International Treasury Management Virtual Week | Celebrating 30 years as the world’s leading treasury event

| 19-05-2021 | Eurofinance | treasuryXL |

International Treasury Management is the annual meeting place for 1000s of the World’s most senior treasurers to learn and share experiences in valuable peer to peer discussions. With a reputation for ground-breaking sessions and world-class speakers, our 30th anniversary event will explore the boundaries of the profession, take a glimpse into the future of business, treasury and working life as well as offer the practical case studies on the treasurer’s top agenda items.

Only one treasury event can deliver the comprehensive mix of big picture global insight and granular treasury knowledge you need to make the right choices for the future.


Back to the future, again

Over the past 30 years since EuroFinance’s inaugural conference on International Cash and Treasury Management, much has changed. Treasurers have firmly become business partners, technology experts, risk managers and opportunity spotters. They often lead fundamental change within the company as markets, business models and technology shifts.

What next? This event will delve into how treasury operations can gear up for the future, having learned the lessons from the past. Where, who, what and how will the corporate be in the coming years and what is treasury’s role?

Keynote sessions will offer big-picture insight alongside themed streams including:

  • Payments revisited
  • Risks and Rewards
  • Digital strategies
  • Practical solutions to day-to-day Treasury challenges
  • The power of partnership

What makes International Treasury Management the must-attend event of the year?

  • networking on a global scale – a significant rise in attendees in 2020 boosted the value networking with banks, providers and potential clients… all in one place
  • strategic insights and best practices – get solutions to the challenges you face from treasury and economic experts during keynotes, practical case studies, fireside chats, analytical panels and more
  • future trends – delve into the latest innovations and new technology driving change in treasury, and their practical applications
  • live Q&A with world-class treasurers – enjoy borderless networking and live Q&As with high-profile speakers directly after each session
  • cost and time-efficiency – tune in form anywhere in the world, at the click of a button with no long distance travel or accommodation costs
  • continued learning – catch up on any missed sessions and re-watch your highlights, on demand for up 2 months after the event
  • unite your international teams – as a free event, it offers an opportunity for your whole treasury team to attend. Perfect for encouraging learning and development at all levels

September 27th – October 1st | Virtual

Register Now for Free!

 

 

Global Treasury Americas | Planning the post-pandemic Treasury

| 12-05-2021 | Eurofinance | treasuryXL |

The leading virtual event defining today’s corporate treasury agenda

For the past year, treasurers have sweated the core stuff: securing short-term liquidity and longer-term credit; enhancing risk monitoring and hedging processes; and dealing with the implications of remote working. But in the complex and uncertain transition to a new ‘normal’, finance functions will have to resume the search for growth. Can treasury help identify where growth is most likely to come from and which parts of the business are most threatened by digital disruption? And can they do better – can they help build the business strategies needed to prosper as we emerge into the next phase of the pandemic.

This event will explore the practical steps treasurers can take to make enterprise and treasury digitalization a reality and look at varied case studies of transformation in the treasury. The event will look in-depth at new technologies in action as well as more strategic concepts including the sustainability agenda. We look at how treasury can make a difference. Finally, we look at what it takes to transform treasury wherever you are in your journey in order to increase efficiencies, protect the business and make a difference to the bottom-line.

Global Treasury Americas: Planning the post-pandemic treasury

2 days of actionable insights, plus real world case studies tackling the key issues facing treasurers in the region. Topics include:

  • The Great Bounce-back
  • Practical steps on the path to automated Treasury
  • Why sustainability matters for Treasury
  • Name that threat: What’s next
  • Building a true cash culture
  • Payments evolution – the Treasurer’s view

What makes Global Treasury Americas your must-attend event of the year?

