Budget Compliance – The Impact of Purchase Orders

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Advise - Major Projects
Assist - Outsourced Services
Research - Market Data
Inform - Industry Insights


Tuesday, July 18, 2023


2:00 PM – 3:00 PM EDT


This is an online event


Alex Camperi, Corpay
Craig Jeffery, Strategic Treasurer

Sponsored By


Hosted By

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Breaking a budget is a ditch on one side of the road. This impacts overall financial performance and impairs accurate forecasting. Poor procurement processes contribute to this process. Adding compensating and manual controls (i.e., manual purchase orders) is used to control the spend, but it can act as a ditch on the other side of the road, as manual processes cost time, impair efficiency, and lead to errors. This session will cover the direct and cascading value (to performance, cashflow, quality, and cost) for organizations that deploy electronic purchase order processes.

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Announcer  00:45

Okay, well welcome everyone to today’s webinar titled, Budget Compliance:  The Impact of Purchase Orders. This is Brian from Strategic Treasurer and we’re pleased you could join us as we consider how poor and manual purchase order processes contribute to inefficiencies and broken budgets and explore the value of electronic PO processes. But before I introduce today’s speakers, I have just a few quick announcements. Zoom offers several different ways for us to interact today. If you would like to post comments or questions viewable by all attendees, please use the chat icon in the toolbar. If you would like to ask your question to just the presenters, please use the q&a icon in the toolbar. You can ask your questions at any time during the presentation and we’ll try to get to as many as we can. But if we don’t get to your question, someone from our team will gladly follow up with you. There will also be a few polling questions throughout today’s webinar, where you’ll be able to select your response from a list of multiple choices. You will need to click the submit button on the polling questions to have your response recorded. If you are here for CPE credits, you will need to answer at least three polls today. And last, please ensure that your Zoom display name includes both your first and last name, so we’ll know to whom we should send the credits. Our speakers for today are Alex Camperi, Sales Director at Corpay. And Craig Jeffery, Founder and Managing Partner of Strategic Treasurer. welcome Alex and Craig. And I’ll now turn the presentation over to you.


Craig Jeffery  02:33

Thank you, Brian. Thanks, everyone for joining us this afternoon or late morning, wherever you’re located. We appreciate you taking some time out of your day to hear us talk and review some material and for you to be engaged through some polling questions. Alex, it’s good to see you. And this is our first webinar together. So welcome. Thank you for having me. And we’re looking forward to it. So we have we have quite a bit to cover. And I know many of you come from the Treasury domain others are handles professionals from procurement all the way to AP. So it’s good to have a mix of finance people on today’s webinar. But let’s let’s begin covering what our agenda is. So you can see on the slide before you six rectangles with little icons and images in each of them. This is our this is our roadmap for our discussion. First we’ll begin with applications of procurement process, how it impacts other areas, this will touch on areas about efficiency of the overall business and certainly of how a company acquires goods or services. It will touch on other implications like scalability, the ability of an organization to handle increased volume as they grow, or as they acquire their companies and also near and dear to the Treasury people’s hearts as to do with the capital implications of of the procure to pay process, demanding more capital or less depending on how efficiently it runs. There’s this reverberation that has an impact there, then we’ll look at the hazards of uncontrolled or manual processes. And this is along the lines of the opposite. You know, a manual process tends to be more costly. It limits the organization’s ability to expand, uses or absorbs capital in a disproportionate manner, and can harm relationships significantly also, resulting in additional costs. They’ll move on to this desired future state of electronic processes, digital so where we’re automating the tasks, how we move and look at data, the workflow, how workflows can support that, especially digital workflows, and move on to that discussion. And then we’ll then we’ll cover some of the key drivers to automate. So while your organization may be different from other organizations are certainly going to be Some common ground. So some of the things that are driving companies to automate different areas of finance, including the procure to pay in the payment cycle has to do this shift to remote work or hybrid work. That’s certainly been going on for quite some time now. And there’s been significant changes there. The ongoing and perpetual drive for efficiency. I don’t think that ever lets up, Alex, as we look at this, it’s just kind of a continual, you have to get more efficient as you go on. And then we’ll also touch on a couple of areas including one about Gen Z, Zoomers, that generation Zoomers, who really not only hate manual processes, because other generational cohorts probably hate manual processes. But they will stop doing it, they’ll move to other organizations. And this is this is this can be disruptive to an organization but can be also helpful in that they won’t tolerate doing, let’s just call it sub optimal processes that can be automated, that’s driving other companies to to automate more of their processes. So here’s Zoomer. Thanks for tuning in. And thanks for for pushing companies to automate, they’ll look at points to consider. And this is this, these are the areas for opportunities. When you look at automation solutions, you know, moving from manual labor manual activities, which create errors and defects to the impact on capital and growth. And then finally, Alex now cover for four areas, four takeaways something to consider. So what’s, what’s the impact? Having an automation mindset automation first, what’s your competitive posture? What are other companies doing in your business? They’re automating if they’re not already automated, and then the the impact of efficiency versus efficiency. So that’s what we’re going to cover today. We’ve got a lot to cover. And I want to start off, I’ll introduce this slide and let let Alex weigh in here. The procurement process is not just about procurement, it impacts up and downstream items and finance generally. Alex, what what do we need to think about here?


