Return to sender

August 10th, 2010

Andrew Jesse, Country Manager, Basware UK

Like any successful relationship, the interaction between buyers and suppliers needs to be a two way street of give and take. Payment practices can often make or break supplier relationships; after all, nobody appreciates being paid late and having their cash flow jeopardised.

Many organisations don’t even realise the impact their payment habits can have on their supplier. Particularly when the recent recession was at its height, for many larger businesses, extending out payment terms rapidly became a seemingly simple solution to their own cash flow needs. However, the impact of such short-sighted behaviour was clearly visible in the collapse of many smaller suppliers, as well as some uncomfortable working relationships with others.

That’s not to say that renegotiation and smarter spending shouldn’t be top of the priority list for canny financial teams, recession or otherwise; but for any spending strategy to really work, it pays to keep an eye on the long game as well as the short.

Many suppliers are willing to negotiate discounts for guaranteed swift payment; other potential areas for making savings include negotiating discounts for purchasing in volume or making early payments, as well as settling on more flexible delivery terms. Once the best deal has been cut, a connected network can go a long way to helping businesses on both sides meet their end of the deal.

A solution such as Basware Connectivity provides the tools to bridge the gap between buyers and suppliers at every stage of their interaction. From ensuring that information is correctly captured and shared, to managing timelines and communications for purchasing and payment, Basware Connectivity delivers value, control and visibility at both ends of the spectrum.

As we move into what’s commonly becoming known as the ‘new economy’, reputation is no longer just about your brand, your product and your people – it’s also fundamentally linked to your financial etiquette. Using the right tools to ensure you can safeguard the valuable relationships that keep your business running and credible is not just nice-to-have, it’s essential.

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A keen, green finance machine

August 6th, 2010

Andrew Jesse, Country Manager, Basware UK

With the rise of the green agenda over the last five or so years, businesses across the globe are making it their responsibility to reduce their carbon footprint. A polite ‘Think Green, do you really need to print this email out’ is almost the standard close on most emails today and we’re conscious to adhere to this to ‘do our bit’ and avoid unnecessary streams of printing. Likewise, turning off lights and even incentivised car pools or cycle-to-work schemes are becoming standard procedures in many companies. But are businesses missing a trick, by ignoring the green potential of their financial processes?

Moving away from paper invoicing is just one way in which an organisation can significantly impact its own carbon footprint.  In 2009, 30 billion invoices were sent across Europe alone .  A typical invoice is approximately three pages long meaning that 90 billion pieces of paper were printed out, posted and flown across Europe in just one year. If all of those invoices were sent electronically 1.3 million trees, 10.5 billion pieces of A4 paper, 13 billion litres of water and 5.4 kWh of powers could be saved each year on just the paper manufacturing alone. The equivalent of which could power 1.6 million 40W lamps, constantly, for 24 hours of the day for an entire year. Impressive numbers in theory, but how feasible are they in practice? Very, it turns out.

Basware has been an industry leader in promoting the electronic exchange of invoices in a bid to improve environmental best practice, internationally, amongst not only our own customers but also other buyers and suppliers. By promoting connectivity between buyers and suppliers, the Basware Global e-invoicing Open Network helps companies switch to e-invoicing, so they can by-pass the vast amounts of paper invoicing that they produce each year to help them achieve Corporate Social Responsibility (CSR) or green targets.

Basware UK customer Lloydspharmacy is one example of how well the system works in practice. Using Basware e-invoicing solutions Lloydspharmacy, one of the UK’s leading pharmacy chains, is processing a large part of the 1.2 million invoices it processes annually, electronically. Lloydspharmacy is in the process of moving all of their suppliers to e-invoicing, a move which, they have calculated, will eventually save over 419 trees and 3.5 million pieces of A4 paper each year.

Although e-invoicing is an excellent tool in reducing the need to print, process and post paper, what’s important is the wider lesson for businesses; carbon reduction doesn’t have to be intimidating, overwhelming or expensive. Often the smallest changes can make some of the biggest differences

[1] “E-Invoicing / E-Billing in Europe – Taking the next step towards automated and optimised processes”, February 2009

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Andrew Jesse market trends

Tackling Financial Risk – Inside and Out

August 3rd, 2010
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The business landscape has fundamentally changed.  The global recession has created a new economic reality for businesses, in which business risk mitigation is now paramount – both within organizations and in their wider networks.

In response to this economic backdrop we have produced Tackling Financial Risk – Inside and Out, which explores the risk landscape and focuses on how businesses can best mitigate against these risks, and considers how organizations can reduce risk throughout the financial value chain by smoothing the purchase-to-pay process.  The Guide is available for download here.

