On this episode of the Futurum Tech Webcast – Interview Series, I am joined by Richard Pascoe, VP of Consulting Services at Applexus Technologies. Our conversation focused on taking your vendor invoice management solution up a notch.
Accounts payable and vendor invoice management processes can be difficult to manage. With fragmented systems and multiple teams involved, the end-to-end invoice processing system can be full of headaches for the entire organization. So, what can organizations do to optimize their processes? That’s exactly what Richard and I talked about. Some of the conversation highlights include:
- How the unprecedented supply chain disruptions have impacted the invoice solution
- The challenges the hybrid work model presents when it comes to AP processes
- Some of the hidden costs within Accounts Payable
- The kind of savings organizations can typically achieve by leveraging a vendor invoice management solution like Applexus’s InSITE
- What a value map calculator is and how Applexus helps customers with this
It was a great conversation on a timely topic, and if you’re in accounts payable, this is an episode that I think you’ll learn a lot from.
Watch the full video of my conversation with Richard here:
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Transcript:
Shelly Kramer: Hello and welcome to the Futurum Tech Webcast. I’m Shelly Kramer, principal analyst and founding partner here at Futurum Research. And today I am joined by Richard Pascoe, who is the vice president of consulting services for Applexus. And we are going to talk about a gnarly subject and that is invoice management. Everybody cringes when they hear that. But the reality of it is you don’t need to cringe. And we’re going to talk about how technology plays a role in getting arms around vendor invoice management and how… we all know accounts payable, vendor invoice management processes can be and often are difficult to manage. I’m seeing my team in the background nodding as we’re having this… in my head, I’m seeing them nod. Because it’s such a big job and it’s such an important part of business operations. And the challenges today are that we’ve got fragmented systems, we’ve got old school processes and ways that we’ve always done things. We’ve got more teams involved sometimes than ever before. And the reality of it is that whole end to end invoice processing system can be fraught with headaches across the entire organization. So we’re going to be talking today about how you can think about vendor invoice management differently and what solutions exist to help streamline that process and take the headaches out of it. So with that, I love conversations like this. Richard, welcome to the show.
Richard Pascoe: Thank you. Nice to be here.
Shelly Kramer: Absolutely. Absolutely. So tell us a little bit about yourself if you would? I always enjoy hearing a little bit of a career path story.
Richard Pascoe: I’ve been working in IT consulting for over 30 years now with SAP as the main products in my background. But I’ve been working in business for about 38 years in these areas. And I’ve been working in consulting as well as for in business as IT director, interim CLO, tackling various solutions and technological solutions to issues that the business are having and finding better ways and easier ways and less expensive ways of doing it. So something like invoice processing, which really is a cost overhead for most organizations. If you can get some cost out of that and make the process smoother, easier and easier for all the people involved in the process, then I’m really up for doing those sort of things. So been doing it for many years now, not just invoice processing, but other solutions within an organization from soup to nuts really.
Shelly Kramer: Awesome. You’re a problem solver.
Richard Pascoe: Yes, absolutely.
Shelly Kramer: I think that’s what I am too. So let’s talk a little bit, let’s set the stage a little bit if we can. So we know that two plus years of navigating a global pandemic has taught us a lot of things that we weren’t really thinking about. I think things that we knew existed and that could become problematic, but a pandemic exacerbated all of that. And one of those things was supply chain issues. We had and continue to have supply chain disruption in one way or another. And how does dealing with all things supply chain impact an invoicing solution?
Richard Pascoe: The end game of any commercial relationship is making sure both parties are happy and both parties are getting some benefit and hopefully some money and some profit out of the relationship. And more often than not, the last thing to happen in a process is the payment of the services. And typically your supplier will suffer if you are late in making that payment to them. And the pandemic has caused various other reasons as to why that might be the case. But typically trying to process your invoice for any goods or any services that your organization has in that final part is often forgotten, often left, and causes issues with your supplier. So with a constrained supply chain, one of the most important things is becoming your preferred customer. Customers that pay when they say they’re going to pay. Customers that pay when they promise to do that actually reduces cost.