Alex Camperi  07:10

Yeah, thank you, Craig. So when I was actually first asked to do this webinar, I kind of have the same question, right. A lot of the attendees are in treasury that deal with liquidity and just kind of finance in general. And there are far reaching impacts when it comes to talking about a PO process. And it’s more just about those downstream effects. So when I work with customers of all various sizes and structures, the PO process, from my perspective is the very first things that happen when a company needs to spend money. And so if there’s no PO process in place, or there’s not a scalable solution in place, or structure that allows for scalability, this has pretty detrimental effects on budget, budget allocation and liquidity. So it’s best from our perspective to kind of implement a process that is scalable, and far reaching within the organization, creating standardized approval processes. So by the time that cash goes out the door, you and the finance team, the treasury folks have a good understanding of where those expenses are being allocated to for budgetary, and then of course, just cash flow management purposes.


Craig Jeffery  08:39

Yeah, excellent. So you know, this idea that it’s, it impacts both the income statement and the balance sheet, and how Treasury looks at capital and cash flow. You know, when you think about a financial statement timeframe, we look at what is our income statement look like for the whole month? What is our balance sheet look like at the end of the month, but there’s also all of the flows in between and companies have to provide for liquidity during those times. And expenses, efficiency touches on each and every area. So yeah, Alex, the next. The next slide here shows a lot of steps. I know you’ve got this roundabout set of rectangles, starting to the going to the end, there’s certainly a lot of steps here there. There can be many more in companies and less.


Alex Camperi  09:27

Yeah, so it’s a very, it’s a very manual process. And it’s not just about requesting a purchase order. As we can see from this grid here. There’s a lot of various coding transactions and budget approvals, and of course the invoice and the payment. When those transactions are received into the accounting org. All that upfront work typically relates to the invoice to help speed up those approval processes and actually paying your invoices. So the procurement process in general, it’s it’s not very straightforward or consolidated. I know there’s a lot of various audience members representing different types of organizations, I’m sure some of the organizations that you represent, have a PO process in place that might be manual. So I’m sure this slide resonates with a lot of you kind of without either without a PO process, or with a relatively manual PO process. Just taking an example. So when I need to, let’s say, I’m a VP sales, and someone whoever in your organization’s need to request spend, again, they need to go through these various steps in the spend approval process to actually procure right the services or the goods from the selected vendors and then getting that invoice ingested into the process. So there’s very manual steps. And an often in this process, it’s very fragmented. So you have different stakeholders within the process, you’ve got a vendor onboarding team, a legal team, a procurement team, you’ve got your AP and your treasury folks. So again, this is kind of far reaching and cross departmental. And so this, this process, if it’s not manual, it creates a lot of heartache and headache within multiple organizations, or multiple departments within one organization.


Craig Jeffery  11:29

And, Alex, for those that are looking and seeing this chart with, with very many rectangles, there’s almost this perception, when you look at every arrow is equivalent. Every rectangle is equivalent. That’s not really true. It shows some concepts about the handoff. And, and that’s what we refer to as the fallacy of the line or I guess, the fallacy of the rectangle that they stand for different things.


Alex Camperi  11:55

Yeah, so because there’s so many, again, different organizations or different departments involved. There’s the person who needs to buy something, right. There’s the approver, there’s finance, from a budget perspective, ensuring that this spend request is going to fall within our budget, and then all the reporting that comes with that. So because any spend request typically, again, touches so many different hands, and a lot of the time there’s manual email back and forth. There’s just so much room for error. And so what this is why there’s a huge focus right now in the industry and procurement, the accounting folks are talking about it a way to kind of centralize and streamline this process because it touches again, so many different hands. There’s just so much room for error, and miscommunication. When it comes to audit requests, trying to look back and forth through emails, sometimes paper POS are processed. So implementing, again a process that is streamlined and scalable, where all the information that lives in one place, you can see your Pio records your invoice records your payment records, will optimize efficiency for the organization and allow faster processing times and reduce Of course any any room for error within the manual human data entry or manual approvals that typically plague any organization today.


