Lauri Palokangas
Product Marketing Manager​
 

Prove good investment decision by first focusing on the on-time payment performance


In my blog last week,  I discussed the history of the Shared Services Center (SSC) model. I mentioned then that one of the key challenges in getting a Shared Service Center established is convincing boardrooms to invest. Once the investment decision is made, there is pressure for the SSC leader to quickly show the benefits gained through the Shared Service Center.
 
The first step in building evidence for good investment is to establish efficient on-time payment performance with accurate reporting. The best way to do this is to deploy a set of standard invoice handling processes for the customer organizations. As different business organizations move their financial operations to the Shared Services Center, the diversity in invoice handling processes the SSC is faced with can be overwhelming. This is why SSCs must be able to deploy a limited number of standard invoice handling options. These processes add discipline to invoice review and approval.

The benefit of standard approval processes is that they get invoices approved quickly so that invoices can be paid on time. Paying suppliers on time will improve your relationship with them. And, if suppliers have been charging late payment fees, this change will also save you money.
 

E-invoices as a foundation for rich invoice information


To achieve on-time payment at an efficient cost per invoice level, many Basware customers have adopted e-invoicing solutions - for sending and receiving invoices as electronic invoices.

At the Shared Services Leaders' meeting in Manchester, the majority of participant organizations received over 50% of their invoices as electronic invoices. Regardless of the maturity level of the rest of your purchase-to-pay process, e-invoicing brings clear benefits. E-invoices not only bring concrete cost-savings, they also creates a foundation of rich invoice data that can be used throughout the P2P process.

E-invoicing adoption can be facilitated by allowing suppliers a range of e-invoicing options to pick from – for example by attaching a PDF to an email, by using a virtual printer to send it from Accounts Receivable to the transaction network, by keying it in through a portal, or by sending true e-invoices.
 

E-invoicing case in Shared Service Center: Van Gansewinkel


Van Gansewinkel, one of our customers in the Netherlands, increased the share of invoices received electronically from 30% to 60% in just one year. This growth was enabled by offering suppliers multiple ways of sending e-invoices.  E-invoicing also increased the scale of their SSC, and enabled them to expand their operations without increasing headcount. 

Help customers’ businesses with new insightful analytics

It has often been the case that financial organizations working under business lines have been so involved in day-to-day operations that it has been hard to find time to look through the numbers for new insights. Shared Service Center can help customers by regularly analyzing the AP process performance, and by establishing key KPIs for the customers. As invoices are in electronic format, and all organizations use only a number of standard invoice handling processes, it is easier for the SSC to identify process bottlenecks and help customers address them in their business before the issues escalate into the supplier interface.
 

Prepare to collaborate with procurement towards Accounts Payable Automation


Once invoice processing workflows have been established and are running smoothly, Shared Service Centers are ready to take the leap of faith from invoice processing, and start talking with procurement departments for Accounts Payable Automation. Closing this gap will result in big improvements in customer efficiency, but also sets demands for the financial systems.

Curiously enough, Ardent Partners reports in their e-Payables study in 2014 , that despite broad availability of two or three-way matching capabilities and standardized AP processes, the top challenges for these organizations include delays in receiving matching information, and slow invoice payment approval. In our global research report Creating Payment Energy,  we found that only 23% of businesses had fully optimized systems in place to pay invoices effectively.
 
Clearly, it is not enough to just have the technology in place, but internal alignment is needed across AP and Procurement functions around one Purchase-to-Pay process.  This alignment is necessary to elevate the role of Shared Services Center from functional to process-oriented. How can this be achieved? We will examine that transformation in my next blog.