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MAKING THE CASE FOR AUTOMATING AP

MEET RYAN NELSON Goby Co-founder & COO

THE STATE OF AP

Today the accounts ts payable pro rocess at t most t businesses is is a hands-on aff ffair • Invoice arrives in • Routed • Manually • Filed or • Paid the mail internally logged archived manually Cumbersome Late Fees Processes Billing Errors Hours of Manual W ork

36 36% 84% 4% of an AP manager ’ s time is spent on transactional activities rather than of AP personnel time is managing, planning, spent on activities and analytics considered mundane

21% 21 27 27% is the amount of available early-pay discounts of AP processing time captured by most is considered waste companies -PwC

78% 78% of AP departments operate in manual or lightly automated environments 59% 59% of supplier payments are initiated electronically — United States Federal Reserve

27% 27% 74% 74% of companies have done some automation already of the companies that have done nothing will start by 2021

58% 58% of AP practitioners expect compliance to become a bigger burden over the next 2 years 62% 62% — IOFM ’ s 2018 Future of Accounts Payable Study of AP practitioners expect demand for real-time visibility into AP to increase in the next 2 years

Contr troll llers rs ra rank AP as as th the most t la labor and ti time-intensive fin finance fu functio ion

34% 34% of AP leaders believe AP will become more strategic and an agile business function — Ardent Partners Onl nly 13 13% % of of sen senio ior lea eade ders be belie ieve it ’ s a a str strateg egic pa part rtner er tha that ad adds ds val alue — Institute of Financial Operations

The dif iffusion of f in innovatio ion INNO NNOVATORS EARLY RLY ADO DOPTERS LATE MAJORIT ITY LAGGARD RDS EARLY RLY MAJORIT ITY 2.5% 5% 13.5% .5% 34% 34% 15% 15% 34% 34%

Exp xpectatio ions by companies by lev level l of f in innovatio ion Early Early Inno novato ators & Inno novato ators & Early Inno novato ators & Majority ty & Majority ty & Early Early Majority ty & Early Lagg ggar ards ds Late te Majority ty Late te Majority ty Adop opte ters Adop opte ters Late te Majority ty Lagg ggar ards ds Adop opte ters Lagg ggar ards ds 23% 23% 31% 31% 35% 35% 36% 36% 19% 19% 19% 19% 12% 12% 45% 45% 20% 20% 100% 75% 50% 25% HAVE IMPLEMENTE TED ARE RE IMPLEMENTING PLANNING TO O IMPLEMENT WITHIN 3 YEARS RS BY 2021

THE FUTURE

MORE RE TECH CHNOLOGY Accounts payable practitioners are placing their bets on image capture, intelligent data extraction, mobile, cloud, and artificial intelligence — IOFM ’ s 2018 Future of Accounts Payable Study

THE CHECK WON ’ T T BE BE IN THE MAI AIL Accounts payable departments expect to make less than half as many payments to suppliers via paper check within the next three years — IOFM ’ s 2018 Future of Accounts Payable Study

LESS KEYIN ING AND ND PAPER PUS USHING 51% 51% of accounts payable departments anticipate that their departments will eliminate most of the paper invoices it receives from suppliers by 2021 — IOFM ’ s 2018 Future of Accounts Payable Study

It ’ s Now 2021 It Inno novato ators & Early Ado dopte pters Early Majority ty & Late te Majority ty Lagg ggar ards ds Nearly 100% Ne 85% 85% 55% 55% 100% 75% 50% 25% HAVE OR OR ARE RE IMPLEMENTING HAVE OR OR ARE RE IMPLEMENTI TING HAVE OR OR ARE RE IMPLEMENTI TING

This is becomes 100% hands- off ff • Invoice arrives in • Routed • Manually • Filed or • Paid the mail internally logged archived manually Cumbersome Late Fees Processes Billing Errors Hours of Manual W ork

BETT TTER STA TAFF FF UTIL TILIZATION In the future, accounts payable staff will spend less time on transactional tasks and more time on value-add activities such as data analysis and relationship building