Craig Jeffery  13:26

Yeah, the in the in the image here with the going from the front door to your table or your chair can be shown by a line versus and how much effort does that take it’s a few steps and you sit down. Just like the chart before there can be a line between two areas. And whether something’s manual or something’s automated, is very significantly different process. The you know, all the steps are involved, possibilities for error differ for errors differ significantly. And so just like you’re gonna have a chart, going from the front door to your chair, that’s a travel and transport there’s a line versus going from the Earth to the Moon or something, something quite a bit more significant. And here we have the number of steps required to go to Earth to the Moon, how dangerous is it is how much it cost and effort is significantly different, though you can still show the concept with some simple lines. I think that’s one of the key things is we when we map out flows, processes, whether it’s procure to pay or other areas of the finance cycle that we understand the effort and the work involved, like how manual is it? How automated is it? Those make a significant difference and the impact are inefficiencies, errors, delays, delays and errors that these defects add to time damage relationships, increase our cost limit our ability to extend and in harm relationships, if you don’t mind me saying it a second time. But that brings us to our first gold question. And this is fill in one our procure to pay processes, highly automated, mostly automated, some heavy manual aspect, mostly manual, I am unsure. And one thing we’ll do is if we have people type the word pay in the chat box, if we have, let’s just say 80. People type the word pay in the chat box, we will share the results of the poll questions, just type the word pay. If you type the word poll, we won’t be upset, it’ll count. It just makes it harder for Brian to count. But that’s what he’s he has to do during these sessions when we’re talking. But go ahead and fill those in and you get a chance. Once you select your option, you can hit submit. And that will register your vote and then we’ll be able to see what the results are. So this will be interesting, Alex to see how many here focusing on the procure to pay or highly automated, how many are mostly manual? And what’s the mix. So with that, we can see the results. I’ll give you a chance to comment on that. But I also wanted to point out the chat box. If you can follow Corpay, Strategic Treasurer, and then our media outlet CTMfile on LinkedIn, just go ahead and click those. Follow them on LinkedIn that helps us stay in touch makes our marketing team happy. So if you go ahead and do that, we’ll be we all that more delighted with with you. So Alex, this is a pretty pretty even mix, mostly automated wins the wins the prize, but we’re around 15 18% for most of them.


Alex Camperi  16:40

Yeah, I love this. I love a diverse, a diverse audience. So we’ll kind of you know, tailor the conversation by the both groups, I would kind of group you know, highly automated and mostly automated, roughly coming in under under about 50%. And the rest a little over 50%. And it’s true when I when I work with organizations in terms of their PO process. A lot is manual, right. So that means potentially no PO process or a paper based PO process and approvals through email. Mostly automated is it’s a good sign, right? That means that there is a PO process in place, maybe there’s some inefficiencies within that process. And then highly automated, I love to see that 15% of the of the audience today, their PO process is highly automated. So from my perspective, right, we’ve got a robust approval process built out, we’ve got spend control, we’ve got coding at the line level, potentially punch out, which I’d love to talk about today, as well. Some punch out POS. I’m coming at this from a tech technology perspective. So I love the latest and greatest kind of technology, punch out chapter 70. That’s kind of what you know, what really gets me excited, helping organizations leverage that latest technology to further streamline these processes. But again, love a love a diverse audience. So I’ll make sure we kind of tailor the conversation to apply to everyone.


Craig Jeffery  18:14

Excellent. Thanks, everybody, for answering the first poll question. Roll, we’ll move on again. Just seeing the others we had 40 responses, and Brian tells me that we need 40 more to send those results to to everybody. Yeah, so let’s let’s continue our dialogue controls matter across the board and finance because we’re dealing with with some of the organization’s most liquid assets. I’ll invite you to jump in here to Alex.


Alex Camperi  18:45

Yeah, so I love I love kind of using examples real life examples, right? So if we take if we take an example of a VP sales, right let’s say the leader of the sales organization identifies that they need a tool to help their SDR team source leads essentially find companies that potentially need a software so VP sales identifies a need he goes out to the market and demos different products decides you know what, I’m going to purchase this tool called Zoom info it’s what we use for our our our pounding efforts. So need is identified right demo process takes place scoping requirements, ensuring it’s a good fit syncs with Salesforce is a real life example. Now when that VP sales is ready to sign a contract with a with the vendors zoominfo. In this case, chances are they’re going to send him the proposal VP sales might negotiate because he likes to negotiate. But at this point, he doesn’t have any visibility in a real time budget updates to his allotted budget. So there’s a big area of concern there. And then in addition, typically, he’s going to sign the contract Zoominfo is going to bill him for, let’s say, 3000 a month, 36,000 a year, up front for the entire license fee, since for this example is related to the software. So, in that uncontrolled process, we have potentially overspending, right? VP sales might not know exactly how much is in his sales software budget. And when he gets that invoice that’s going to affect liquidity. Because chances are, he’s, you know, you’re gonna have to pay that invoice upfront, there might be disadvantageous payment terms embedded within the contract. So if we look at now, manual controls process, so the idea here is to implement control when the spend request is initially submitted. So this is going to force the buyer to think through all of those scenarios. And when it comes to budget and coding that PO transaction to software expense, there can be additional layers within that approval process as well, to prevent something that he may overlook. So something like again, payment terms or billing terms, you can typically negotiate with the vendor to, you know, advocate for quarterly payment terms, or net 60 with a 5% or 10% discount, which again, at the end of the day affects our cash liquidity. So it’s all about that up front control process and to influence behavior, the buyer behavior to inform finance and accounting all these downstream organizations or departments when the spend request is actually created.