It makes you a preferred customer. It gives you the opportunity to negotiate better prices. But in the position where we are with the supply chains being constrained and the shipping constraints and all sorts of things we’re seeing globally still suffering from off the back of the pandemic, is still having cost into that market. So if you can actually know when you are negotiating a price with your vendor that you can pay him on time or even take advantage of early payment discounts, then that puts you in a much stronger position. And even if you’re not taking the early payment discounts, paying when you say you’re going to pay and within terms will make you a much better customer. We all hate chasing debt, we don’t like having those ugly conversations. Even if you’ve just been out to dinner with friends and you’ve picked up the bill and a friend says, “I’ll transfer the money to you,” it’s an uncomfortable feeling and you’ll be less inclined to offer to pick up the check the next time around. So it’s no different in commercial business. So being a preferred customer and resolving those impacts through an easier, better way of paying it. And it’s not normally down to, I don’t want to pay on time, it’s down to, I can’t. And I can’t because things go wrong in the process or it’s too complicated or it’s too manual.
Shelly Kramer: No, absolutely. And I will tell you this, I’m one of those people from a business standpoint and from a personal standpoint, when I can pay in advance, when I can pay quickly, when I can realize the significant benefit financially from a reduction in cost to do that, I’m all in. And so understanding ways that I can streamline processes to help me be able to do that more effectively is attractive. I think it’s attractive especially right now across the globe. We have many things affecting us from a macroeconomic standpoint. And so finding ways that you can improve your processes and save money in the process, I think is compelling.
Richard Pascoe: Absolutely. Yeah, absolutely.
Shelly Kramer: Absolutely. So hybrid work, a global pandemic brought us the reality of hybrid work. When it comes to the accounts payable process, what challenges does hybrid work interject into the situation?
Richard Pascoe: This is probably the biggest influencer on late payment that’s been going on because anybody that has a manual process for processing their invoices… and we’ve all been there, we’ve all worked in organizations where it’s got that very manual process where you’re sitting at your desk and the internal mail comes through and you open up the internal mail and in there is your invoice and you’ve got to stamp the invoice, put the right cost center on it. Sign it as you’re the authorized person to say, I’m authorized to spend this money and have this invoice paid, and then get it back to accounts payable again. That’s really where a lot of the time and the cost of processing invoices is taken up. You add hybrid work into that and people are not always in the office. So this mail isn’t being posted out.
So you have either got somebody scanning these invoices and emailing them around and then getting lost in the same way, or they’re sitting in somebody’s in-tray waiting for them to come into the office on that day to then pick up the invoice and process it. And then if there’s a knock on delay to somebody else in an accounts payable team, weeks go by before things get approved and signed off very quickly, very easily. And this is one of the contributing factors we’re seeing to a lot of delays in payment then that puts a strain on the economy everywhere. Prices start to go up and you have impact everywhere.
Shelly Kramer: Absolutely. So let’s talk a little bit, if we could about… I know that there are some hidden costs that we don’t often think about within accounts payable. Would you shed some light on that for me if you would?
Richard Pascoe: So I’ve already started to allude to that in the process of moving things around to get the approval. A lot of people think that the cost of accounts payable is how many people you’ve got processing the invoices in that team. But when you think the consideration of how many people that goes out for approval and who those people are that you’re sending those things out to approval and what their role is in your organization. Some of these gets up to some fairly senior people, if not the CEOs themselves of these organizations depending on the value of money being approved. It’s all their time involved in finding the invoice because somebody’s saying, “Where’s my payment? I’ve not had it.” And sending out copies of that invoice and people trying to find the document they need to approve. To be able to approve it and follow all the other controls that need to be in place to make sure that the correct person approved it, they had the right authority, that is indeed their signature. And you think of all of that moving around the business to get that done, there’s a lot of cost in there that people don’t often think about. And when they consider the cost of invoice processing, you can very easily focus on the finance team that are doing the job as opposed to everybody else that’s involved in the whole process.