  • Understand the practical steps towards making enterprise and treasury digitalization a reality
  • Gain actionable solutions and best practices from varied real-world case studies
  • Network with an unrivalled audience of 800+ senior treasury professionals across the Americas
  • Benchmark your operations against the regions most forward-thinking treasury teams
  • Explore how to support business growth whilst balancing the traditional role of treasury

June 9-10 | Virtual

Register Now

 

 

SpendLab Analyzer | Centralization of Accounts Payable Data Platforms

| 7-4-2020 | treasuryXL | SpendLab Recovery |

Our Partner SpendLab Recovery is introducing the SpendLab Analyzer, a way to centralize accounts payable data platforms worldwide. The platform has the ability to detect failures on Vendor level and provide real time insight. Furthermore, the SpendLab Analyzer can discover undue, incorrect double payments and VAT anomalies

More and more CFOs and Financial Controllers are choosing to work with the latest technology available within the SpendLab Analyzer because of the direct results in extra money, savings and data quality. The result of the analyzer is a recovery of more than 240 million euros in overpaid amounts to the tax authorities and suppliers over the past 5 years.

In addition, the quality in data improvement helps to save money in processes and the statistics ensure that the Compliance & Risk reporting is improved. The SpendLab Analyzer can be used independently of the ERP system (SAP, JD-Edwards, Oracle) used by the organization.

More info and contact information here.

 

Alternative Risk Finance Part 4 – Risk Trading and the Future of Insurance within Treasury

| 07-12-2020 | Mark Roelands | treasuryXL

Intro

This series on alternative risk financing has been about alternatives to traditional insurance, which get are more important role in the current hard insurance environment. How to build the business case is explored in Part 2 and the alternative structure of Cell Companies is explained in Part 3. The last part of the 2020 series is about the future of alternative risk financing, risk trading and the role of treasury in insurance.

In a data driven era, with rapid advancing capabilities there may be more efficient manners to transfer or share risk, insight into risk scan be increased as well as the subsequent possibilities to retain or transfer. Although this is an outlook into the (not too distant) future, it is important to be aware of developments and get into the position to benefit from these developments preparing for 2021 and beyond, the hard market isn’t just a 2020 phenomenon.

Treasury Risk Management

Obviously, risk management is a critical part of Treasury processes. The scope of risks to be managed however within Treasury varies significantly between companies. Common risks in scope include operational risks within payment processes and financial risks like currency risk and interest rate risk. Insurable risks (like property damage and general liability) can be part of Treasury responsibilities, but can be part of legal or enterprise risk as well. Often this relates the the nature of the business as well as the size of the company. For instance, high liability type of businesses often have insurance within a legal function.

With advances in data as well as the analytics capabilities it is possible to expand the scope of insurable risks and thereby the responsibilities of Treasury. As will be explored, with further advances insurance is similar to hedging. This then comes down to matching the risk exposure with the transfer instrument, can this be matched appropriately?

 Parametric vs. Indemnity cover

Traditional insurance is well suited to high frequency, low severity events which is covered in the lower part (in terms of limits) of the corporate insurance program. A captive might be part of that area of risk as well, which has a higher degree of predictability. A multitude of small-scale losses are easier to model and manage due to the richness of historic data and the fact that the law of large numbers will enable accurate macro level predictions. Indemnity cover is based on carefully drafted wordings, and a loss has to be established before ultimately (which may take some time) a claim payment is made. The principle of parametric insurance intends to speed this process up to a great degree, as shown below.

This is not intended to declare the end of indemnity cover, this can still be highly efficient. But parametric insurance is increasingly important to complements this traditional approach to improve both the efficiency as well as effectiveness of cover.

Critical is the carefully constructed payout trigger. Traditionally this has been weather related like rainfall or windspeed at a certain weather station. This is increasingly tailor made with on-site weather stations preventing any mismatch in hitting a trigger (“basis risk”). Next to that other perils are increasingly possible, production downtime for instance can be objective measured. Lockdown measures also provide a clear objective trigger, and this is being discussed extensively. With increasing amounts of data and advanced data analytics minimizing a potential mismatch can be done objectively for a large range of perils. Basis Risk in that sense is the equivalent of retained risks in indemnity cover.

