Technology Posts

Why Supplier Information is like Precision Machinery

Monday, June 13th, 2011

Precision InstrumentFor years, procurement organizations had as its primary charter to best manage spend and spending activities. The concept of “spend” comprised several different elements:

- Suppliers
- Supplier Contractual terms
- Purchasing volume with those suppliers under control of agreed upon terms

In pursuit of maximizing/managing spend, many procurement professionals have devised numerous intelligent methodologies for selecting the correct suppliers and for negotiating the best possible terms. Unfortunately a lot of the work done on these matters exists as a point in time. For example, selecting a supplier at a single point in time and you set contractual terms at a point in time to last for a period of multiple years. What is not accounted for is that as soon as you lock in a contract with a supplier much of the details regarding the supplier will begin to change almost immediately.

Just like precision machinery, supplier information degrades over time if not maintained properly. For example, Lavante often finds that a customer’s supplier file includes nearly ten percent overlap in the supplier population. That is to say one in ten suppliers are related to some other supplier in the population – but that connection is not visible to the customer. This unseen linkage between suppliers can lead to significant profit loss in the form of missed price breaks, volume discounts, and rebates.

True spend management requires the best of breed technology and processes to select suppliers and negotiate terms. In addition, due to the constantly changing landscape, it is important to manage and refresh the supplier information in real time so that enterprises have ongoing visibility into the constantly evolving relationships within the supplier population.

Precision machinery requires lubrication, sharpening and maintenance at continuous, frequent intervals. Similarly, accurate and well maintained supplier information can reduce unnecessary errors which will help you avoid over-payment all while improving organizational efficiencies and providing your company a competitive advantage in strategic relationships.

To find out more about Lavante’s solutions to help maintain supplier information please click here.

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Posted in AP Industry, Lavante, Supplier Information Management, Technology | No Comments »

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For Consumers, Online Bill Payment Is Becoming Mainstream

Thursday, September 9th, 2010

That’s one conclusion from Fiserv’s 2010 Billing and Payment Trends Survey, which was completed in January by more than 3,000 individuals. Some highlights:

  1. About four out of five households pay at least one bill online through their financial institution. Overall, about one-fourth of all bill payments were completed online, up from about 7 percent in 2000, and nearly equal to check payments, which came in at 26 percent. In 2000, just over half of all consumer payments were completed via checks. (more…)

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Accounts payable’s impact on the bottom line

Wednesday, August 25th, 2010

A recent study conducted by Forrester Research on behalf of Basware, a provider of purchase-to-pay solutions, shows the significant impact that accounts payable can have on an organization’s bottom line. Representatives from 550 accounts payable departments located across the globe participated in the survey. On average, they processed 93,000 invoices annually, of which 6,000 or so contain errors. Forty percent of the invoices were based on purchase orders.

The survey found that errors and inefficient processes within AP can cost real money. In the last year, just under one-third of survey participants had foregone early payment discounts, while 27 percent had incurred late payment fees.  (more…)

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Lavante SIM for Supplier Information Management

Wednesday, August 11th, 2010

Hello All,

I am very proud to announce that Lavante SIM was released for general availability on August 9th.  This launch marks the expansion of our vendor file management services into a larger suite of supplier information management products and services.

Lavante SIM has been created specifically to address the feedback that we have received from the market over the years about the challenges that all of you face.   Lavante has learned that supplier information is integral to optimizing relationships with suppliers and for maximizing the value from your ERP system and other automated solutions.  Used correctly, a well-kept supplier master data file is a strategic asset that you can leverage into time savings, resource savings and dollars to your bottom line.

The collection and management of supplier data is more important now than ever based on the growing number of regulations and controls that your departments are faced with.  In that last years alone stricter penalties and controls have accompanied new OFAC screening laws, Sarbanes Oxley and diversity mandates (to name a few).  In just the last few months, 1099 tax legislation was included in the new health care bill which will require you to collect TINs, W-9s and W-8s and to perform 1099 reporting on a larger scale than ever before.  Your companies will likely need to implement new policies and new systems to manage supplier information and stay in compliance.

Lavante SIM has been built as a direct solution to the challenges that you and your departments face.  The on-demand application is the industry’s most advanced solution and enables companies to proactively engage with suppliers on an ongoing basis.  The product drives 8 times the compliance of any other competitive solution and manages communication across the entire supplier lifecycle, from on-boarding, to data capture and validation, to automated maintenance.  Lavante SIM can help you with vendor master file cleansing as well as TIN collection and validation against the IRS website.  The product will even help to reduce costs and labor of ERP installs and upgrades.