MAKE AP THE HERO

DATA TA DR DRIVEN 63% 63% percent of accounts payable practitioners expect that the use of their department ’ s data across the enterprise will increase “ slightly ” or “ significantly ” over the next three years — IOFM ’ s 2018 Future of Accounts Payable Study

Show me the money 57% 57% of accounts payable practitioners expect to capture higher card Show me the money rebates as a total percentage of spend within the next three years 54% 54% — IOFM ’ s 2018 Future of Accounts Payable Study of practitioners expect their organization to capture more early-payment discounts — IOFM ’ s 2018 Future of Accounts Payable Study

MAKIN ING TH THE BUSIN INESS CASE CASE

Sav ave Money & Ti Time + + Avoi oid Costs + + Valu lue Pro rop Make Mon oney 1. 1. governance = ROI 2. 2. stra strategic 3. 3. ROI

How will ill we save ti time & money? Fix this: • Invoices do not get into the process as quickly as possible • Errors in keying the invoice data • Lost or misplaced invoices • Long approval and exception resolution cycles • Coding errors • High paper storage and retrieval costs • Delays uploading data on approved invoices to downstream systems • Difficulty implementing operational best practices

How will ill we avoid costs? ? • Stop paying late fees • Stop over-paying • Stop double-paying • Don ’ t be defrauded • Hire less people per invoice as you grow

How will ill we make money? ? • Capture early-pay discounts • Celebrate cash-back rebates • Negotiate favorable terms

STEP 1 Diagram an overview of your current process

As-is process... AP makes available for department heads Invoice Types Received AP Team Current system does Sent for approval manually reviews not incorporate data Sometime if required invoices for errors analytics s sent to facility Paper Mail Scanned AP team manually enters ERP system is used Sent to & saved PDF ’ s data from invoice & codes for invoice payment HQ into ERP system AP team Email Challenges: Significant manual processing and data coding, manual integrations, dark data, keeping up with the growth of the company. Manual comparison review for quality.

Document t known chall llenges Qua uantify iss ssues such such as: as: • Lost invoices and duplicate copies • Manual data entry • Matching errors and other invoice exceptions • Supplier inquiries and escalations • Duplicate payments • Late payments • Missed discounts

Number of FTEs Annual invoice (full-time volume equivalents) STEP 2 Cost per invoice Measure your performance & cost per FTE Total accounts Value of all other payable cost time spent

STEP 3 Benchmark your performance

Cost per invoice Share of e-invoices received requiring no manual intervention Low <10% $20.00 Limited 10%-29% Moderate 30%-49% Significant 50%-80% $12.50 High >80% $11.00 $8.50 $6.00 Low Limited Moderate Significant High Level of automation

Invoices per FTE Share of e-invoices received requiring no manual intervention Low <10% Limited 10%-29% 19,500 Moderate 30%-49% 17,500 Significant 50%-80% 14,500 14,000 High >80% 10,500 Low Limited Moderate Significant High Level of automation

Beli lieve it it and sell ll it! it!

AP Team CFO ID IDENTIFY KEY Y Procurement Treasury STA TAKEHOLDERS Controller CIO

ENGAGING Implementa tation STAKEHOLDERS Tip ips

Establish status sharing norms and involvement expectations for senior stakeholders Do not underestimate change management Find a good solution / implementer

Cl Clou oud bas based How to identify a good solution? Mobi obile rea eady CX CX foc focused

Process Design Phased Rollout Project Milestones Go-Live & Testing Hyper-Care Sign-Off

EXPECTED OUTCOME

Best-in in-Class AP Depart rtments • Have cut invoice processing times in half • Have reduced per invoice cost by 50% or more Exp xpect t payback perio iod of • Process 3 times more invoices per FTE 9 to to 15 15 months on • Earn some cash-back rebate on 30% of spend AP automatio ion • Capture 7 times more early pay discounts inv investments • Increase DPO without changing payment terms • Make most of their payments electronically

Contin inuous Im Improvement Compliance ris risks are re mitig igated • Maintain easily accessible audit trails • Improve position in supplier negotiations • Offer incredible reporting across the company

Str trategic A well designed big data strategy is associated with strong financial performance * The Economist Intelligence Unit