Transcription
Procure to Pay (P2P)Risk AnalyticsRisk Advisory
ContentOverview4Procure to Pay Issues and Challenges6Risk Analytics Approach8Reporting Dashboard10Contact143
Procure to Pay (P2P) I Risk AnalyticsOverviewThe Procure to Pay process (P2P)remains one of the most complex businessprocesses, often spanning accross multiplesystems and operations. Despite thelevel of automation, including enterpriseresource planning (ERP) implementations,P2P remains an area prone to fraud, moneyleakage, and inefficiencies. Since it is oneof the most critical business processeswhich involves huge cash flows, visibilityinto the entire life-cycle of a transactionfrom vendor selection to the final invoicegeneration and payments with adjustmentsbecomes a challenge for the business.It is critical to have insights into thesemetrics for businesses, which can beachieved by incorporating data fromsource systems such as SAP, Oracle, etc.,using technology driven analytical toolsto highlight exceptions, outliers, andtrends which helps clients improve and attimes, reinvent their processes, enforcingaccurate decision making and drivingefficiency.Identifying Risk in the P2P ProcessStage INegotiation/VendorManagementStage IIRequest forQuotationStage IIIInvoice ReceiptVondor MasterSteupPurchaseRequisitionDespite the availability of technology thatcan drastically reduce the man-hoursspent in collating and anlysing the P2Pdata and inefficiencies plaguing accountspayable, few companies have addressed4Vondor MasterChange ManagementApprovalApprovalPurchase otherCreationPaymentaccount payable transformation like otherprocesses essential to the business whileothers still use the approach of manualtransaction monitoring.ApprovalGoodReceipt
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Procure to Pay (P2P) I Risk AnalyticsProcure toPay Issues andChallengesGiven below are a few P2P challengeswhich ultimately impair the ability toeffectively manage and efficiently executekey activities: Finance does not provide sufficientinformation to support decision making(e.g., spend analytics) Data governance and quality areinadequate to make informed decisionsand meet Finance stakeholder needs(e.g., Vendor Master Data)6 Absence of, limited, or multiple/unintegrated systems supporting theprocess Customization of ERP which leads toabnormal entries being processed Lack of ERP knowledge/training amongusers which facilitates incorrecttransaction processing
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Procure to Pay (P2P) I Risk AnalyticsRisk AnalyticsApproachAt Deloitte, our teams help design,implement, and embed technology,enabling our clients to identify, assess,and mitigate risks in the P2P process byintegrating and analyzing the data frommultiple source systems. As the ERPsystems become more and more powerfulto maintain huge databases acrossgeographies, the complexity of the datastructure increases manifold.The analytics platform provides insight intothe overall health of procurement controlsfrom Requisitioning through to Payment aswell as Segregation of Duties and VendorMaster Data.Data-to-Insight-to-ActionWith the use of analytics, organizationscan run their order processing, purchasing,and other business-critical transactionsthrough preset filters, such as valuethresholds and data completeness8parameters. These exceptions reports actas an early warning system for potentialbusiness risks and regulatory noncompliance and reduce the risk of materialfinancial leakage.Getting started requires an understandingof the following: Detailed process understanding foridentification of relevant risk in theprocess– Compliance– Finance– Fraud– Operations Categorization of risk to define the keyobjectives of the analytical procedures Develop analytical scenario for trends,outlier, and exceptions to the processes Assessment for potential risk/KPIindicators
Procure to Pay (P2P) I Risk AnalyticsAnalytics Indicators Compliance– Split Purchase Order– 3-way Match Analysis– Invoice without GRN– Segregation of Duties Finance– Large Non-PO Invoices– Share of Business(Vendors)– Payment Terms Mismatch– Debit note analysis (HighValue) Fraud– Duplicate Vendor Invoices– Employee as Vendors– Duplicate Vendors– One-time Vendor Analysis Operations– Price Variation Analysis– Open Purchase Orders &GRN– GR-based InvoiceVerification– Payment without POD9
Procure to Pay (P2P) I Risk AnalyticsReporting DashboardFacilitates Trends, Correlations and Drill-down onInteractive modeGain Actionable Insight into Spend,Process Key performance indicatorsand SuppliersThe procure to pay cycle can be challengingto manage, given the high volumesof transactional data often housed inmultiple IT systems and applications andcomplex authorization processes. Thefinancial consequences of errors, duplicatepayments, and vendor and employee fraudcan run into huge amounts of losses eachyear.10Insight into spend, process KPIs, andsupplier metrics not only drives revenue,but also gives you critical control over yourfinancial operations. P2P Analytics platformprovides all of these capabilities in a userfriendly and highly visual procure-to-payreporting solution.The tool’s interactive data filtering givesyou the ability to slice and dice the data inany way, e.g. spend volume by category,organization unit, cost center, project orother relevant dimension.“The successful executionof the P2P strategies thatimpact cash positionsrequires a level of cohesionand visibility across theentire P2P process that isusually best supported bytechnology solutions.”Chief Research Officer,Leading P2P Company
Procure to Pay (P2P) I Risk AnalyticsYou can employ automated andrepeatable analytics for immediatefraud detection plus manage andtrack anomalies from initial detectionto resolution. With automatedmonitoring, Business ProcessOwners are able to reap significantcost savings by identifying andresolving issues at source, ratherthan during periodic audits. Theorganization also gets the addedintelligence of identifying root causesthat can now be addressed to helpwith overall improvement of theprocurement process.Risk ProfilingThe transactions are analyzed for everygeographic location–drilling down tovarious vendors and entities associatedwith that location and further to theMaterials/Items being procured/transferred.These transactions are associated withvarious types of risks and a risk profile isassigned to them–making the segregationof risky accounts and vendors possible.This helps the management and otherusers of the dashboard make quick,accurate, and right decisions withoutspending thousands of man hoursassessing various vendors.Flagged TransactionsTransaction Scrutiny provides thelist of flagged transactions againstspecific tests such as Ageing, DuplicateInvoices, problems in Accounts Payables,Unreconciled accounts, etc.Segregation-of-Duties analysis identifiesand analyzes risk areas such asmisappropriation of funds and accountspayable balances where Employees poseas vendors for transactions.11
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Procure to Pay (P2P) I Risk AnalyticsContactSenthilvel KaliyamurthyPartnerDeloitte Haskins & Sells LLP 91 9820166912senthilvelk@deloitte.comKedar SawalePartnerDeloitte Haskins & Sells LLP 91 9820003510ksawale@deloitte.comPayal AgarwalDirectorDeloitte Touche Tohmatsu India LLP 91 9819443540agarwalpa@deloitte.comHarpreet DhingraSenior ManagerDeloitte Touche Tohmatsu India LLP 91 9810618994hdhingra@deloitte.com14
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Procure to Pay (P2P) I Risk Analytics 10 Gain Actionable Insight into Spend, Process Key performance indicators and Suppliers The procure to pay cycle can be challenging to manage, given the high volumes of transactional data often housed in multiple IT systems and applications and complex authorization processes. The