Craig Jeffery  22:00

Right.  Now, as we look after the controls process or a controlled process, then we move over to the uncontrolled process where it breaks, it breaks the budget or the cash flow. I guess, as I think about this, you know, the capex budget always lays out things by month, people shift things in and out. And, you know, the expense difference tends not to be too much. Yet, it can have a very significant cashflow difference. Why don’t you walk us through the some of the challenges of an uncontrolled process for the budget implications?


Alex Camperi  22:46

Yeah, I mean, I think this slide does a very, very great job succinctly describing exactly what happens. So, again, I think about this because we deal with purchase orders on a daily to daily basis. So that’s just kind of what my mind goes to how these POs can actually be set up. So again, it really comes back to the upfront work done when the PO requests or the purchase request is created. So in this first line, we have an ideal scenario, right? That V, that example of the VP sales leading needing to buy a software system. When the PO is created, he’s going to split that PO amongst four quarters or months in this case. So that’s going to allow for appropriate budget allocation. So the entire, you know, $36,000, or, you know, whatever it is $50,000 contract isn’t going to hit his budget for a particular just one quarter or one one month, it can be split across various months. And then I have again, from the cash flow perspective, if the vendor is willing to negotiate on a billing billing term basis, you can have that cash flow, come out from your bank account on a consistent basis instead of one. one lump sum. The the downstream effects on the accounting sites, we talked about liquidity, how this affects cash, but also from an accounting perspective, because the work is done up front on the PO and the budgets are appropriate, appropriately allocated, this gives accounting and finance accurate reporting data so they can run their budget versus actual and see what has come in under budget. And what is the actual right the actual spend the cash installed out out of the door. And so, again, when the POs are created, assuming control processes put in place and you’re influencing your buyers behavior, this affects not only budget, but again, cash flow and streamlined accounting processes.


Craig Jeffery  24:57

Yeah, but that’s great, you know, uncontrolled processes are often they can be automated, uncontrolled to fault the automation of the workflows done poorly. But we can also see how manual processes create challenges. You know, and just as a setup, like you to weigh in on this too, Alex is the the resident expert on on AP and procure to pay. But here’s the here’s, here’s my thinking on some of the subject, anything that you know, what, what creates significant costs and problems, both in terms of operational efficiency. And in terms of capital? It has to do with defects when there’s different types of errors, and what causes errors, manual processes, poorly designed processes, a mismatch and timing issues a latency issue, those are the items that cause defects, errors, delays, they’re costly. They prohibit expansion. And so the most fertile area, of course, is made up processes lead to challenges. I know that’s I know, I said a lot there. But that’s my my general view on it. But can you talk us through what we’re seeing here?


Alex Camperi  26:09

Yeah, absolutely. So let me let me just kind of start off by saying, a manual process is better than no process, right, you’re in the right, you’re in a boat, you got the boat pointed in the right direction, you’re not there to the destination, and you haven’t made land, you’re still in the middle of the ocean kind of floating around. But again, it’s better than nothing. It’s a really great starting point. And it shows that organizations have identified the problem, which it is, as we’ve previously discussed, there’s a lot of downstream effects when you don’t have any Pio process in place. So manual process is a step in the right direction. Again, there’s a lot of room for error. So just as I love to use live examples. So taking that same example. Typically, when a process is manual, it doesn’t necessarily have to be paper based. So obviously, if it is paper based, of course, we can assume it’s manual. But even if it’s electronic, let’s say you’ve implemented a POs system, but there’s room for judgment in who needs to approve the purchase order, or there’s room for judgment and how the purchase order is actually created. So the idea behind no manual process, again, it’s better than nothing. But chances are if your organization hasn’t taken a hard look at that structure, and implemented scalable approval processes and given documentation and standard operating procedures to the requisition or is the folks actually filling this out. That’s going to go back on procurement and finance to adjust the PO process or just the PO itself, which is again, a time suck. Just correcting errors when they could be fixed when the PO is actually created just by influencing human behavior. And then in addition to that, you’ve got your PO, right, even if it’s gone through a Pio process, manual process, great. A lot of the time savings gets recognized when the invoice is actually received. So you did all this upfront work on the PO, right? You’re working hard you’re you’ve implemented a process that is scalable, people understand it, they can use it, they’ve got access to it. But when your PO comes in or your invoice comes in and matches to the PO, if you don’t have an effective two or three way match variants, control and process to handle those different scenarios and non PO invoice to a match in a threeway match, then it’s not to say it was all done in vain. And you’ve lost all that, you know, all that time spent. But that is a huge conversion or a factor where you can really streamline or or see an ROI on this process. So in a manual process, again, when the invoice comes in a lot of the time, the accounting team is pulling up the PO whether it’s a paper PIO, maybe they have to log into a different system, match it line by line. So a lot of the times, organizations order from Staples or CPW, Office Depot, sometimes Amazon and so office supplies, things like that, typically there’s tons and tons there could be 50 100 plus line items on any particular invoice. Someone has to manually review that, right, they’ve got to look at what’s been approved on the PIO, what’s actually invoiced and it takes way too much time. And so this is again, manual process is better than no process, but you’ve still got pretty significant downstream effects really affecting accounting, the entry and the review process which is then going to effect still affect finance and Treasury because the longer it takes to enter an invoice, chances are you’re probably missing out on early payment discounts, maybe getting late fees in some scenarios. But again, manual process is better than no Pio process, it shows a step in the right direction. When you’re almost there, it typically doesn’t take much more, you know, to push that over the hump, get it all in one system, and completely automated to handle all those different scenarios.