Shelly Kramer: The thing about our processes is that when they’re cumbersome and require us to slog through X number of steps, sometimes we do it and we grumble a little bit and we think, ugh, there’s got to be a better way. You know what I’m saying? But when we really realize how amazing it can be is when we go through a process that is the way it should be and it’s just boom, boom, boom. And so interrelated, I’m thinking about, actually I just switched mobile phone carriers, which doesn’t have anything to do with processing. But I’ve been with my carrier for a really long time and I felt like they didn’t care about me and they weren’t taking care of me and they were taking the whatever amount of money I’m spending on a monthly basis completely for granted.
And you know what, it’s really hard changing providers, in many things, not just for mobile carriers. But the carrier that I went to made it so easy for me. I didn’t have to physically even walk into a store. I just connected with their team and everything I wanted, everything I needed, easy solutions, easy selections, easy understanding. Everything from the sending me the contract so that I could sign it electronically yesterday. And the whole time I’m thinking, I’ve never had a process be this easy. This is how it should always be. And that’s what I think we’re talking about here. It’s when we can convert those things that we’re accustomed to being drawn out and I’ve got to wait on Mitch or Sally or whatever, or check your inbox, or all those little frustrating steps that add time and effort and energy to the process, I think that when you can magically get rid of that, it’s like, oh my gosh, why did it take me so long to realize that this is the way I could have had it.
Richard Pascoe: Absolutely.
Shelly Kramer: It is crazy. So with that, I would love for you to tell us a little bit about Applexus and the capabilities that Applexus offers to clients?
Richard Pascoe: At Applexus we basically try and make things that easy and simplify things and make them more straightforward. Be that from implementing full blown ERP solutions to focus solutions around a particular pain point, such as the processing of invoices. And we’ve developed a product that we call Insight. The Insight product automates the accounts payable process and it will take that automation as far back as the supplier if they can cope. If they can’t, then there’s various steps along the way to still keep it simple for your main users.
So for example, a supplier can send you an electronic copy of your invoice via a pdf, for example, in an email. Our solution can open that email, read the invoice, make all of the correct postings that need to happen, work out who it needs to be approved by, email it across or workflow that invoice to that person for them to approve it. And allow them to just visually view the document, check the document and approve it, all within minutes of it coming into the organization regardless of where they’re based in the world. So being able to take something and simplify that. Also, if a paper invoice arrives in the hybrid working still, the person within accounts payer can scan that invoice and the same process happens. From the minute it’s scanned, it works out who it’s got to go to, what the right approval codes are. And it’s reading all the information that’s on that document, putting it all into the right fields, the correct fields that are there. And sometimes it doesn’t work smoothly. In that case we’ve got some really nice easy to use screens that people can then actually correct the document. And then because of the corrections they’re making, we’ve got artificial intelligence built into that solution, which means they only have to show it once.
If an invoice arrives from that same supplier again, in the same format, it already knows and it routes it to the right person already. So making things easy, learning on the fly as it goes, rooting them to the right people, and then getting those through ready for payment, providing all the reporting requirements as well, makes a solution really simple for something that should be simple and easier to process. That means you can see your cash flow much faster. It’s already posted into your systems automatically and there’s less touching of people by people having to enter that information, find that information and slog through what can be a very boring job, basically in processing.
Shelly Kramer: And I think to me that’s one of the beauties of integrating technology solutions like this into your tech stack because you have a team of people whose time and brain power can be spent doing things that add significant value to the business bottom line that aren’t these manual, repetitive, somewhat boring, somewhat mind numbing tasks. And then when you’ve got the AI functionality that’s part of it, that helps with detecting anomalies and making changes so that you don’t have to do them in a repetitive way and things like that. All of that is a really exciting solution I think.
