Invoicing and Finance - Premium Content

Payable Strategies for the Long Tail Suppliers — Stage 5: Getting to a Decision [PRO]

Payable strategies decision

Now it is time to get to a payable strategies decision.

In this five-part Spend Matters PRO series, we have provided a way to help companies address how to approach paying suppliers early given a company’s current baseline and legacy situations.

The mandate was simple. The mandate was clear. Find a way to offer ALL suppliers a way to take early payment.

All companies with that mandate start from a different baseline of solutions, technology, processes and agreements. This series has provided a way to think deeper about this journey.

“Payable strategies can be incredibly confusing for companies of all sizes,” said Jason Busch, Managing Director of Azul Partners and Founder of Spend Matters. “This series has struck me as an ideal primer for procurement and finance organizations to not only discover all of the early payment options at their disposal, but to understand that making the worlds of technology and working capital come together requires a set of steps that must come before driving to a solution. In the wake of the Greensill Capital fallout and the continued future of supply chain finance (SCF) as one of many options available for early payment and working capital programs, it is essential that companies take a step back to understand all of the options at their disposal.”

For this series, here are the five stages for tackling your payables strategy:

Let’s jump into the details for Stage 4.

We’ll discuss core RFP components and sample questions, use of a decision matrix for making the call, setting executive management expectations, and the supplier optimization approach once a decision has been made.

Payable Strategies for the Long Tail Suppliers — Stage 3: Addressing Operational Challenges Early [PRO]

In this Spend Matters PRO series, you have been tasked with a mandate from your CFO to find a way to offer early pay finance to ALL suppliers and create a “win/win” with your supply base. The previous two parts of the series looked at how to assess your current situation, the spend funnel and introduced several techniques.

In the third part of our series, we will look at some of the key operations issues that impact early pay finance offerings.

Today, many large businesses may be running several early pay finance techniques targeted at different supplier segments. Each of these techniques comes complete with their own set of technology and operational components, and can include virtual cards, marketplace auctions, third-party payable finance and dynamic discounting. Companies may be looking to expand programs regionally, or simplify their current offering, or have a mandate from the CFO to find a way to offer early pay finance to ALL suppliers.

For this series, here are the five stages for tackling your payables strategy:

Let’s jump into the details for Stage 3.

In the course of our discussions with treasurers, we found six operational areas that challenge the rollout of any type of early pay program.

Payable Strategies for the Long Tail Suppliers — Stage 2: Understanding Addressable Spend & Early Pay Options [PRO]

In this five-part Spend Matters PRO series, we will explore how businesses can approach paying suppliers early given the business’s current baseline and legacy situation. Today, we focus on understanding addressable spend and the various early pay options.

For this series, here are the five stages for tackling your payables strategy:

  • Stage 1 — Assessing Your Current Situation
  • Stage 2 — Understanding Addressable Spend & Early Pay Options
  • Stage 3 — Addressing Operational Challenges Early
  • Stage 4 — Selection Process and Key Issues to Address
  • Stage 5 — Getting to a Decision

Let’s jump into the details for Stage 2.

Payable Strategies for the Long Tail Suppliers — Stage 1: Assessing Your Current Situation [PRO]

Payables strategies

In this five-part Spend Matters PRO series, we will help companies address how to approach paying suppliers early given your current baseline and legacy situation. If you’ve been tasked with a mandate from your CFO to find a way to offer early pay finance to all (or a vast majority) of suppliers and create a “win/win” with your supply base, we’ve designed this series for you.

We also hope this will help with tech selection. It should allow companies in the market for solutions to coordinate internal departments like procurement, AP, shared service centers and treasury to plan for and assess different technology choices and ultimately determine the best option for the company and its supply base.

For this series, here are the five stages for tackling your payables strategy:

  • Stage 1 — Assessing Your Current Situation
  • Stage 2 — Understanding Addressable Spend & Early Pay Options
  • Stage 3 — Addressing Operational Challenges Early
  • Stage 4 — Selection Process and Key Issues to Address
  • Stage 5 — Getting to a Decision

Today, we’ll give a 2021 overview of early pay finance. And before we talk about where and how to begin, we’ll discuss the complexity around the company’s current baseline of technology, spend categories and legacy procurement contracts.

Tradeshift Pay overview: Connectivity as a bridge to finance [PRO]

Back in May 2018, Tradeshift announced Tradeshift Pay, and proclaimed it was the industry’s first end-to-end cloud platform for supply chain payments and finance, including blockchain-based financing. At that time, very few source-to-pay vendors had any type of payment offering. What those solutions provided was an approved payment request, which involved matching the invoice with documents (purchase orders, packing slips, etc.) and changing the payment status to approved for payment, or “OK-to-pay.” Once the approved payment reached its scheduled pay date, based on the specified payment terms, it was paid.