Enabling parametric cover does however mean that data should be available as well is a clearly defined model how trigger and potential loss relate. That means that (risk) data needs to be governed and managed, ensuring good quality data available to the treasurer. This may also imply that the treasury or insurance professional needs to tap into more data sources in order to model the trigger and exposure optimally.

Trading

Parametric insurance was initially developed in the form of catastrophe bonds to provide extra reinsurance capital for major disasters. Still very often this is based on large volume transactions. Global capital markets dwarf reinsurance markets in terms of capacity. The Aon Reinsurance report 2020 estimates the global pool of reinsurer capital is $532bn. This is tiny when compared to the global equity market of $75tr, a global bond market of $100tr and a global derivatives market with a notional principal value of $700tr. Insurance provides a very interesting type of risk which is not or limited correlated with traditional investment risks and provides a very interesting new asset class. Being able to transact in smaller volume, while remaining the good trigger-exposure link is a challenge, but this is being resolved with a Risk Trading platform like Ryskex. 

Integration into Treasury Processes

An In-house Bank structure is common treasury terminology, the in-house insurance structure is that fors ome treasurers. A Risk Trading hub enables to integrate the best of both worlds and create a shared risk pooling vehicle enabling efficient and effective sharing of risks within the organisation.

A key feature in this approach is Treasury Technology. The Treasury Management Platform or the Trading platform which most (dedicated) treasuries use will inevitably play a key role in the infrastructure of the Risk Trading hub. They provide the centralised point of entry and point of control for trading. Via API or other connectivity the link to a Ryskex platform is possible and allows the treasurer to trade a ‘traditional’ insurance risk as easily as USD risk, hedging any risks that the treasurer isn’t willing to retain.

Conclusion

Whether it is possible to have a parametric trigger or a step further to trade risks is work-in-progress, but as corporate insurance manager, treasurer, captive manager it is critical that initial steps are already being taken. Are you in control of your risk data (which is broader than an historical claims overview)? Which data are you able to utilize and is the data quality being managed? The roadmap for a future proof treasury starts today.

Check my previous blogs of this serie:

  1. Alternative Risk Finance in a hardening insurance market
  2. Alternative Risk Finance Part 2 – Building the Business Case
  3. Alternative Risk Finance Part 3 – Cell Company

 

 

Mark Roelands

Risk and Compliance Specialist

 

 

Update Digital Finance Summit 2020

| 02-12-2020 | François de Witte | treasuryXL |

After having worked for more than 30 years in banking, François launched his own consultancy activity, FDW Consult, specialized in finance and treasury consulting. From 2014 to 2016, he was also Solution Partner Treasury & Finance at USG Professionals. Since then he took up several assignments, including one in the automotive sector with Ginion Group and with Ibanity, part of Isabel Group in the area of PSD2 and open banking. He currently is Senior Project Manager Treasury at Gaming1 (part of Ardent-Group). 

Introduction

For the 5th year, Fintech Belgium organized its annual seminar, the Digital Finance Summit, this year with as main theme “The World After”.
Due to the current sanitary situation, this year’s edition went entirely ONLINE! It was attended by over 400 persons. There were also over 230 virtual stands of exhibitors; The organization was seamless. I perceived a participant experience which was not that far away from a physical gathering.

 Some messages

 Main Stage Sessions

During the general sessions, the main message was Digital becoming the new normal. Xavier Corman, Board Member of Fintech Belgium stated: “The Covid Crisis has also brought good thing. Years worth of Digital transformation.”.

Despite the virtual exchanges, which following on the COVID19 crisis, increased dramatically, in a digital worlds, People and trust become more important. We got also interesting testimonies of banks moving to disruptive models, such as Aion (e-bank providing full set of services for a fixed subscription fee and KBC (using AI models to improve its services in the insurance).

There is a large need for digital identity, like e.g. ITSME in Belgium, but more importantly of the interoperability of the digital identity solutions. Prof Bruno Colmant • highlighted that the creation of Digital currencies represent a new paradigm and a tectonic revolution in the monetary landscape.