Richard Pascoe: Absolutely. And it adds a lot of value to the rest of the business as well, because it also helps reduce opportunity for fraud. We can automatically do various fraud checks in there as well. So there’s other added benefits in that process of being able to read things you wouldn’t normally check. Such as you hear about fraud on email and people changing bank details and things like that with the email interjection. We’re checking bank details against the previous company’s bank, the previous invoices and their master data we hold on the system. So it stops those sorts of things happening as well.
Shelly Kramer: And that happens automatically. It’s not something that a human has to do. Oh, here’s the account number. That’s really to me, what’s the beauty of it.
Richard Pascoe: Absolutely. And that elimination will alert it and alert the right people to go and check manually. And it may be that the vendor’s changed their bank account details and forgot to tell you. Which is fine But it will detect it, it will pick that up and avoids problems further down the line. And again, long before the payment is due, which means you can still pay on time.
Shelly Kramer: That’s great, that’s great. Fixing things on the front end rather than chasing it around. “Why haven’t we received your payment?” Those are the worst calls, those are the worst calls to make. So you touched a little bit on risk mitigation as a benefit, but what other kind of savings might an organization be able to achieve by leveraging an invoice management solution?
Richard Pascoe: Typically even if you just automate it. Various studies have been done in the past of having an automated solution and it cuts the cost of processing an invoice in half in the time that it takes to work that through. So depending on the volume you have, you can make some significant savings. But some other areas that you may not consider in A, the time it takes for senior managers to be approving invoices much quicker. They can approve those through and they spend less time. They don’t have to look for them. They’re there in an inbox waiting for them to do it. So you get the savings there that they alluded to earlier. But even something that you may not consider, such as your audit, everybody has to have an audit every year. Part of their audit process is making sure you’re following approval processes correctly. And you want to work from a… often your auditors will go and pull out a paper copy of an invoice and say, “Show me how this one got approved?” We’ve turned that on its head. We just say to them, “Pick any invoice.” Physically, you can see an image of that invoice electronically, and then you can follow its history of who approved it, when they approved it, what time. So cutting cost out of your audit processes is another big advantage as well as reduction in fraud as well.
Shelly Kramer: Absolutely, absolutely. So something that I’m really excited about is the value map calculator. Tell us about this? I think it’s… Anything that I can use to play around with to try to help get to, where’s the value here, I’m always interested, so tell us more about it?
Richard Pascoe: It’s quite straightforward. It’s basically we have some calculators that will help individual companies understand exactly what they will save. So rather than have a generic, it’s half the cost to process automatically than it is manually. We start to see some detail that works specifically for an organization. So within this calculator, we pick up typical number of invoices that you’re going to be processing, the value of those invoices, who’s in your approval chain, their average salaries, the time it takes to do the approval of them. All of this data goes into our calculator that comes up with a savings number that we can pretty much stand by as part of delivery of the project. Because even though they’re fairly generic algorithms that we’re working within the calculator, it’s accurate. So when you start to put that sort of information in, they’re real benefits and real savings that you can expect to achieve as an organization.
On top of that, if you want to get down to some real level of detail, we have a value realization team specifically that do this job, not just for invoice management, but also other areas and other systems. So we can go to whichever level an organization wants, and then we measure the value as part of the project. So once we’ve deployed that project and afterwards we can show you what that measurement was as well. So being able to accurately forecast the benefit you’re going to make, track that forecast and help you realize that that benefit helps pay for these sorts of projects that people want to go in and do. To make everybody’s life better and show to your shareholders exactly what savings you can achieve.
Shelly Kramer: And I love the, “Don’t take our word for it,” because so many times when you make a purchase, sometimes a software technology purchase it is, “Take our word for it, this is going to be better.” But don’t take our word for it. We will show you in numbers, we will show you the value proposition here. You need to take a little bit of leap of faith here at the beginning end of this. But what we can show you once we get started is surreal concrete savings. And I think that’s a really impressive part of a value proposition.
Richard Pascoe: And not just generic that you know can say everybody gets, these are particular to your organization. So it’s a very clear path that you can say that you can make.
