to Jim O’Rourke, director of business development for Scottsdale, Ariz.-based systems integrator ICG Consulting Inc. That pattern holds true to this day, which is why ICG is expecting a banner year in 2011.

“In the bubble, everyone is focused on sales,” O’Rourke says. “Now that revenues are flat, people are looking for efficiencies in the back office.”
O’Rourke says ICG’s business increased more than 30 percent in 2010, and he expects comparable growth in 2011. “Our business has never been better, and we’ve been in business 20 years.”

Henry Ijams, president of PayStream Advisors Inc., an electronic payables research and advisory service based in Charlotte, N.C., says his company is on a similar trajectory.

The outlook is similar in London, where Susie West runs sharedserviceslink.com, a global community of 1,500 accounts payable and accounts receivable professionals who exchange best practices online and face to face.

“I do see a groundswell shift toward automation adoption,” West says. “C-level executives want visibility over liabilities and days payables outstanding.”

Challenges
What executives want and what they spend money on are often two different things, particularly when it comes to accounts payable. Companies have focused their investments on accelerating money coming in through accounts receivable before looking for efficiencies on the payment side.

O’Rourke acknowledges there has been a learning curve. But companies, especially those with larger operations – typically with annual revenue between $750 million and $5 billion – are recognizing positive cash flow benefits of being able to capitalize on emerging opportunities in automated payables. Those opportunities include dynamic discounting, supplier self-service, and increased visibility and control over procurement spending.

Another challenge has been the documented performance gap between expected returns and actual return on investment among many early adopters – a problem Ijams blames on the fact that some early automation projects were not integrated systems and their returns were predicated on head count reduction.

“In today’s accounts payable departments, data entry is only about 20 percent of what those people do,” Ijams says. “The rest of their time is spent fixing or working around broken processes.”

O’Rourke agrees: “Automation only works if you have an efficient system. If it takes 30 to 45 days for an invoice to work its way through your process, automation isn’t going to help.”

And there is the peculiar persistence of paper to consider. Futurists have been predicting the paperless office for decades. Notably, most of those prognostications were published in books, which were printed on – paper.
But paper’s reign finally may be coming to an end, not for any altruistic or “green” reasons, but – as is usually the case – for economic ones.

“Companies have reduced head count to the point that those left in accounts payable are suffering from paper fatigue. Paper is slowing us down,” Ijams says, adding that executives have their own reasons for wanting to go electronic. “Paper is the enemy of control.”

O’Rourke says the control element, and visibility of spending, are essential to getting an automation project approved in this tight-money environment.
“If you try to pitch it as a technology solution, nobody has any money in their technology budgets,” he says. “You have to look at it as a holistic solution.”

A long way to go
According to the Invoice Automation Benchmarking Report 2010 by PayStream, 77 percent of all business invoicing is still done on paper. Add e-mail invoices, which are typically printed out and handled as paper, and old-school invoicing still accounts for 86 percent of the big picture.

That’s consistent with the findings of the 2009 AP Automation Study conducted by International Accounts Payable Professionals, in which more than half of those surveyed indicated they still relied on manual processing for more than 75 percent of their payable invoices.

Reasons vary from supplier reluctance to technical challenges and internal resistance to change. A full 22 percent of respondents in the PayStream survey said they intend to keep filing paper invoices and have no intention of switching to imaging – or scanning of paper documents to be stored electronically, the first step in AP automation – because most invoices still arrive on paper. The reasons most often given for not switching included cost, insufficient return on investment, and satisfaction with an existing paper system.

Of those companies that had implemented some type of electronic payables system, nearly a quarter in the PayStream survey said they had been working with electronic invoicing for more than five years, while 30 percent said they were implementing their systems or had implemented them within the past year. Significantly, more than a third of all companies scanning documents said they were still keying in at least 75 percent of their data manually.

Looking ahead
West, at sharedserviceslink.com, said it is hard to pinpoint where today’s AP department stands in the automation spectrum.

“In Europe, in 2009, of 30 billion invoices, only 5 percent were processed electronically. The pioneers for electronic invoicing started here eight to 10 years ago. But wide users of e-invoicing are still in the minority,” she says. “The pace of change has been quite slow, and the adoption of e-invoicing is not yet mainstream. However, there is a shift, and in 10 years, I believe the application of e-invoicing amongst large corporations will have become prevalent. It could be another 10 years or more before smaller companies will adopt similar practices.”

PayStream’s research identified three key insights:

• There is still a lot of potential for automated workflow solutions because only about a third of the companies are using this type of technology to route and approve invoices.
• Lack of budget and resistance to change are the two biggest challenges.
• Automated workflow solutions are not as mature as imaging technology, with only a small percentage of companies having used them for more than five years.

O’Rourke says vendors would be well-advised to work together to create holistic solutions instead of trying to wedge their way individually into already tight technology budgets.

“People aren’t buying technology right now,” he says. “But to the extent that you can pitch efficiency, people are going to at least listen.”

So what’s the outlook for AP automation in 2011, and where does the AP profession stand in the opportunity cycle?

“I’d say we’re in the third quarter,” O’Rourke says. “I don’t think the story has changed a lot from last year. But as soon as CEOs believe the economy is coming back, they’re going to shift funds back to sales. It’s very predictable.”

Brad Kuhn

To access a link for full webinar on Vendor/Supplier Portals, Dynamic Discounting and AP Automation please fill out the contact for on our home page and enter “Webinar Link” in the comments section.

YouTube -ICG Vendor/Supplier Portal Presentation

Scottsdale, AZ. October 15, 2011 — In an effort to make clearer the benefits of working with their company and to make it easier to communicate them, financial operations and processes consulting firm ICG Consulting has launched a redesigned and updated website. The re-launched site can be seen at www.icgconsulting.com.

“The purpose behind this re-launch is to better explain our services, in plainer language, and to make it easier for visitors to request information or ask questions.” said Jim O’Rourke of ICG.  ”In our business, which is business process consulting and technology services, there is a tendency to fall back on ‘corporate-speak’, which uses a lot of buzzwords without really saying anything. We’d much rather clearly say ‘here’s what we do, and here’s how we can help’. We think this new website get us closer to that goal.”

According to O’Rourke, the trick was to maintain a professional look and tone, while also making the overall message more accessible. And while the message was to be simpler and clearer, the focus of the website still had to squarely remain on the company’s services, but in a much broader, more customer-friendly way. “The updated site speaks to our core audience, and lets them know we can help, regardless of whether the solution is people/process-based, technology-based, or a mixture of both.  We hope that the new layout, which focuses more on ICG’s booming business portals offerings, will add value to their web site visit.”

About ICG Consulting

Located in Scottsdale AZ and serving all of North America, ICG Consulting assists large corporations (Global 200, Fortune 1000, etc) in streamlining their financial back office operations, and helps makes sense out of the complicated and unwieldy. With a systematic, well-researched approach that has been thoroughly developed over the past 15 years, ICG Consulting helps companies cut costs, increase efficiency, and achieve greater profitability.