Evolution in the cards Landscape

Within the cards busine, the tokenization of cards is increasing, reducing the friction, whilst keeping the security.
Tokenization is the process of protecting sensitive data by replacing it with an algorithmically generated number called a token. Often times tokenization is used to prevent credit card fraud. In credit card tokenization, the customer’s primary account number (PAN) is replaced with a series of randomly generated numbers, which ares called the “token.” These tokens can then be passed through the internet needed to process the payment without actual bank details being exposed. The actual bank account or credit card number is held safe in a secure token vault.

 

Evolution in the payments world

Following a three-month public consultation, the EPC (European Payment Council) has published on 30/11/2020 the first version of the SEPA  Request-To-Pay (RTP) scheme rulebook.  The Request to Pay (RtP) is an umbrella term for several scenarios in which a payee takes the initiative to request a specific payment from the payer.

The scheme covers the set of operating rules and technical elements (including messages) that allow a Payee to request the initiation of a payment from a Payer in a wide range of physical or online use cases. The scheme can be considered as a complement to the payment flow because it supports the end-to-end process and lies between an underlying commercial transaction and the payment itself. An RTP as such can be seen as an enabler for digital payments.

The first release of the SEPA RTP scheme is scheduled to go live on 15/6/2021. The SEPA RTP scheme, combined with the SEPA Instant Credit Transfer could be a challenger for card payments, being much cheaper for the merchants. It might take some time to take off.

Conclusion

This conference was a good forum to get an insight in the Belgian FinTech market. I saw a lot of interesting initiatives and consider that Fintech will bring a lot of added value in the payments and corporate treasury landscape.

If you want to learn more on this topic, I invite you to attend the one day training session, which I animate on the topic on 16/12/2020 “PSD2 & Open banking: impact on the financial ecosystem and new challenges

 

François de Witte
Founder & Senior Consultant at FDW Consult
Managing Director and CFO at SafeTrade Holding S.A.
treasuryXL ambassador

Digital Finance Summit | The World After | 24 November 2020

| 20-11-2020 | François de Witte | treasuryXL |

Only 4 days left for the Digital Finance Summit, the highly renowned conference focusing on the ever-increasing digitalisation of the financial industry, is back again this year to set the path for a bright and more dynamic future at the heart of Europe.

Digital Finance Summit is at the crossroads between Tech Talent, Regtech, Cloud Computing, Big Data, Blockchain, Crypto-assets, Artificial Intelligence, Crowdfunding, Cybersecurity and Banking. It gathers global innovators looking to get inspired by a unique blend of industry leaders and turboboost the whole European FinTech ecosystem!

ONLINE EVENT | NOVEMBER 24 | 2020

Due to the current sanitary situation, this year’s edition goes entirely ONLINE!

For the 5th year in a row, FinTech Belgium is preparing a creative programme spread over 3 stages with Keynotes, Workshops and the European FinTech Pitch Battle!  And, of course, be prepared for the most qualitative networking in Digital Finance in Belgium!

REGISTER NOW!

 

 

 

SpendLab Analyzer: Each invoice is tracked at VAT cost line level throughout the entire administration

| 04-11-2020 | treasuryXL | SpendLab Recovery |

Last May, we welcomed Spendlab Recovery as our Premium Partner, in order to provide our treasury community with expertise in the field of Liquidity, Accounts Payable and Risk Management. SpendLab is the Dutch market leader in spend justification. The company is a former spin-off from the Dutch government with a 98 year old heritage in procurement. It currently specializes in generating liquidity for clients by analyzing -and identifying anomalies in accounts payable data. By having insights in the accounts payable and being able to recover unjustified liquidity, treasurers will be able to identify and control (liquidity) risks in their vendor data. In this article, the focus lies on the role of VAT.

