INFOGRAPHIC REPORT

Transforming
Procure-to-Pay:
Align Finance and Procurement to boost
efficiency and improve the bottom line

© sharedserviceslink.com Ltd and SAP Ariba 2016. No copy or visual can be used in part, as a phrase or in whole without the written permission of
sharedserviceslink.com Ltd. The concept of this product belongs to sharedserviceslink.com Ltd and cannot be re-created by a third party for the
purpose of an event, article, report or any other written product, without written consent made available by sharedserviceslink.com Ltd.

An efficient Procure-to-Pay (P2P) process is the engine behind any high

performing organization. When finance and procurement are aligned
through a holistic, end-to-end P2P process, organizations can find new
ways to create savings and open doors to profit-driving opportunities.
sharedserviceslink and SAP Ariba conducted a study with over 150
finance and shared services professionals to better understand the
state of Payables and P2P and identify opportunities for improvement.
This report is the third and final section of the research report and
focuses on how to improve the alignment between finance and
procurement through an efficient P2P process, and the difference it
can make.

About our respondents

45%
6%
37%
Western
Europe 9%
3 %
North
America
Asia
Eastern
Europe
Middle East
and Africa

What is your annual revenue? (In USD)

Less than
$1 billion
More than
$10 billion

19%
41% 5 %
$1 billion -
$2 billion

22%
13% $2 billion -
$5 billion

$5 billion -
$10 billion

How many invoices do you

process annually?
Less than
100,000
More than
1 million

23% 22%

21%
34%
500,000 – 100,000 –
1 million 500,000

Respondents are from large companies. 81% of respondents have

more than $1bn revenue, and 78% of respondents process over
100,000 invoices annually.

How aligned would you say Finance

and Procurement are?

54%

18% 20%
3% 5%
Not aligned Rarely aligned Somewhat Mostly Very aligned
there is no we work aligned aligned we share same
collaboration separately, but we collaborate we share organizational
between Finance collaborate on certain most goals goals, KPIs and
and Procurement when needed projects and most KPIs leadership

Not aligned Well aligned

While 54% of respondents say they are somewhat aligned, 21% are not
well aligned and only 25% were mostly or very aligned.

Which of the following pain points do

you have in P2P?
Handling invoice exceptions 80%
Responding to internal
inquiries (Procurement/vendor
set up team) about specific 58%
vendors/invoices/payments
High volume of supplier
inquiries via email/phone 57%
Poor master vendor data 51%
Difficult vendor on
boarding process 37%

Keying invoices into your ERP 37%

Handling payment rejections 14%

The majority of respondents (80%) struggle with invoice exceptions.

What are your top three priorities

to improve your P2P process?
Standardize processes globally 58%
Automate P2P Processes 46%
Onboard more suppliers
to e-invoicing 35%
Improve PO compliance 33%
Implement a supplier
portal/ supplier self-service 33%
Implement e-invoicing 27%
Automate workflow 18%
Implement scanning technology
15%
Consolidate ERP systems
13%
The top two priorities, standardization and automation, are key to
solving many of the issues companies are facing when Finance and
Procurement operate in silos.

Survey respondents generally have low levels of alignment

between Finance and Procurement. Only 25% say they are well
aligned (mostly or very aligned), and 21% say they are rarely or
not aligned.
The symptoms of poor alignment, including high rates of invoice
exceptions and time spent answering internal process related
questions, are felt by the majority of respondents. Many are
prioritizing process standardization and automation, which will
help relieve these pain points.

Here we examine the correlation between process ownership,

alignment and one of the key indicators of alignment, Purchase
Order (PO) rates.
We also look into what technology respondents are using and
looking to use to improve their P2P process.

What % of invoices are PO vs Non-PO?

Overall average

Non PO

33%

67%
PO

% of PO invoices
24%

16 % 17% 17%
13%
13%

0%
Less than 50-59% 60-69% 70-79% 80-89% 90-99% 100%
50%

Overall, respondents have 67% of invoices under purchase order

(PO). 41% have 80% or more of their invoices under purchase order.

61%of companies that are well 34%of companies that are not
aligned (‘mostly aligned’ or ‘very well aligned ('rarely aligned' or
aligned’) have more than 80% of 'not aligned') have more than
invoice under PO. 80% of invoice under PO.

Are you actively looking to

improve your invoice processing?
46%
35%

11% 8%
Our invoice Improving We want to We are looking to
processing is invoice improve, improve our invoice
high quality processing but don’t processing, and
and we aren’t isn’ta priority yet have have budget
looking to right now budget to do so
change it

81% of respondents want to improve their invoice processing.

35% have already secured the budget to do so.

Which of the following technology do

you use in the P2P process?
Use currently Looking to use in the future

e-procurement
58%
30%

e-invoicing 48%
38%

Contract
management tools
46%
23%

An end-to-end 30%
P2P solution
49%
e-procurement and e-invoicing are the most popular tools used currently,
and the biggest area of growth is in end-to-end P2P solutions.

Do you have global process owners?

