Basware Launches Purchase-To-Pay Model To Help Organizations Unlock Cash Flow Efficiencies

Best Practice Framework Helps Businesses Identify Strategies for Effective Purchase-to-Pay

Basware, the leading provider of purchase-to-pay solutions, has recently launched 'The Cash Flow Manifesto', a purchase-to-pay (P2P) model, providing a framework for businesses of all sizes to follow on their quest to identify ways to optimize cash, manage cost and working capital management across their operations.

Purchase-to-pay is typically characterized as the process that happens between the sourcing and ordering of goods and services, through to the receipt and payment of invoices, underpinned by continuous supplier performance monitoring and cash flow optimization. Purchase-to-pay represents a core component of a company's business processes, managing what a company spends and the way it collects money, and as such, interacts with multiple departments - with finance, procurement, accounts payable and the treasury functions all involved in the process.

By implementing the right processes, the finance department gains control and visibility of cash flow; internal process alignment enables procurement to become embedded into the business and its objectives become fully aligned with the company's. Subsequently the organization is working in unison towards a shared goal and the efficiency savings are apparent at every stage, with cost savings and increased working capital driving a positive bottom line impact.

Basware helps companies around the world to transform their purchase-to-pay processes, and through its network, currently manages in excess of 15 million purchase orders and e-invoices on behalf of customers across multiple industries. Using this knowledge, Basware has identified four stages companies typically go through as they look to align procurement with finance and create visibility and transparency through their purchase-to-pay process:

• The Emerging Company - Automating processes is one of the first steps taken by this type of company. The invoice provides the source of truth about spend and cash commitments the company has made. However, traditional paper based invoicing is slow, expensive and fails to provide transparency of spend. Paper processes also restrict the ability of the Accounts Payable department to be responsive to the needs of both internal and external stakeholders, including suppliers. By removing the paper element and automating invoice handling processes, the Emerging Company starts to achieve levels of greater visibility and control which allows it to get a grip on cash and payment commitments to its supply base.
• The Aligned Company - Greater integration between Procurement and Finance is the core characteristic of the Aligned Company, with best practice process management and procurement technologies helping the once siloed departments to work in tandem. Finance is able to establish robust compliance procedures that reduce maverick spending by up to 40% and the procurement team begins to enable and integrate its supply base via direct goods requisitioning systems, ensuring purchase-to-pay accountability is enforced at the point of need.
• The Networked Company - The defining characteristic of the Networked Company is the move to a fully integrated model covering Finance, Procurement and external suppliers - one allowing for strategic sourcing and management of the full contract lifecycle. Value from P2P begins to accelerate exponentially through the use of open networks to connect buyers and sellers of all sizes, with suppliers also benefiting from lower costs of doing business, greater process visibility and faster payment collections. Procurement elevates its relationships with suppliers and the flow of cash becomes seamless across the organization, significantly improving the ability to forecast.
• The Agile Company - At this stage the business has fully optimized processing costs throughout the P2P cycle and has reduced the cash-to-cash flow. Department heads work collectively to implement innovative payment strategies, with full cash flow visibility allowing a company to lower the cost of capital and optimize its working capital positions. Shareholder value increases, as does the company's credit rating - impacting top line performance as well as bottom line impact. Cash rich companies can also deploy innovative payment strategies to maximize discounts and ensure supplier assurance, while optimizing DPO (days payable outstanding) and DSO (days sales outstanding) performance. This enhanced visibility and streamlined processes enables the Agile Company to operate with the greatest financial and organizational agility.

Based on Basware's experience as process experts, the model also illustrates best practice approaches used by leading organizations to ensure rapid and sustainable supplier integration across the purchase-to-pay value chain. Enabling suppliers to easily participate in an organization's P2P processes and transmit documents electronically, regardless of their size, industry or geographical location is a critical and yet often overlooked aspect of purchase-to-pay execution - one which, if ignored, will result in reduced spend under management and significantly lower the returns from a purchase-to-pay development initiative.

"Today's business environment mandates that cash management become a core competency for all finance and procurement teams and the purchase-to-pay process is an ideal area for the these two groups to join together in their efforts," commented Andrew Bartolini, Chief Research Officer, Ardent Partners. "As a purchase-to-pay program advances and matures, the benefits gained from an expansion of the initial purchase-to-pay program, including investments in additional resources and technology, can deliver accelerated returns and help enterprises ultimately achieve purchase-to-pay excellence."

"Cash remains king for businesses in 2011, with more and more time dedicated to scrutinizing the performance of the cash cycle from incoming revenues to outgoing costs," said Ari Salonen, Basware general manager, North America. "The current lack of visibility across this cycle can lead to cash being hidden from view, skewing the perception of available capital. According to the 2010 Cost of Control report, visibility is a key driver of confidence, not only in the Finance department but also in the commercial success of the business. This framework has been designed to allow businesses to reflect on how efficient P2P is within their organizations as well as in integrating suppliers, and it provides a personalized way of navigating their journey to operational excellence, based on their own company's situation, goals and culture," Salonen added.

About Basware
Basware is the global leader in purchase-to-pay solutions with more than 1,500 customers and 1,000,000 users in over 50 countries around the world. With Basware, organizations can reduce the cost of buying and paying for goods and services and gain visibility and control of their entire spending process by automating manual processes, from sourcing, contract management, purchasing and supplier collaboration to invoice automation. Basware solutions and services enable substantial cost reductions across businesses and deliver value by providing compliance and control, as well as fast return on investment. The solutions are distributed and implemented, either on site or as a service, in Europe, the U.S., and Asia-Pacific through an extensive network of Basware offices and business partners. The company's U.S. business, Basware, Inc., is headquartered in Stamford, Conn. For more information, visit www.basware.com.

SOURCE: Basware