Craig Jeffery  30:30

Sounds good, Alex. Now, you mentioned to a match and threeway match is I’m pretty sure most of our audience knows what those are, but maybe not everybody. Could you just give the quick foundational description of to a match and three match?


Alex Camperi  30:43

Yeah, absolutely. So a two way match is just a match between the PO and the invoice. So when we have an approved PO, again, a lot of writers upfront budget approvals and things that we want to implement to control, spend, and control coding and automate coding. So a two way match is simply matching that Pio to your invoice transaction. And again, even in a manual process, a lot of that review can be manual review, still prone for error. So ideally, organizations can implement system where the PO record and the invoice record lives in the same system. Because a lot of the time, the systems that support both transactions can implement variance controls. And when I say variance controls, again, just using that real live example, it’s just a variance between your PO which is your approved spend, and your invoice, which is your actual spent. So if we’ve gotten approved spend for 36,000, zoominfo, comes in at 40,000, or whatever, they added some additional user license seats that can influence the approval process further. So again, in simple that was a long winded answer, there’s a lot of different scenarios to consider. But it’s simply just a match between your approved spend, which is your PO transaction, and your invoice, which is your actual spend, and then our threeway match. So if we’re if we’re talking about kind of golden scenario, what everyone in the accounting and finance or strives for, it’s that three way match scenario. So that’s where you have a PO transaction. So you’re approved, spent and it’s already coded, it’s set up, it’s tagged to the appropriate budgets. receipt of goods is this third element in this three way match scenario. So that’s when, let’s say again, I order I buy some software, I as the purchaser or the buyer, mark a receipt of goods transaction. So that’s a way to verify either service had been performed or goods received. So threeway matches again, PO, so our approved spend our receipt of goods, which is just another transaction definition, and our system, and in general, and then we’ve got our invoice. So that all matches up completely, we’ve got a threeway match, I call it our ideal scenario, because that’s the scenario that accounting loves, right? They see an invoice that matches up to the PO matches up to the receipt transaction. A lot of the times they don’t even need approval on that invoice, because it’s already been, it’s already been coded, we’ve got budget approval, someone verify, you know, we can go ahead and pay this vendor by marking your receipt of goods transaction. So this is kind of a straight through process. This is the most automated most ideal scenario in the accounting or accounts payable world.


Craig Jeffery  33:33

So the receiver document, I guess my understands all these benefits, either could be a shipping label, it could be an internally generated document that shows that the goods or services were were in fact received. It might be digital, it might be paper, some artifact.


Alex Camperi  33:51

Yep, yep. It’s typically a combination of both when you look at, you know, any spend management system. So there’s an electronic record, which is just, you know, it’s like a PO dash 123, or a receipt, or an invoice object. And then there’s supporting documentation that goes along with that. So a lot of the times, you know, a mobile app can be accessible. So if I order widgets kind of pivoting to a tangible example, tangible goods being ordered, if I order something on Amazon for my work from home setup, when that good is shipped, and I receive that, I’m going to pull out my phone, use my mobile app, take a picture of the packing slip that creates a receipt of goods object or a transaction. That’s what matches up to the invoice transaction. So you’ve got all three data elements and the supporting documentation to support that. support that information.


Craig Jeffery  34:48

Thanks, Alex. So everybody who’s listening, we’re moving from the slide called manual process to the slide called poll questions. Their second poll question. I know you’re thinking electronic appeal process that comes after this one. So this, this poll question is select all that apply are payable process or payables processes automated payment generation of the following types checks. In other words, it will do the full check run at once, virtual card will create the virtual card entries to be sent ACH, other rapid electronic payment options such as real time payments, wire transfer, something else called other or I am unsure. So we had needed I think 10 more people will type in the word pay or pull. I think we are now at our total. So we’ve hit that. So we will share the poll results. But go ahead and select all that apply on this list. If you select I’m not sure it probably shouldn’t be, you shouldn’t select anything else other than I’m not sure. So we’ve gotten enough responses. And we are set everyone will receive it not just those who type the word a or poll in the chat box. So thank you for your responsiveness there. All right, it’s up. ACH dominates on this. Alex, three quarters have that wire transfer is 50%. Number two is check 61%. Pretty, pretty impressive. That check is not number one. So any other any other thoughts on this mix here?