Finance and procurement in particular face a greater urgency to optimize the systems within their remit that can negatively impact the business. From the dangers of poor spend management, fluctuating currencies, shaky cashflow positions and shortcomings of internal processes through to the external risks that affect supply chain stability, risks lurk everywhere.  These risks are also increasingly interconnected – and difficult to identify.

So how do organizations begin to address these risks?  To control financial risk it’s essential to start from a position of knowing where your money is going, having control over purchases and payments, and being able to manage costs appropriately.  Visibility, control and process efficiency is key.  However many organizations don’t have adequate visibility or control of their finance and procurement processes.

And what better way of demonstrating how this can be done than looking at how we’ve helped some of our customers?  Within this guide, you will find customer stories defining how they’ve successfully tackled such issues – Lloydspharmacy, the UK’s largest community pharmacy operator, and ACCO Brands Europe, leading supplier of office products.  Perhaps you will find something to relate to in their stories!

The guide outlines areas of risk and introduces how purchase-to-pay can play a crucial role in de-risking financial networks: facilitating greater visibility and control, enabling companies to more accurately forecast and manage cashflow, leveraging buying power and better managing the supplier base.

admin market trends

Beat fraud in the new fiscal year

July 28th, 2010
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It was tax time for businesses in Australia with this month kicking off the beginning of a new financial year.  In the midst of this busy period, it was surprising to uncover a PricewaterhouseCoopers report1 which found Australia has almost double the global average of accounting fraud.   That’s a massive 40 percent of Australian organizations who reported at least one incident of fraud in 2009, compared to the global average of 24 percent.  The report also found that in Australia more than a third of the frauds cost more than $1 million AUD and stealing or asset misappropriation was the most common form of fraud.

These statistics are a reality check for many organisations.  So, with the new fiscal year ahead what can businesses do to better manage their financial processes?  Here are some tips:

  • Process all your incoming purchase invoices electronically using an invoice automation system that forces every  out going payment to be approved by more than one person with sufficient approval limits.  Invoice automation gives you greater control and  transparency and your business is provided with a full audit trail which is vital in the event of mismatched invoices or discrepancies with suppliers.
  • Minimize possibilities for human intervention with the critical supplier data (e.g. supplier bank account details) by using e-invoicing with your suppliers.  E-invoicing removes all manual keying of invoice data to the financial systems, leaving no room for fraud.
  • Get your indirect spending (non strategic spending) under control by using a purchase management system that supports a controlled way of spending company money using catalog based buying and secures that proper approval protocol is followed already prior to any purchase being done.
  • Centralize you accounts payable process into a financial shared services center using best available technologies and eliminate the handling of outgoing payments by any local finance functions. Centralized processes are significantly easier to control and remote local functions.

To download a full copy of the PricewaterhouseCoopers report, click here.

Karri Lehtonen, Vice President, Australia and New Zealand

1The 5th Global Economic Crime Survey – PricewaterhouseCoopers

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Combining e-invoicing and eProcurement doubles chances for achieving AP invoice processing excellence

July 21st, 2010
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“Best AP departments 50 times as productive as the least effective1” – the headline finding from a study we commissioned Forrester Consulting2 to conduct.  We asked Forrester to examine the performances of accounts payable departments in relation to the levels of efficiency within their invoice handling processes. 

Applying a complete purchase-to-pay process combining e-invoicing, integrated procurement and finance solutions, is found to lead to excellence in accounts payable departments, and increased productivity for organizations.

Examining the AP departments’ performance in terms of how many invoices each AP employee processed annually, the study measured the gulf between best and worst performing AP functions to determine what defines AP invoice processing excellence.  The findings revealed a significant disparity between those accounts payable departments that are still relying on paper-based processes and those organizations that have adopted automated processes and e-invoicing. 

47 percent of the organizations surveyed still receive more than half of their invoices in paper form, which leads to increased errors, delays and costs resulting from manual processes.  According to the study, “the worst-performing AP departments don’t seem to realize how far they lag behind their peers.  In contrast, 60% of those in the top quartile saw further scope for improvement. The least-efficient departments can’t move forward until they realize just how far they lag behind their peers.”

Integrated purchase-to-pay process combined with best practices such departmental collaboration between finance and procurement enable organizations to transform their AP departments to top performers, delivering cost savings and ultimately boosting the bottom line.  Combining invoice automation with e-invoicing and eProcurement within organizations was shown by the research to double the chances of achieving AP invoice processing excellence and maximize straight-through processing (STP). 

Eliminating human intervention in the invoice handling and approval process cuts manual data capture tasks such as document scanning and data entry, thus not only increasing the speed of the process but also providing cost-savings within the business.  By implementing purchase-to-pay solutions, organizations can gain control and visibility over finance and procurement processes and improve overall process performance.