Shelly Kramer: I love it. I love it. So one of my favorite questions to ask is, and I don’t know in advance that you came prepared to talk about this, but do you have a case study or two, something that you can share about somebody that started using the solution and some of the benefits they realized? Anything you can share with us?
Richard Pascoe: We have some information available on our website that you can actually download some of these. But I worked with a fashion retailer who were not at… they actually had a level of invoice automation when we engaged with them, but they couldn’t process 85% of their invoices that were related to the purchase order processes. So they managed all of the overhead type costs, expenses, travel fares, hotel bills, and then other gas bills and so on that come into their organization or marketing costs. So all those unplanned sort of costs rather than going to actually cost of goods sold. But they couldn’t process the ones they had that were processing through for factories to actually make product for them. And through our solution, particularly in advance, especially for the fashion industry as well, that we can get right the way down to the purchase orders and the purchase order line items and reduce the cost of processing items that come into your cost of good sold areas. So 85% of their invoices were of that type that they couldn’t process electronically. We enabled them to do that. Along with that, we were able to avoid some levels of fraud because they were getting bank details checked. And there’s a few companies that have come unstuck with the email interjection I was talking about before that happens through fraud.
But again, the systems are there to stop and check that. And then again, their auditing process was so much better for them as well. So they were a fashion organization. It’s quite a small company, not massive, and that’s more than paid for their project in the cost savings they’ve had through that automation. And we actually took that a step further for them. Because the solution is capturing all the additional information, one of the benefits that they realized that they weren’t expecting was we were able to capture everything along with the invoice. So in their particular case, we had the invoice itself, we had a bit of lading, things going on to vessels. We had country of origin certificates that needed to go through for customs that were required at the other end. And if you take that further, if you start getting into luxury goods, you have things like cites documents required to bring new risk into countries and so on. And that was then made available throughout the whole system, not just through accounts payable. So then somebody who is in the customer services team and they get a call from their customer saying, “Oh, we can’t find the right paperwork. We need to get this through customs-
Shelly Kramer: Here it is.
Richard Pascoe: … here it is.” And you can email them straight across to them. So some big benefits from other areas in the way that we just use the tool and make the data available to everybody that could benefit from it. So they made some big benefits from that area and understanding how we could use to take things further. As well as then automating other things. If you got the invoice and somebody approves the invoice, but somebody didn’t put the goods receipt in the system, that causes a big problem in their accounts at the end of the day. Being able to automatically do the goods receipt because the invoice has been approved, I must have had the goods, that fixes the accounting process again with no manual intervention and nobody else getting involved in it. So lots of advantage in the automation when you start to really get under the hood of what’s available there.
Shelly Kramer: Absolutely. And you answered a question that I hadn’t yet asked, which was really, what kind of organization is a solution like this best suited for? Do I have to be an enterprise level multimillion dollar organization? And it sounds like the answer to that is no.
Richard Pascoe: No, absolutely not.
Shelly Kramer: That the solution can serve across the board regardless of company size?
Richard Pascoe: Absolutely. There’s obviously… anybody will benefit at some point. It’s about how long that payback is, but you really don’t need to be a big organization to benefit quite quickly.
Shelly Kramer: Awesome. Richard, it has been a delightful conversation as I knew it would be. And thank you so much for spending time with me and with our audience here today. And for our listeners and our viewers, I will include… you can find the Applexus solution in SAP store. I’ll include a link there. I’ll include a link to the Applexus website so that you can learn more there as well, if you would like that. And with that though, Richard, thank you so much for spending time with me today and for talking about the world of vendor invoice management. Hopefully for some this will be just the impetus they need to make a change and to start making their business lives easier with some technology in play.
Richard Pascoe: And thank you very much for having me. It’s been a wonderful conversation. Thank you.
Shelly Kramer: Absolutely. Absolutely. I hope we talk again soon.
Richard Pascoe: Yeah, I’d love to.
Author Information
Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging development, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”