Alex Camperi  36:27

Definitely. I mean, I think this is, you know, this is this is pretty interesting, right? We’ve still got, we’ve still got a lot of checks processed. Every time I see that, you know, plus 50%, it makes me cringe a little bit, right, because checks, they take a long time. They’re they’re probably the most prone to fraud in my opinion. And then virtual card to virtual cards, seeing that 35% That kind of excites me, because virtual card is kind of the latest and greatest technology kind of relates to you know, the percentage on the PO, automated Pio process. So virtual cards really cool. I love I love talking about virtual card. Since you know most most of our audience are in the Treasury Department. So for those of you who haven’t, haven’t been exposed, maybe this is a new term, or maybe your organization’s not utilizing it. virtual card is just a way to pay your vendors with a virtual credit card. So a lot of banks like a lot, a lot of banks, a lot of systems, AP automation systems, management systems in general, are kind of pivoting or focusing a lot of their efforts on virtual card payments, because when a credit card transaction occurs, there’s a shared pool, there’s an interchange essentially associated when that transaction occurs. So the merchant typically takes a fee of let’s say, it’s 3%, just as an example, or 220, basis points, whatever, whatever that fee is. So the the great thing about that is, there’s additional revenue or cash flow that can be captured simply by paying your vendor. And a lot of the time, you can influence the vendor to accept MasterCard as a form of invoice payment almost as like an early payment discount. So if we pay your invoice today, you know, you’ll accept MasterCard, within certain, maybe net 10, for example. So it’s very similar concept to an early payment discount. In addition to rebates that that come along with virtual cards. There’s also fraud, right fraud prevention, virtual cards generally are a unique credit card number and CVV code associated with each transaction. So if you pay an invoice, that credit card can be swiped once it can be used once and so credit cards stolen, guess what funds are used. So this is cool because it disappears, right? It prevents any future potentially fraudulent activity happening on that virtual card because it’s typically a one time use virtual card and ACH is also great. I love seeing that 73% of payments. ACH so ACH is also very, very ideal. When you have a manual Pio process, it can still be a pain to collect the ACH information and that’s probably why there’s still a large percentage of check because a lot of the time it’s manual you know you have to reach out to the vendor get the routing number through email, get the bank account number through email and then someone’s got a load the transaction again room for error there When keying in the routing number and the bank account number into typically the ERP or the accounting system wherever the pay Minister initiated from. And then we’ve got some international some wire transfer, that can be domestic as well. But it’s nice to again have such a wide variety of payment methods used international also, if you know if any organizations or if those are cross border transactions, one of the one of the benefits is being able to process all payments from one system. So again, a lot of more enterprise grade organizations or systems out there can handle 100% of invoice payments, of course, corporate included, but again, interested in, you know, hearing more and engaging with the audit audience on these different kind of thoughts and ideas around these various electronic payment methods.


Craig Jeffery  40:52

Yeah, some great data. So thanks, everybody for responding to that poll question. Now, prior to my my trick about asking about manual process, then we go to electronic PO process with a goal of better timing efficiency through better information, better visibility, a consistent look and single view of the truth, if you will, between companies. Alex, how do we think about this differently from the manual process side?


Alex Camperi  41:23

Yeah, so this is, you know, we spent the last 40 minutes or so talking about how, how bad and terrible a manual or no Pio processes in general and all downstream effects. So when we consider an electronic process, first off, there’s a couple of slides on remote capability as well. But the idea here is to make the PO process accessible. So it’s great, right? If you implement a PO process, you’ve got you know, approvals built out, you’ve got finance within the approval process for budget check, you’ve got two way match and three way match scenarios set up. But your users have to use it, right, they need to be on board with filling out forms. And so a lot of the time when it when it is a manual PO process, it’s not going to happen, right, they’re not going to it’s, it’s a painful process to fill out a form manually, or send a request through email, get a response and then order those goods. And so because this PO record, typically, it can be accessible to everyone in your organization, right? Anyone who spends money in the organization or has the authority to spend money can request a Pio theoretically. So you want to reduce as much as possible the pain within that process. So when it comes to accessibility, when an electronic PO process is implemented, your users can access to submit a purchase order through a mobile app, or just by logging onto their computer, maybe it’s in you know, it is hand, something happened, they can still use any device to access a web portal, punch in whether you know Chrome or Safari or whatever web browser they’re using, they could just go to, you know, in our case, corporate or.com to access that record, and if they need to spend or submit a spend request, this is first giving all of the users accessibility and ease into access into submitting a purchase Rec. And then also an electronic PO process. Again, when it comes to I love talking about punch out. So punch out is really just the concept of further streamlining the ordering of tangible goods. So when I’m a user, and I’m filling out a PO form, typically I include what I need to buy in app purchase requests. So punch out allows you to punch out to the suppliers catalog. So if let’s say you need to buy something on Amazon or CW Office Depot, the whole theory behind this is again to reduce the pain in the process. Because it’s not fun, right for for someone needing to buy something, they’re not going to want to adopt it, they gotta do all these all this additional processes, they gotta get proper approvals, it’s painful. And so the idea is to again, reduce the pain make it easy for them, they can log into a nice, you know, nice UI have access to reporting, they can banter with the vendor, also directly. So typically, it’s nice to have a centralized place to go back and forth with the vendor on pricing or, you know, maybe there’s a question. And so a lot of this when it comes to electronic Pio process, it also helps develop vendor relationship which I’ll touch on in a couple slides don’t want to get in get ahead of myself again, but I Craig, anything to kind of round things out for us?