Some of the e-procurement vendors were developing payment punchout capabilities for catalog purchases, using a virtual card to pay suppliers. Almost no one had any money transmitter license, bulk payment capabilities, cross-border payments, digital wallets or other payment capabilities.

Now in 2020, the source-to-pay world has recognized that the payment gap needs to be closed. Offering capabilities around sourcing, e-procurement, AP automation, spend analytics and other important modules without providing the payment capabilities was not truly a source-to-pay, invoice-to-pay or procure-to-pay solution.

The question was how to do this. S2P, I2P, P2P and AP automation vendors (like Coupa, Tipalti, SAP Ariba) have taken different roadmaps.

In Tradeshift Pay’s case, the focus is providing a digital solution for buyer payments while providing sellers on the network early finance opportunities. The prime objective of the Tradeshift Cash solution is to help sellers get paid earlier for their invoices to address supply chain liquidity. Tradeshift built a solution that can get its network suppliers paid much faster — from an average of 30 to 45 days in the European Union and U.S. down to a couple of days.

Tradeshift Pay is built around invoice automation to get the invoice ready to be paid. But through the integration with Tradeshift Cash, sellers can now be paid before the invoice has been approved. Tradeshift has built a receivable finance solution that ties in their network transactions with their network and third -party data to provide receivables finance.

Let’s take a closer look at how Tradeshift Pay works.

Coupa Pay: Solution Overview — 2020 Update [PRO]

For most companies, supplier payments represent 80% of total payments (internal and external). Payments include intercompany payments and payments to third party vendors. While there is no “typical” company, many larger enterprises operate multiple legal entities (think sales offices, factories, distribution centers located globally), with multiple banks, and hundreds of banks accounts. Tens of thousands of vendors, suppliers, gig workers and employees must be paid globally. It is messy, to say the least!

The payments function is, still, generally, a largely unautomated backwater. Some of the most (comparative) manual processes within finance and procurement still exist around generating supplier payments and handling different payment types. The challenge of doing this with multiple bank relationships and multiple disbursement accounts, while making sure the company has an updated view of its cash position via current payables information further complicates (and slows) activities.

For these reasons, B2B payment has become a very hot topic. So it’s no surprise that Coupa, a source-to-pay suite provider of business spend management solutions, is interested in carving out its share of the opportunity. But Coupa is not alone. Whether it be real-time fraud detection, applying APIs to bank connectivity or facilitating cross-border payments, there is no shortage of investment by numerous fintech vendors to help companies become more efficient with their payments.

But probably nowhere is there a bigger interest than managing payments in a unified single interface, across multiple channels, banks, rails, and to handle both domestic and cross-border payments to suppliers, contractors and employees while performing real-time fraud detection to stop payments before they are made — reducing dependence of after-the-fact payment recovery processes. This is where Coupa’s vision comes into play with its Coupa Pay offering.

From a procurement and AP lens, Spend Matters PRO has covered Coupa Pay before. See:

Today, we'll focus not only on updating our coverage of Coupa Pay to reflect the latest release capabilities as of Q2 2020, but also provide a perspective on the solution from the lens of the finance organization, especially account payables, which is tasked with much of the complex orchestration of B2B payments.

Invoice-to-Pay Tech Selection and the Deep Persona: Analysis & Commentary [PRO]

The market for invoice-to-pay solutions, much like e-procurement, has grown in size and relevance to procurement organizations in recent years. We even expect the I2P market will begin to rival the EDI-based world in the 2020s, eventually overtaking it.

Despite this rapid growth, the total number of providers in this space will likely remain relatively small. As leading I2P solutions continue to grow their supplier networks, their increased clout, based on their ability to connect more and more buyers and suppliers, will impede new providers from breaking into the larger I2P market.

Yet competition will come from other fronts.

Procure-to-pay solution vendors, for example, have begun to invest significantly in developing the I2P half of their suites, rounding out transactional shopping/ordering capabilities with functionality for invoice processing and, in some cases, basic payments support. This could create competitive pressure on I2P specialists in tech selection scenarios where access to end-to-end P2P capabilities are an important criterion.

Similarly, AP automation solutions are taking a bite out of a different customer base altogether: the long underserved middle market. Small and medium-size businesses are increasingly seeing benefits to adopting software that automate invoice receipt, capture and validation processes (sometimes inclusive of payments execution), yet these customers also seem to be satisfied with an 80%, “good enough” solution in terms of functionality. This creates a new competitive dynamic for I2P solutions looking to move down market, as decisive tech selection criteria may revolve more around usability and collaboration features than supplier network breadth.