Specific VAT regulations for small caravan sites, VAT application on invoices within the Social Domain or system integrations after municipal mergers. “Every municipality has specific characteristics and risks in VAT processing,” says André Weitjens, VAT manager at SpendLab and specialist in financial administrations and applications. “The insights and experiences from a municipal project are validated and made applicable for subsequent projects. Also with regard to the interpretation and application of the changing VAT regulations, it is the combination of data research and tax expertise. ” (Blog continues in Dutch)

De grootste uitdaging wordt gevormd door het juist inregelen van de btw-tabel binnen de financiële applicatie. Zeker omdat deze tabel de ingeregelde btw-regelgeving automatisch toepast bij de verwerking van een inkoopfactuur. Als gemeente moet je exacte kennis hebben van de in beweging zijnde btw-regelgeving om dit correct binnen de btw tabel te vertalen. Daarnaast zorgt de variabele stroom van inkoopfacturen, welke via de workflow aan budgethouders ter codering en goedkeuring wordt aangeboden, vaak voor kwetsbaarheden in de btw-verwerking. Budgethouders richten zich op de inhoud van de factuur en zijn zich om die reden veelal niet bewust van de gekozen btw-verwerking bij het coderen van de factuur. Veelvuldig wordt de btw hierdoor onterecht kostenverhogend geboekt.

SpendLab Analyzer

De meest genoemde reden om de SpendLab Analyzer® in te zetten is om zeker te weten dat de btw-verwerking te vertrouwen is. Wij hebben een enorme databank opgebouwd waar alle btw-problematiek wel voorbij is gekomen. Specifieke btw-regelgeving uit hoofde van het BCF, het van toepassing zijn van een mengpercentage, de keuze voor ondernemer of overheid, niet of verkeerd verlegde btw. Veel regelgeving vraagt om specifieke keuzen binnen in een financiële applicatie, welke zich door de toenemende digitalisering niet eenvoudig laat controleren.

De SpendLab Analyzer® beoordeelt de inregeling van de relevante btw-regelgeving bij een gemeente op basis van jurisprudentie, belastingexperts en gevalideerde kennis uit andere projecten. De opdrachtgever is in principe de kennisexpert, maar als we vaststellen dat de btw-boekingen optimaler kunnen, dan adviseren we onderbouwd met de jurisprudentie en of motivaties vanuit andere projecten. Interessant is dat niet de grootboekrekening of kostenplaats het startpunt is, maar de totale boekingsdata in relatie tot boekingsregels. Het grootste verschil met reguliere controles is dat de SpendLab Analyzer® de btw verwerking volgt vanaf het moment van de eerste vastlegging tot de betaalbaarstelling, om vervolgens de data analyse op te bouwen.

De SpendLab Analyzer® beoordeelt integraal alle kostenregels van de facturen op een juiste btw-verwerking. Elk btw bedrag dat onterecht kostenverhogend is geboekt of mogelijk onterecht in aftrek is genomen of is gecompenseerd wordt inzichtelijk gemaakt. Dit gaat al snel over tienduizenden btw-regels bij een kleine organisatie. Handmatig is dit niet meer te doen. Gemeenten en hun accountants doen dit op basis van steekproeven, terwijl SpendLab alles fijnmazig op basis van honderd procent van de factuur data analyseert.

De belastingdienst is voornemens om dergelijke integrale controles in de toekomst zelf vorm te geven, en dat is precies wat wij al doen. De SpendLab Analyzer® gaat vijf volle boekjaren terug en beoordeelt ook de betaalbaarstelling. Zo werkt SpendLab met zijn integrale controle complementair aan de fiscalist en accountant. Zo is een gemeente ook nog eens proactief en zeker van een juiste verwerking van btw in de toekomst.