Craig Jeffery  45:04

Well, just just a couple of things that like he kept talking about the the punch out process of being being efficient that seemed. That seems quite important. And that’s not a term I’m as familiar with. But this, this idea of a central system single version of truth that helps not only within the company, but the other trading partner as well, if you can provide some visibility into here’s what I’m what I’ve ordered, or here’s what you’ve got, I’ve sent here’s what we’ve received. Here’s what we’ve invoiced. Here’s what we’re planning on paying all those reduce points of friction points of issues where there’s, you know, people are circling back on it. So just a couple couple of comments there. And, Alex, this brings us to our third and last poll question, this is multiple choice. So we end with a nice multiple choice. In the chat box, you can follow Corpay, CTMfile, and Strategic Treasurer. Please do that that makes us really happy if you do. On the implication side is the question we look at payments, and the payments process as a cost center, or a profit center. And then an area ripe for fraud requiring improving security, a key component in our management of liquidity, just another finance area. Other I am unsure. So whichever ones you’d like, and we have enough responses survey, get the poll questions. So that will be a test if you’re listening, or will save the pay for the next webinar or two and use those to apply to whatever count I just happen to randomly pick. But in terms of the applications, like what are these views? Yeah, looking forward to seeing those incompetent and we get to the point where we’ll accelerate towards the final thoughts, we have a few more and more content slides.  So now, as we have cost centers, 50% profit center 90% I think if he had been went back 10 years would be hard to get over five or 10% saying it’s a profit center. So there’s some progress there, particularly with different types of rebates on card programs, etc. area ripe for fraud 34%. I’m surprised that only 50% said it’s a key component in our management of liquidity. That, that surprises me. What about you?


Alex Camperi  47:34

Yeah, that’s interesting. So I think a key component in our management of liquidity. Yeah, I would guess almost 100 100 plus percent of you would agree with that says, you know, it’s got to its cash flow out the door. A ripe area for fraud. I mean, right, there payments. So of course, there’s always room for a room for error room for fraud, whether there’s a bad actor. In this case of fraud, of course, sometimes there’s bank account information was entered incorrectly. So it could just be a failed payment that needs to be troubleshooted and remediated. There’s a lot of organizations are ripe area for fraud 34%. You know, I think it is right, it’s got to do with vendor payments. This is where fraudsters typically focus on right, they can potentially hack and system load fraudulent bank information. And so it’s important if, if your organization is at a stage of considering you know, how to implement not only a Pio process, but just to spend management process in general focus on this area, because there are different kinds of trains or theories on how to minimize risk when it comes to fraudulent payments. There’s a lot of right system built controls around verifying payment methods up front both through electronic or data interchange. So when a payment method is entered into a system, initially, before the payment even goes out, or the invoices received, you can verify those payment methods up front. And so there are controls you can put in place when the vendor is actually being added to the system going through a contract review. So typically, I see organizations and implement, you know, control, it’s a combination of system controls and kind of human checks. But when it comes to an approval process around a vendor edition, right so when a vendor is being added to the system to the ERP for the very first time, you can go through approval processes, right so finance accounting can approve these vendor additions Before they’re marked as active and eligible for payment, right, so that’s a it’s a combination of a manual approval process and an electronic check, essentially to verify account holder name matches up with the legal name of the vendor. So there’s kind of technology solutions that can help streamline fraud prevention. And then also plaid right, a lot of organizations use plaid to verify or actually require the vendor to load their bank information through a login to their bank account via a plaid integration. In the profit center, right, so this is 20%. That’s good. That means 20% of the respondents are probably using virtual card, because that’s how you turn right your your treasury department from a cost center into a profit center. A lot of the times these virtual card rebates have blown me away, they’ve a lot of the time now they can actually pay for the software in terms of the end end process, vendor onboarding, a Pio streamline approval process, you got your spend controls your budget controls, you’ve got an automated process to reduce costs within AP or just spend management in general. And then if it’s a profit center, right, a lot of organizations can actually pay for 100% of that software, and you get to implement a streamlined process around it. And then cost centers just kind of obvious, right, we’re paying. We’re paying vendors. So of course, of course, it’s the cost center.


Craig Jeffery  51:35

Sounds good. Yeah, that brings us to drivers to automation, what what makes people make the shift automation. You know, one of the one of the I’ll talk about the last one, which you cover, whichever ones you’d like to Alex, that the competition is moving to automation. This sometimes is compelling to certain certain industries. And sometimes it’s not that that’s a motivator in some, some industry verticals. And it’s not much of a concern and others. But no organization would do well without without really focusing on their efficiency. And efficiency almost always requires automation. So that’s what what are some of the other highlights there?