1In this study, Forrester conducted an online survey of 100 large organizations in the US, the UK and France.
2“Finance And Procurement Work Together To Achieve AP Invoice Processing Excellence. AP Departments That Combine Technology With Best Practices Are Most Likely To Get Top Results”, A commissioned study conducted by Forrester Consulting on behalf of Basware, April 2010.

Juha Hakamies market trends, procurement

Basware continues strong growth in Q2

July 16th, 2010
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Announcing our interim Q2 financials earlier this week, we were proud to announce continued growth and development across the business and internationally. Building on the growth in a tough economic climate in 2009, and maintaining the momentum from the Q1, Basware experienced a strong net sales growth of over 17% from Q2 2009 to EUR 27 million. Operating profit continued to show significant growth, at EUR 3 million, an increase of 40% from the same period in 2009, representing 11.3 percent of net sales.

Further regional growth has occurred with international operations accounting for 53% of net sales, a growth of 18%. The fastest growth was seen in the North American and Australian territories, with a combined growth of 141%. Net sales are expected to continue their positive growth on the level of 2009, and operating profit (EBIT) is expected to represent 10 to 15 percent of net sales.

During Q2, the fastest growing areas were Basware Connectivity services and Software as a Service (SaaS) operations, with an increase in net sales of 33%, and license sales, up 27%.  During the quarter, Basware signed a major Connectivity services agreement with one of Europe’s leading energy suppliers, Vattenfall. Furthermore, Basware agreed to deliver purchase-to-pay and scan and capture services to a university sector service provider UNINETT FAS in an agreement exceeding EUR 3.5 Million over the next 8 years.

The overall H1 results showed an 11% growth in net sales, to EUR 49 million, with an operating profit of EUR 5 million (a growth of 37%). International operations grew by 14% to 53% of net sales, and automation services grew by 50%. Download the full interim report.

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Connectivity for suppliers – automating the Accounts Receivable processes

July 15th, 2010
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We’re pleased to announce the addition of supplier functionality to our Basware Connectivity services.  This means that Basware Connectivity for Suppliers now enables Accounts Receivable departments to deliver all sales invoices electronically to their customers, irrespective of the invoice format required by the customer organization.
Toshiba TEC Germany, a recent Basware Connectivity for Suppliers customer, found in an internal study that by the time a paper invoice was printed, enveloped, stamped and sent to the post office for delivery, the total cost per invoice averaged € 1.61. A comparable electronic invoice costs a mere € 0.40. According to recent calculations, Toshiba is experiencing 75% savings in invoicing costs!

As well as the cost savings, an increasing number of Accounts Receivable departments are facing demand from their customers to provide e-invoices. We are already seeing this become a key factor in vendor selection processes as they seek to improve collaboration across their supply chains. By providing an easy, automated process for the Accounts Receivable department, we hope to ensure companies cash visibility is improved, savings are made and some competitive advantage too.

Juha Hakamies Uncategorized

Lost in Transaction 2010 – Weak Finance Processes Hitting Global Business Profits

July 8th, 2010
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Our latest global research, Lost in Transaction 2010, is now published!  Following on from Cost of Control 2010, this study focuses on the Accounts Payable (AP) environment with the intention being to measure AP sophistication…or lack of!

Based on responses from 550 Heads of Accounts Payable from large enterprises around the world, this research explores the relative strengths and weaknesses in the financial processes behind Accounts Payable (AP) departments across Europe, America and Australia.

Lost in Transaction 2010 puts finance processes under the spotlight with weak processes found to be undermining global business profits; AP teams are missing early payment discounts, incurring late payment fees and reneging on payment altogether – largely due to human errors.

With direct control over cash flow, finance professionals are under growing pressure to strengthen controls, drive out costs and increase process efficiency.  They have a number of tools at their disposal to achieve this but the research shows that they are not always using these to best effect. 

The key findings of the Lost in Transaction survey can be summarized as follows:

Turning up the heat on finance

  • 59% think the AP department as a finance function is becoming more strategic
  • 59% believe that the AP department has a positive effect on profitability
  • Almost half (48%) of respondents think that AP performance is being monitored more closely than a year ago

Costly finance errors

  • Weaknesses in finance processes are resulting in additional costs in some cases – 30% of respondents state having missed early payment discounts and 27% have incurred late payment fees in the past 12 months
  • 24% of respondents know of instances where their organization has not been paid due customer / external finance department errors and 35% know of suppliers who have not been paid due to internal finance department errors
  • Respondents also state that 7% of invoices contain errors, equating to more than 6,000 erroneous invoices per year in a typical enterprise from the study 

Human error

  • Human errors whether by the AP (58%) or the procurement department (53%) is identified as the biggest cause of AP errors. 
  • Lack of communication between AP and procurement departments are highlighted as a cause of AP errors in a quarter (24%) of companies