 

 

Alternative Risk Finance Part 3 – Cell Company 101

| 02-11-2020 | Mark Roelands | treasuryXL

The introduction to a most utilized form and key alternative to a traditional captive

As described in this series: an in-house insurer can be of great added value to your company. In the current hard insurance market, the possibility to utilize an own vehicle instead of the turbulent market is a direct and tangible benefit. But it is not a free alternative, the cost of setup of an insurer and operating it in a compliant manner might be too high to generate an overall positive business case. That issue is being addressed in utilising a centralised facility taking care of a.o. most of capitalisation and compliance matters, while the risk taker can operate an in-house insurer. This light-weight route is what can be named a “Cell Company”.

A Protected Cell Company, Incorporated Cell Company, Segregated Accounts Company, Segregated Portfolio Company are all different names for a centralised facility each buidling on local legislation, which we will collectively name “Cell Companies”.

In this part of the series of Alternative Risk Financing the generalised concept of a Cell Company is described.

Structure explained

Where a fully-owned captive insurance entity imposes the full requirements on the parent company, the Cell Company utilises a centralised facility, a “Core”, which provides the infrastructure to be leveraged by multiple insurance entities. In the illustration the full hexagon is the Cell Company, with the Core representing the infrastructure.

The Small grey hexagons represent the Cells, which are segregated units within the facility and which belong to a specific client. Assets and Liabilities and legally segregated from other Cells and the Core. Cell A will for instance belong to Company A, while Cell B belongs to Company B. In most Cell Company structures the number of cells is not limited to 8 but is practically unlimited. In order to generate the segregation a split is made between Cellular Assets and Cellular Liabilies (the A-H hexagons) and non-cellular assets and liabilities (The Core).


Owning Cell A will enable a client to participate in an insurance program in a compliant manner, while building on the centralised facility which provides both a compliant governance structure, as well as the required capital amount.

As an individual client a key requirement however is to fund the ‘risk gap’, any open underwriting exposure being retained by the Cell needs to be collateralised somehow. Either via a guarantee. Letter of Credit, Capital or perhaps reinsuring more of the cover. This also ensures that each cell is able to sustain itself.

Key question: Is it safe?

Leveraging on the infrastructure of another company, which also facilitates other companies raises the obvious question: is it safe? Are my funds secure, and can I be held liable for the liabilities of other companies?In short: Yes it is safe … but …it builds on carefully drafted agreements, hence careful due diligence is required.

Basically, it comes down to default legislation of the domicile involved. In the Netherlands for instance there is no separate legal form of a Cell Company, and legal segregation critical fort he structure cannot be achieved. In Malta the for instance the “Cell Companies Act” recognizes the type of entity and segregation involved. A recent Montana case also recognized the structure including legal segregation.

Domiciliation

As mentioned several times, in order to make use of a Cell Company, legislation needs to be in place recognizing this particular form of a captive. Domiciliation is one of the the key considerations when an alternative risk finance structure is considered, as has been explain in Part 1 and Part 2 of this series.

In the Netherlands the required legislation for a Cell Company is not available. Within Europe therefore either Malta, Guernsey, Isle of Man or Gibraltar needs to be utilised. With Malta having the edge being within the EU. Ireland and Luxemburg have hinted on establishing Cell Company legislation as well, but Brexit (and moving insurance companies into these domiciles) has shifted supervisory priorities and no information has been published on any plans for a few years now. While Vermont is often the go to domicile within the US, there are more States with Cell Company legislation like Montana. Establishing a Cell Company close to an office of your company could be regarded to be beneficial. Vermont however does have an extensive captive servicing industry which is also a benefit.

Within Asia Vanuatu or Labuan would be interesting domiciles and the popular captive domiciles of Bermuda and Cayman Islands also both enable Cell Companies, and both have a solid supporting industry. This however needs to pass tax requirements in the organisation.

What’s next?

In Part 1 and Part 2 Captive Insurance and Building the Business Case is described. A Cell Company can possibly allow a business case to be positive, as the cost of operating and capitalising the Company is much lower then a fully-owned Solvency II compliant Insurance company. For building the business case please review Part 2, but when considering a Cell Company also take the following into consideration:

  • Due diligence on the Cell Company itself
  • Lock-in effects with a facility provider: brokers and insurers provide the facilities, but there are also some independent facility providers

This may unlock the potential for an in-house insurer allowing you to pool your risks centrally and finance them in the most efficient manner, while operating in the most light weight manner.