We are proud to announce the delivery of this revolutionary product and we are proud to work so closely with our clients to create real solutions to major industry problems.  I encourage you to reach to your Lavante contact person or to visit the Lavante website at www.lavante.com to learn more.

Thanks for taking the time to read this,

Joe Flynn, Founder and CEO, Lavante Inc.

Lavante Supplier Information Support:
408-754-0491
888-610-0757

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Posted in 1099 Reporting, AP Industry, Lavante, Supplier Information Management, Tax ID Numbers, Technology | No Comments »

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Check Payment Software Requires Due Diligence

Tuesday, July 13th, 2010

If you see ads touting software that you can download to immediately start writing checks and paying your vendors, you’ll want to tread cautiously. The provisions of the Bank Secrecy Act require that sellers of payment software complete several steps that will enable them to verify the legitimacy of their customers, says Richard Rogers, president of yourfavorite.com, publisher of checkwriter.com and several other payment applications. The reason? Payment software that’s available on demand and doesn’t require any verification of the purchaser’s legitimacy, could be used by anyone, anywhere in the world, to defraud others or commit terrorism. (more…)

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Maintaining Supplier Data and Information to Maximize ERP Systems and 1099 Reporting Compliance (Part 1)

Monday, July 12th, 2010

Supplier information is integral to optimizing your relationships with your suppliers and for maximizing the value from your ERP system and other automated solutions.  Used correctly, a well kept supplier master data file is a strategic asset that can be leveraged into time savings, resource savings and dollars to your company’s bottom line.

The biggest challenge to maintaining the quality of your supplier data is its near immediate decay after being recorded.  Suppliers constantly undergo mergers, purges, acquisitions and employee churn that challenge the integrity of their data.  Dun & Bradstreet (D&B) reports its database of businesses experiences annual changes of 20% for addresses, 17% for business names, and 18% for phone numbers underscoring how quickly and frequently supplier data decays.  ERP systems perform some data quality measures at the time a supplier is set up, but they do little to preserve the integrity of the data over time.  ERP systems are reliant on quality data, but they do not ensure it.

Allowing your supplier data to decay over time is very costly to your enterprise. Inaccurate data delays implementation of ERP systems and other automated solutions and can prevent those solutions from achieving their optimal ROI, effectiveness or their value over time.  Failure to identify overlaps or relationships within your supplier population can lead to missed volume discounts or rebates as well as an increase of duplicate payments by up to 300%.  Poor supplier data quality is also very costly in terms of lost efficiency and time.  Bad addresses alone can lead to miss-sent shipments and checks.  Quality supplier data is also vital to stay in compliance with various external regulations and internal controls.  Failure to achieve this compliance can be both disruptive and very costly while causing great exposure and risk.

Collection and management of supplier data is more important now than ever.  New 1099 tax legislation included in the funding provisions of the Patient Protection & Affordable Care Act (March 2010) requires companies to collect valid Tax Identification Numbers (TINs) on a much larger scale than pre-legislation levels.  Today most companies are expected to perform 1099 reporting for less than 10% of their supplier population. When the new law takes effect, companies can expect reporting levels to rise above 90%.  Companies will need to implement new policies and potentially even new systems to manage supplier information more accurately in pursuit of staying in compliance.

The question arises: How are you going to ensure the ongoing quality of supplier information to achieve optimal project ROI and on-going efficiency while maintaining compliance with controls and regulations?

Check back for part two.

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Posted in 1099 Reporting, Supplier Information Management, Tax ID Numbers, Technology | No Comments »

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AP Departments Steadily Automate

Thursday, July 8th, 2010

Increasingly, the AP department is seen as a strategic element within companies and an area that can contribute to profits; perhaps as a result, it’s being monitored more closely. These are several of the findings of a recent study of 550 AP and finance professionals around the globe, which was conducted by Basware Corporation.

At the same time, manual processes within many accounts payable functions adds time and cost to the system. For instance, 30 percent of respondents said they’ve missed early payment discounts within the past twelve months, while another 27 percent incurred late payment fees. Similarly, about one-quarter of survey participants said mistakes by their customers meant their firms had not received a payment due them.

Human errors, either in AP or procurement, are behind more than half the mistakes, such as missing early payment discounts, survey respondents said. Lack of communication between the AP and procurement departments is the reason for another one-quarter of mistakes.