Lost in process

  • Invoice scanning / data entry is identified as both the most time consuming (38%) and the most error-prone (41%) element of inbound invoice processing
  • 4 in 10 invoices are not based on purchase orders (POs) and one third (32%) of finance departments have difficulty reconciling invoices with POs
  • 61% of respondents think invoice processing could be speeded up and 56% think it could be more accurate

The automation imperative

  • There is much reliance on manual methods to match POs against invoices – only 1 in 4 companies use specialist invoice processing applications and there is low adoption of P2P products (5%)
  • Automation tends to be partial in most areas – highest in issuing POs (47%), tax accounting (47%) and approving payments (45%) and lowest in supplier interaction (29%) and contract management (31%)
  • Companies, however, recognize that automation can improve matters – 60% think increasing automation is a reliable method for removing payment and accounting errors from the business
  • 62% of respondents believe that moving towards higher levels of automation will improve profitability

In summary
Finance departments occupy a unique position in companies with the potential to truly influence a company’s financial performance.  The research depicts finance departments about to reach a tipping point, where costly errors and inefficiencies can no longer be tolerated as companies search out additional cost savings and hunt for profit.  Despite huge advances in invoice processing technology, many companies have been slow to adopt end-to-end tools, opting instead for operational systems that still rely on considerable manual processes. 

Cash constantly flows through organizations and mirroring this, finance departments need to be dynamic and flexible in their processes.  Against this backdrop, finance automation should not be avoided because of the perceived cost, but instead regarded as an ongoing evolutionary investment that brings order to chaos, and ensures finance is concerned with profit margins and not inhibited by avoidable margins of error.

Juha Hakamies market trends

Cost of Control – revisited

July 2nd, 2010
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After our launch of the 2010 Cost of Control research, we wanted to highlight the regional themes, drawn through by the coverage received in different markets. With the research covering the main markets for Basware, including the US, Europe and Australia, it provides us with a good temperature check both across the globe and within finance and procurement departments.

For the most optimistic outlook on the market from a finance department, look at Australia, with Australians showing greater confidence in all areas than the overall sample, particularly on the regional economy, where 40% are confident, as opposed to 19% in the overall global sample. This likely reflects the general perception that the recent recession has not affected Australia to the extent that it has affected other markets in the developed world. CIO magazine in Australia highlighted the study finding that 84 per cent of Australian finance executives surveyed are planning to use invoicing and purchasing automation over the next 12 months – rather a good hot spot for us at Basware!

The US publications, including Supply & Demand Chain Executive, discussed similar issues as those in the UK and Europe, with finance’s lack of visibility across the supply chain causing concern, but also the efforts being made over the last 12 months to ensure better collaboration between finance and procurement professionals.  Director of Finance discussed the positive trends in this relationship, as finance becomes more aware of procurement’s impact on risk.  A more vigilant 39% of respondents cite procurement as a financial risk exposure, up from a more insulated 28% last year.  These findings indicate that lessons have been learned in the last 12 months, probably as finance departments were rocked by unpredicted turbulence within supply chains.

Overall, it was great to see such interest at the global level in our annual research piece, with the regional trends highlighted as well as a strong commonality being discussed around the collaborative experience. We are already looking forward to the next set of research findings to share with you all.

Juha Hakamies market trends

Shared services and outsourcing week event – Europe

June 15th, 2010
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This year’s European event in Scotland really showed that this kind of working practice is ever more mainstream- leading on nicely from my colleague, Karri’s experience in Sydney! The participants this year were high level decision makers, with a definite agenda for moving to a shared services model, or improving on their current shared services. After previous feedback to the event organisers, there were more workshops rather than one-way PowerPoint presentations and this seemed to work well. Our sessions were very well attended and the people who came to them were really engaging – thanks to you all for some very interesting discussions!

The key areas we focused on were to do with handing various intra-country issues, such as VAT handing concerns, as well as looking at the whole change management processes that underlie the establishment of a shared services centre. The cost savings were already assumed and the discussions really were about what kind of shared services implementation companies need to suit their specific environment – be it one in each country, or one for the entire company based in one country.

It was interesting to hear that many felt they needed to consolidate their ERP systems before they could attempt a SSC. We of course suggested, that with our solution that really isn’t necessary, as we can act as a bridging solution across multiple ERP environments! In addition,  there was discussion around the automation of the SSC, especially around matching invoices with purchase orders. Many of the attendees had ROI calculations based on good matching rates, so looking at technologies and services that helped with this process were key to helping them realize this.

Overall we really enjoyed the event and looking forward to future discussions!

Rowan Lemley, Product Marketing Manager, Basware Corp.

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