42%
34%

15%
9%

No, we do No, but we are Yes, we have Yes, we have

not have looking to process owners for end-to-end
process implement the distinct global
owners process owners processes process
soon (For procurement, owners
AP, but not P2P)

76% of respondents have process owners, however most have process

owners for distinct processes, not truly end-to-end process owners.
Only 9% of respondents don’t have process owners on their radar.

45% of companies that are well 25% of those that are not well
aligned ('mostly aligned' or 'very aligned ('rarely aligned' or 'not
aligned') have end-to-end aligned') have end-to-end
process owners. process owners.

Summary
• Finance and Procurement teams are showing insufficient alignment:
only 20% of respondents are “mostly aligned” on goals and KPIs
and a mere 5% actually share goals and KPIs. Only 34% of
respondents have end-to-end global process owners.
• Handling invoice exceptions is the top pain point in the P2P process
for 80% of respondents, and over half struggle with high volumes of
internal and supplier inquiries.
• Only 41% of respondents have more than 80% of their invoices
under PO; but that percentage goes up to 61% when considering
respondents in the well aligned category.
• The top priority for respondents is to standardize and automate the
overall P2P process. 80% of respondents state they are actively
looking at improving their invoicing process.

The survey clearly shows the problems caused by a disconnected P2P

process and the lack of collaboration internally (between Procurement
and Accounts Payable teams primarily) and with suppliers. That
situation leads to the high number of invoice exceptions and
internal/external inquiries our respondents are experiencing.
Therefore, organizations spend too much time managing transactions,
and less time on more strategic activities.

Based on our research, we identified three ways you can unlock P2P
efficiency and drive alignment between finance and procurement.

1. Get to the root cause of invoice

exceptions
For many, the phrase invoice exception is a misnomer. If they were truly
exceptions, they would affect only 1-10% of transactions. However many
find that exception handling represents 30-60% of invoice volume. It’s
important to first understand the scope of the problem, then get to the
root of the issues.
• Analytics tools can help you identify repeat offenders who don’t raise
POs, those that raise retrospective POs and can help you identify
where Goods Received Notes aren’t recorded properly.
• Once you understand where exceptions come from, you can
communicate how much non-compliant behavior actually costs the
business. When you can show a non-compliant invoice costs
significantly more to process, you should start to see behavior change.
• Many organizations have high PO rates, but the non-compliant
invoices still cause problems. To address this, start reporting on
invoices that don’t comply. You can ignore the 97% compliant
invoices, and instead report on the 3% and find ways to reduce them.

2. Standardize and digitize your P2P

process to streamline processing
and improve control
The amount of time your organization spends on fielding invoice status
queries can be significant. Standardizing and digitizing your P2P
process will promote straight-through invoice processing and supplier
self-service, and improve control. Additionally, this will free up Accounts
Payable to tackle more strategic activities such as improving cash flow
and working capital metrics.
• To effectively align Finance and Procurement, make sure your
processes are as ’closed loop” as possible. When your suppliers can
invoice directly off POs (as in PO-Flip), or from a contract without a
PO, you have more control over spending.
• E-invoicing not only drives costs savings from a transactional
perspective, it can enable you to secure early payment discounts,
and these cost savings can be much larger than the operational
savings. Be sure to build this into the business case for your P2P
automation initiatives.

3. Align the KPIs and objectives of

Finance and Procurement
For many, there are cultural ”walls” around Finance and Procurement.
However, for an efficient end-to-end process, these departments need
to work hand-in-glove to be as streamlined as possible.
• The effort you put into creating a collaborative culture between
Finance and Procurement is well worth it. Having shared KPIs,
vision and leadership will all help drive alignment.
• Make sure that Finance and Procurement work together on projects
and don’t have different agendas. This is crucial for enabling
technology such as e-invoicing. A key reason e-invoicing initiatives
fail is because it was driven by Finance, and Procurement wasn’t
involved. E-invoicing is a supplier-based program, so make sure
that you have support from Procurement.
• Many companies have process owners for distinct processes only
(AP or Procurement instead of an end-to-end P2P process owner).
This can work, but only if the AP and Procurement process owners
collaborate effectively. Having global process owners is preferred
as it will drive better, and quicker, results.

About SAP Ariba

SAP® Ariba® is the marketplace for digital business, creating
frictionless exchanges between millions of buyers and suppliers
across the entire source-to-pay process. Our market-leading
solutions enable companies to simplify collaboration with their
trading partners, make smarter business decisions and extend their
collaborative business processes with an open technology platform.
More than two million companies use SAP Ariba solutions to connect
and collaborate around nearly one trillion in commerce on an
annual basis. To learn more about the company’s offerings and the
transformation they are driving, visit
www.ariba.com/solutions/financial-supply-chain-management

© sharedserviceslink.com Ltd and SAP Ariba 2016. No copy or visual can be used in part, as a phrase or in whole without the written permission of
sharedserviceslink.com Ltd. The concept of this product belongs to sharedserviceslink.com Ltd and cannot be re-created by a third party for the
purpose of an event, article, report or any other written product, without written consent made available by sharedserviceslink.com Ltd.