Given these different competitive fronts and the evolving needs of this market, how can companies with different technology requirements evaluate invoice-to-pay solutions amid an array of vendors with varying degrees and kinds of capabilities?

Spend Matters’ SolutionMap accounts for these differences using a persona-based approach. Each SolutionMap persona is calibrated to weight evaluation requirements so that it reflects the profile of certain kinds of buyers. For example, the “Nimble” persona reflects small and medium-size businesses that prioritize fast time-to-value and ease of use in the selections; the “CIO Friendly” persona emphasizes technical foundation and interoperability with other enterprise systems to make for a straightforward implementation.

So, what do SolutionMap personas look at for in the Invoice-to-Pay rankings, and how can they help your organization make better technology decisions?

In this Spend Matters PRO series, we’ll analyze the invoice-to-pay market using our five I2P personas: Nimble, Deep, Turn-Key, Configurator and CIO Friendly. (See persona definitions* below.)

This review is organized just like our RFI for SolutionMap, according to these topics: platform capabilities, services, features & functionalities, and customer value.

This brief looks at invoice-to-pay features and vendors as viewed through the Deep persona.

Invoice-to-Pay Tech Selection and the Nimble Persona: Analysis & Commentary [PRO]

The market for invoice-to-pay solutions, much like e-procurement, has grown in size and relevance to procurement organizations in recent years. We even expect the I2P market will begin to rival the EDI-based world in the 2020s, eventually overtaking it.

Despite this rapid growth, the total number of providers in this space will likely remain relatively small. As leading I2P solutions continue to grow their supplier networks, their increased clout, based on their ability to connect more and more buyers and suppliers, will impede new providers from breaking into the larger I2P market.

Yet competition will come from other fronts.

Procure-to-pay solution vendors, for example, have begun to invest significantly in developing the I2P half of their suites, rounding out transactional shopping/ordering capabilities with functionality for invoice processing and, in some cases, basic payments support. This could create competitive pressure on I2P specialists in tech selection scenarios where access to end-to-end P2P capabilities are an important criterion.

Similarly, AP automation solutions are taking a bite out of a different customer base altogether: the long underserved middle market. Small and medium-size businesses are increasingly seeing benefits to adopting software that automate invoice receipt, capture and validation processes (sometimes inclusive of payments execution), yet these customers also seem to be satisfied with an 80%, “good enough” solution in terms of functionality. This creates a new competitive dynamic for I2P solutions looking to move down market, as decisive tech selection criteria may revolve more around usability and collaboration features than supplier network breadth.

Given these different competitive fronts and the evolving needs of this market, how can companies with different technology requirements evaluate invoice-to-pay solutions amid an array of vendors with varying degrees and kinds of capabilities?

Spend Matters’ SolutionMap accounts for these differences using a persona-based approach. Each SolutionMap persona is calibrated to weight evaluation requirements so that it reflects the profile of certain kinds of buyers. For example, the “Nimble” persona reflects small and medium-size businesses that prioritize fast time-to-value and ease of use in the selections; the “CIO Friendly” persona emphasizes technical foundation and interoperability with other enterprise systems to make for a straightforward implementation.

So, what do SolutionMap personas look at for in the Invoice-to-Pay rankings, and how can they help your organization make better technology decisions?

In this Spend Matters PRO series, we’ll analyze the invoice-to-pay market using our five I2P personas: Nimble, Deep, Turn-Key, Configurator and CIO Friendly. (See persona definitions* below.)

This review is organized just like our RFI for SolutionMap, according to these topics: platform capabilities, services, features & functionalities, and customer value.

This first brief looks at invoice-to-pay features and vendors as viewed through the Nimble persona.

20 Questions for E-invoicing and Procurement Network and Platform Selection (Part 2) [Plus +]

supplier network

Editor's note: This Spend Matters Plus brief is a refresh of our 2013 series on supplier network selection, which originally ran on Spend Matters PRO.

In the first installment of this series, OB10/Tungsten, Ariba/SAP, and GXS: 20 Questions On Supplier Network Selection, we gave some context around the right organizational questions that procurement, accounts payable (A/P), finance and supply chain organizations should ask before getting to a supplier network selection RFP/RFI. We also offered up the first five of our 20-question list, which we’ll complete today.

But before we get started, it’s important to note that this list isn’t just relevant for an initial selection for new connectivity tools and on-ramps, but also for evaluating an ongoing strategy – and selecting the right set of providers to work with in the future. In nearly all cases, it will be multiple network or platform providers rather than a single one.