Perhaps because of this, a majority of companies are steadily moving to streamline their finance processes. More than half (56 percent) of the processes surrounding spending are now automated, versus 50 percent in 2009. In addition, 46 percent of indirect spending is captured in companies’ PO systems, up from 42 percent a year ago. Finally, 44 percent of respondents predicted that electronic invoices for B2B purchases will replace paper-based invoices within the next five years.

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Leaders in AP Continue to See Reduced Costs

Tuesday, June 29th, 2010

When it comes to accounts payable, best-in-class companies continue to forge ahead, streamlining processes and cutting costs. In fact, a recent study, “Global Payments: Maximizing Cash Flow with Electronic Payments and Process Automation,” by Aberdeen Group found that top firms need less than five days to process a transaction. That compares with more than nine days for average performers, and nearly 16 for laggards. The top performers also have seen their AP processing costs drop by more than 14 percent annually, versus an average decline of 3.3 percent, and a slight increase in annual processing costs among the bottom 20 percent of companies.

Several attributes are common to many high-performing AP departments. For starters, they are 21 percent more likely to have established centralized processing or a shared service center for accounts payable than other firms. In addition, these firms are 37 percent more likely to have fully automated their procure-to-pay processes. (more…)

Posted in AP Industry, Shared Services, Technology | No Comments »

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Unlocking trapped working capital from your supply chain (Notes from Spendmatters.com analysis of Basware and Lavante partnership announcement)

Thursday, June 24th, 2010

Lavante’s recent activities were covered this week by an industry expert.

Jason Busch of SpendMatters.com spent some time exploring the new Lavante/Basware partnership diving a little more deeply into why such a partnership would take shape.  Astutely, Busch points out that neither firm has played at “superficial Barney deals” (read: “I love you, you love me”) which frequently dot the partnership landscape.  So why should these two groups, which may seem to have otherwise disparate backgrounds come together?

From his review of the deal announcement, Busch quickly connect dots, and highlights a marquee quote from the release, “the combination of Basware’s enterprise purchase-to-pay solutions and Lavante’s suite of Supplier Information Management (SIM) tools will enable Fortune 1000 companies to drive efficiencies throughout the purchase-to-pay process and maximize their return on investment.”  If I may add a little more self-serving color around this quote… For years, Lavante has delivered vendor file management in tandem with its flagship supplier recovery services and has recently expanded vendor file processing into ongoing on-demand SIM.  Basware customers, attempting to install enterprise-wide P2P solutions are often gated by poor quality of their resident supplier data  and there really is no quick fix for this dilemma.  Although a supplier cleanse project can prove helpful to improve data quality in the short term, that information begins to deteriorate rapidly.  Lavante benchmarking demonstrates that at least 50% of suppliers will change some relevant attribute on an annual basis and the Institute of Management Accounting estimates that up to 7% of companies annually change their name.  Long story short:  Lots of constant change.  The solution to this constant data drift may start with a project, but truly requires an ongoing process to sustain the data quality, and that is where Lavante SIM comes into play and provides that ongoing quality (as well as many other services).

Another of Busch’s accurate observations (which was not mentioned as directly in the release) is how Basware can leverage Lavante’s recovery services to decrease the barriers of entry for clients that run into budget difficulties.  Busch writes, “Lavante can serve as a means to generate the working capital to fund investments in invoice automation solutions such as Basware.”  For years Lavante has refined its platform for communicating with and driving compliance throughout a company’s vast vendor population.  In that process, Lavante is able to perform a near-effortless review supplier AR ledgers.  It is with this ongoing visibility that Lavante is able to unlock working capital from within the supply chain and return it back to the enterprise.  These dollars which average about $600,000-$900,000 per $1Billion spent by an enterprise can quickly add up to millions of freed up working capital and can be applied to fund any number of investments in the P2P space and beyond.

Read the full Jason Busch article

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Tackling The “Middle Ground” of Payments

Tuesday, June 8th, 2010

A growing number of businesses today are tackling the “middle ground” of payments – or the spending that falls between very low- and very high-ticket items, and that is done with suppliers that may not be high-volume, but that still invoice regularly, according to a recent report by J.P. Morgan. After all, the ends of the payment spectrum already have been taken care of, at least at many companies. Purchasing cards usually work well for low-dollar, frequent purchases, while ACH capably handles high-dollar transactions.

To target this group of payments, which so far, has largely been paper-based, companies are turning to single-use accounts. They’re also expanding their use of p-cards. (more…)

Posted in AP Industry, Technology | No Comments »

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