Check my previous blogs of this serie:

  1. Alternative Risk Finance in a hardening insurance market
  2. Alternative Risk Finance Part 2 – Building the Business Case

 

 

Mark Roelands

Risk and Compliance Specialist

 

 

Top 4 most useful Key Performance Indicators for Accounts Payable

| 14-10-2020 | treasuryXL | SpendLab Recovery |

Nowadays all businesses use Key Performance Indicators (KPI’s) to measure the performance of internal -and external processes and thereby operational success. In the Accounts Payable unit of an organization this should not be any different.

‘If it cannot be measured, it cannot be managed’. Establishing and tracking KPI’s in the Accounts Payable department enables an organization to identify weak processes and operational inefficiencies. A KPI should be specific, quantifiable, time-bound and should be agreed upon by all project members. KPI’s need to be measured on a regular basis to ensure that the Accounts Payable process matches with the goals set by the organization and to identify areas of improvement.

In general, but also in specific cases such as mergers and acquisitions, organizational restructuring and new technology implementations (e.g. Robotic Process Automation, Artificial Intelligence, and Machine Learning) it is imperative to make use of Accounts Payable KPI’s that enable organizations to measure the impact of changes on the Accounts Payable process.

In the last couple of months, SpendLab Recovery has requested their clients to share the KPI’s that are most important to them in the Accounts Payable department. From the reactions that we received, we have compiled a list of KPI’s that secure the most meaning from available data, which can be used to strengthen the Accounts Payable process.

  1. The cost per processed invoice

The cost per processed invoice is the cost of processing one invoice in the (entire) organization. This cost can vary depending on the type of business as well as the factors that are taken into account. Important to understand is the fact that the cost per processed invoice may appear to be low, just because the hidden costs that negatively impact the profit have not been taken into account.

One example related to hidden costs is an organization that has a high level of manual invoice processing. This type of organization needs to take into account labour- and operational costs, the risk of human errors, and lengthy processes. In addition, the cost per processed invoice needs to take into account the time spent by employees in the Accounts Payable process. Several other contributors to the cost per processed invoice are systems and equipment, overpayment, errors, lost supplier discounts as well as audit costs.

A second example encompasses invoices that are sent by suppliers, but do not meet the requirements set by the client. This inefficient process results in a chain reaction that increases the number of activities that have to be conducted. Consequently, the costs of processing an invoice will increase.

Over the past 10 to 15 years, the processing costs of an invoice have decreased significantly. Whereas the costs of processing an invoice in the Accounts Payable department ranged between $20,00 and $30,00, some organizations are now able to process an invoice for $10,00, and top performing organizations for $5,00, according to the results of a survey published in 2018.

Accounts Payable departments can reduce the manual handling of invoices by implementing and utilizing paperless Accounts Payable automation software.

  • The lead time per processed invoice

The cost of processing invoices increases when an organization processes invoices slowly. The lead time per processed invoice in the Accounts Payable department tracks the total time that it takes for an invoice to be received, processed, finalized, and made ready for payment in the financial ERP system. Processing speeds vary based on the size as well as the industry an organization works in.

If a specific Accounts Payable automation solution manages the total process, starting from receiving the receipt to posting in the ERP, this metric can easily be tracked throughout the system. However, if process steps happen outside of the Accounts Payable automation solution, it might get tricky, but still an exceptional way to measure the overall efficiency of processing invoices in the Accounts Payable.

The key to achieve a reduction in the lead time per processed invoice is automation. By mapping the Accounts Payable process, removing manual process steps and implementing an automation solution that takes on the workload in the back-end of the organization, organizations are able to save valuable time and ensure that the resources in the Accounts Payable can focus on value-adding activities.