We begin our list by addressing this question of single/multiple providers directly and how to structure an arrangement with a preferred on-ramp, vendor, or working with multiple providers on the same level:

Dynamic Discounting: Backdrop, Definitions, and Enablers [Plus +]

finance

Editor's note: This is a refresh of our 2014 series on dynamic discounting, which originally ran on Spend Matters PRO.

This Spend Matters Plus brief provides a primer on one of the timeliest topics in receivables and payables finance: dynamic discounting. Note that by receivables financing we mean the selling or other leveraging of “receivables” as an asset on a supplying organization’s balance sheet to receive early payment. By payables financing, we mean the financing of early payment by a third-party (or the buying organizations’ balance sheet).

Even this subset of trade financing is a big and complicated topic, but in this analysis, we’ll discuss how dynamic discounting can reduce risk and create greater liquidity in the supply chain. If you’re in procurement or accounts payable and are new to the topic, this brief will be a useful first step in understanding what dynamic discounting is, how it can help, and which technologies and vendors can enable it.

Defining AP Automation Functional Requirements (Part 4): Payment Systems, Partnerships, Processing, Analytics [PRO]

In Part 4 of this Spend Matters PRO series, we’ll examine AP automation functions related to payment systems and methods, payment partnerships, payment processing and payment analytics.

Accounts payables automation capabilities vary dramatically between different software providers, and the capabilities a finance or procurement organization will require to support the automation of AP processes also vary materially, based not only on company size but a broad range of other factors. These include organizational complexity, invoice capturing requirements (e.g., paper, PDF, electronic, etc.), systems complexity, systems integration, industry, EDI integration/support, payment/financing capabilities, treasury integration/working capital management, geography and compliance requirements — to name just a few.

To understand how different providers stack up against these (and other) categories of requirements, the quarterly Invoice-to-Pay SolutionMap Insider report can provide significant insight. And to create a one-to-one map between business requirements for AP automation and vendor functionality capability, SolutionMap Accelerator can dramatically speed up the vendor shortlisting and selection process, even allowing companies to “skip the RFI” entirely.

This Spend Matters PRO series defines AP automation requirements from a functional perspective to put AP, finance and purchasing professionals in the driver’s seat when they evaluate the available supply market for AP automation to fit their needs (either on a standalone basis or as a specific component of broader invoice-to-pay, procure-to-pay or source-to-pay solutions). Click to see our SolutionMap rankings of vendors in each category.

Part 1 of this series investigated core invoicing requirements for AP automation and some of the criteria that Global 2000 and middle market organizations should consider when selecting solutions (i.e., invoicing set-up, paper scan/capture support and e-invoicing).

In Part 2, we turned our attention to an additional set of AP automation functional requirements, including AP process, invoicing validations, workflow, collaboration and integration requirements.

In Part 3, we looked at the final set of AP automation topics: invoicing mobility, invoicing compliance and invoicing analytics.

Now let’s get into payments.

Defining AP Automation Functional Requirements (Part 3): Invoice Mobility, Compliance, Analytics [PRO]

e-invoicing

AP automation capabilities vary dramatically between different software providers, and the capabilities a finance or procurement organization will require to support the automation of AP processes also vary materially, based not only on company size but a broad range of other factors. These include organizational complexity, invoice capturing requirements (e.g., paper, PDF, electronic, etc.), systems complexity, systems integration, industry, EDI integration/support, payment/financing capabilities, treasury integration/working capital management, geography and compliance requirements — to just name a few.

To understand how different providers stack up against these (and other) categories of requirements, the quarterly Invoice-to-Pay SolutionMap Insider report can provide significant insight. And to create a one-to-one map between business requirements for AP automation and vendor functionality capability, SolutionMap Accelerator can dramatically speed up the vendor shortlisting and selection process, even allowing companies to “skip the RFI” entirely.

This Spend Matters PRO series defines AP automation requirements from a functional perspective to put AP, finance and purchasing professionals in the driver’s seat when they evaluate the available supply market for AP automation to fit their needs (either on a standalone basis or as a specific component of broader invoice-to-pay, procure-to-pay or source-to-pay solutions). Click to see our SolutionMap rankings of vendors in each category.

Part 1 of this series investigated core invoicing requirements for AP automation and some of the criteria that Global 2000 and middle market organizations should consider when selecting solutions (i.e., invoicing set-up, paper scan/capture support and e-invoicing).

 In Part 2, we turned our attention to an additional set of AP automation functional requirements, including AP process, invoicing validations, workflow, collaboration and integration requirements.

Now, in Part 3, we turn our attention to a final set of AP automation topics: invoicing mobility, invoicing compliance and invoicing analytics.