Alex Camperi  52:19

Yeah, yeah. So these are so remote work, definitely right. COVID happened, organizations and employees are vouching for hybrid work schedules, remote work schedules in general, even organizations that are not, you know, it’s important to again, make a system accessible to your users. So they use it, you can realize the benefits of consolidate, consolidated and streamline procurement process. And then generational demand, right? I’m, I’m a millennial. And when it comes to data, right data entry or manual processes, I mean, right? There’s just kind of unacceptable when it comes to the younger workforce, we just don’t tolerate it really like this come on, what are we doing here, we got to move faster, we got to streamline, we got to automate. And so right keeping keeping employees younger employees happy. And half the organization, I think, is pretty key. And then it kind of also relates to competition, right? The labor force, it’s a, it’s a very competitive market, there’s a lot of forward thinking, organizations that make make the not just the PO process, but just in general, it’s a way of thinking to kind of streamline and being being competitive in the market, you know, against competitors, but also in the job market, just, you know, lobbying for, for the best workforce, and then supply chain relationships. So we don’t really talk about this much, but I’m glad this is a key point in this slide. So vendor relationships you want in general, right? You want to have a good relationship with your vendor, it’s always transactional, right? You’ve got an agreement with the vendor, they pay you, you know, there’s an exchange of money for services, etc. But maintaining a good relationship. I don’t think that’s focused on enough in, in, you know, a lot of discussions around procurement and accounting in general, but that can that can greatly influence your experience with the vendors that you do business with. They give you potentially better rates and discounted payment terms, things like that. And so it helps fuel your organization for continued growth. We have vendors who want to do business with you. Because unhealthy relationships, you know, chances are, they’re not going to, you know, treat you the best if, if they don’t have visibility or don’t have a method to communicate or negotiate with you.


Craig Jeffery  55:02

Right, so, so what are what are some of the key consideration or areas to consider when we look at automation? I’ll start with a couple of months you finish this off there, it’s, you know, the the issue is how, if we put automation in, what are the types of steps were eliminating kind of like the fallacy of a line, which are the biggest, most involved steps that are manual that generate error? So how much will that relieve us of the manual task? And then the second point is what we’re doing now, if more of its manual, or even if it’s automated, if it’s not automated, rightly, how will that allow us to scale? What will help us scale most properly? Go ahead, Alex. I know there’s a couple more here to talk. Pretty straightforward.


Alex Camperi  55:49

I would just ask the audience, you know, think about these questions, have them, have them resonate, go back and sleep on that. And, you know, go to your organizational leaders once you have answers to these questions. But I think this is a good starting point, I just take a hard look at the organization and the process and determine, you know, what payment methods and files are supported? Why need additional vendors to handle payment execution and credit cards, underwriting anything like that? This is just good kind of fundamental questions to ask yourself and your organization to identify those next steps to improve the process.


Craig Jeffery  56:26

All right. And then that brings us to our final thoughts. Why don’t you start us off? I’ll cover the last two if you take the first two.


Alex Camperi  56:35

Sure. Sounds good. So just to kind of wrap things up impact, right clearly affects multiple departments within your organizations typically riddled with manual process and data entry and human error. overspending, so I think that’s, you know, we’ve kind of tried to drive that point home. And then automation, right? We’ve talked a lot about implementing a process around control and budget approval and automation with a two way imagine the three way match and punch out. It also has to do a lot with scalability. Right? So part of the reason, almost the major reason for implementing a Pio process and standardizing that process is to allow your organization to be scalable. So when you have those pre defined processes in place, you influence your requisition errs behavior, that process is scalable. And organizations that don’t have necessarily a scale scalable process. If they have a manual Pio process, it’s going to create a lot more pain as your organization grows.


Craig Jeffery  57:45

Yeah, so the third point here, the the thoughts what some of the mindset that’s necessary, you know, your competition’s automating, we all have to improve how our organizations run. And the idea of if I automate once now I’m going to realize the benefits from them forward. It’s a it’s an annuity, providing benefit going forward. And the other part is, where are we technologically, automation is far, far easier now than it was three years ago, five years ago, 10 years ago, the tech is better, it’s easier to integrate this matter. So the payoff is there, usually more quickly, it’s a challenge because one of the biggest constraints tends to be availability of IT resources. And so the better the tech is today, the less of an impact is on IT resources that you have. And then finally, from an inefficiencies perspective, where are you most inefficient? If you draw out that that shard of all those rectangles going from one area to another? Where are you most inefficient? Can you eliminate steps or they can be can they be simplified, can be automated, if you have a digital handoff, you have less opportunities for error, and less time absorbed into the system of people tracking and trying to balance a manual handoff as opposed to a system to system integration. But when you look at these changes that you make, measure the benefit, measure the change in errors, the decrease in error rates, the throughput, the scalability, measure those things and track them, and show them to your organization as you roll out this project. And that will provide you with additional fodder and support for other projects. I’ll drop us on to our last slide with just a minute to go and Brian can take us home. Thank you so much, Alex, thank you everybody for listening. And Brian, what what’s what’s coming up next and how can people stay in touch?


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