  • The number of invoices processed per employee per day

One of the KPI’s that should not be neglected is the number of invoices that an Accounts Payable employee processes on a daily basis. This KPI provides key insights into the strengths and opportunities in the Accounts Payable department.

There are a significant number of negative downstream effects in relation to low performers in this KPI. For instance, until an invoice is processed, approved and filed into an ERP system, other departments are not able to assess the development and/or stage of the process the invoice is in.

This lack of insights and therefore visibility leads to organization-wide problems such as missed supplier discounts, late payment fees, mismanaged cash flows, and overall poor relationships with suppliers.

Optimizing this KPI is therefore a must.

  • Percentage of invoice exceptions

Invoice exceptions are a plague for Accounts Payable departments and therefore organizations in general. The result of invoice exceptions is twofold. First of all, invoice exceptions cause a reduction in the processing efficiency, having to discuss and agree on the invoice with peers and, in the worst case, creating disputes with purchasers and suppliers. Secondly, invoice exceptions drag down employee morale, especially when the exceptions have to do with structural problems that are related to the workflow. A few examples of invoice exceptions are the following: discrepancies in the purchase order (e.g. wrong supplier codes, receipt dates or zip codes), incorrect, duplicate and missing purchase orders and non-purchase orders.

The bottlenecks that are a result of invoice exceptions are able to bring entire Accounts Payable departments to halt. Being able to reduce the impact of discrepancies requires organizations to track and control invoice exception rates.

About SpendLab Recovery

SpendLab Recovery is the Dutch market leader in spend justification. The company is a former spin-off from the Dutch government with a 98 year old heritage in procurement. It currently specialises in generating liquidity for clients by analysing -and identifying anomalies in accounts payable data.

In terms of certification, SpendLab is GPR compliant and is ISO-certified for Information Security Management (ISO/IEC 27001) and Quality Management (ISO 9001:2015).

By having insights in the accounts payable and being able to recover unjustified liquidity, treasurers will be able to identify and control (liquidity) risks in their vendor data.

For more information visit SpendLab.com

 

Only 5 days left until the International Treasury Management Virtual Week 2020

| 16-09-2020 | Eurofinance | treasuryXL |

Don’t miss the Treasury Event of the Year! If you haven’t signed up already, here is a reminder to join this great virtual event with incredible speakers and live sessions.

Virtual Event

Now more than ever, we need to learn and engage with other treasury professionals around the world, so that we can navigate and overcome the unprecedented challenges we are facing.

As the current situation unfolds, the role of the corporate treasurer is evolving and becoming more strategic than ever before. The complexities and function of treasury within the business is changing even more rapidly. The question is: What does the future of treasury look like and how will this affect my team? And where can I turn for world-class advice on building resiliency, supporting the business and addressing future challenges?

Look no further than EuroFinance’s International Treasury Management Virtual Week taking place 21-25 September. It will see world-leading treasurers and economists come together to address these issues, deliver big picture global insights and share the essential granular knowledge you and your team need for the path ahead. In the spotlight will be the latest on cash flow forecasting, supply chain finance, tech, liquidity and FX and payments plus much more.

Speakers and Live Sessions

The line-up of speakers is impressive with the likes of Shell, Alibaba Group, HP Inc., eBay, Finnair, Microsoft, Intel Corporation, Schlumberger, Booking Holdings Inc. and Rio Tinto holding centre stage in one of the 75+ live sessions. But don’t worry if you miss a session, they will be available on-demand for you to watch at a time that suits you.

The custom-built virtual conference platform will bring the experience of a live event to life in a virtual world. It offers plenty of opportunities to network and learn from your global peers, plus a smart calendar to build your schedule.

Free Registration

The great news is, the 2020 event comes without a price tag! It is free for corporate treasurers. So, you can get all the world-class expert knowledge and insights you expect from the leading treasury event without the costs of registration, flights, accommodation or even expenses.

What are you waiting for? Set your treasury team up to thrive not just to survive.

Register for free today!