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Accounts Payable ServicesA strong foundation for sustained benefitsAccounts Payable

2Accounts Payable

IntroductionThe accounts payable (AP) function is changing.For the past decade, finance departments havefocused on driving cost, complexity, risk anderror from their routine transaction processes. Streamlined business processes, often combined with improved technology systems, havelargely been the basis of these efforts. The resulting improvements often are viewed throughan efficiency lens: more invoices processed withshorter cycle times, fewer employee hours and greater accuracy.CFOs expect more from the AP function. AP, long regarded as a back- office cost center, is now evolving intoa strategic business enabler chargedwith the mission to reduce costs,strengthen compliance and controls,ensure accurate and timely reportingof payments, partner with procurement, receiving and business units tostreamline the procure-to-pay processand add value through more strategicpayables-related working capital.To accomplish this mission, the APfunction must streamline the invoiceprocess, update or implement newtechnology and, like other parts ofthe organization, implement successful strategies such as outsourcing nonstrategic work, leveraging P-Cards forlow-value high-frequency transactionsand migrating from paper to digitalworkflow.Accounts Payable3

Today’s AP challengesIn most organizations the majority ofnon-purchase order invoices and T&Ereports still enter the process in paperor paper-equivalent form.From receipt to payment, manual touch pointsare required to convert and validatedata, to complete approval throughthe purchase order and non-purchaseorder process and to remit payment.Staff is inundated with manual dataentry, duplicate invoice copies and requests for special payments, non-stopcalls for payment from suppliers andstaff and paper recordkeeping.Moreover, decentralized receipt andmanual routing prolong payment timeso that a substantial number of invoicescannot be paid on time. Discounts arelost. Late fees are incurred.4Accounts PayableThe accrual of outstanding liability isguesswork at a time when the CFO andCEO are required to endorse for the accuracy and integrity of financial reporting under the Sarbanes-Oxley Act.On the strategic front, there is insufficient time and staff to work on p rocessimprovements and implement automation. Resource limitations hinderwork to align procurement and APpractices to ensure payments are madewithin contract terms, exceptions areminimized and discounts and rebatesare  realized.At the operating level, AP managers arepressured by management to reducethe total cost of AP, even as businessunits demand more analytical support, suppliers want faster paymentand procurement seeks an integrated rocure-to-pay (P2P) process and inpternal audit mandates for fewer errorsand tighter controls.Finally, while all organizations use technology, the technology they have is notdesigned to eliminate the manual workof processing invoices and T&E claims.Most organizations operate multipleERP systems with or without invoiceworkflow. Manual labor is required toenter data, to work with separate ERPsand to secure approval and exceptionsoutside ERP. The use of scanning anddigital content management technology is becoming more prevalent. However, most organizations still do not useautomation to capture, validate andmatch data, or for approval collection.

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comprehensive, customized, modularand Flexible AP Servicecanon business Process Services provides acomprehensive accounts payable servicethat can help the AP function escape thelaborious work of processing invoices andfree up the budget and time to work onmore important, value-added work.canon’s AP service covers the entire invoice lifecycle from receipt to payment.we provide the technology, people andfacilities to process invoices and T&Eclaims. we can hire your staff and provide the services onsite or provide theservices in our facilities. we integrate ourtechnology with yours to optimize the APinvoice workflow end to end.canon Accounts Payable Service Processcanon’s AP service is scalable and can be implemented step by step toadd the right level of enhancement that makes sense for your process.INVOICE INTAKEINVOICE PROCESSINGINVOICE PAYMENTReceiveScanValidateApproveCentralizedpaper, digitalIntelligent captureextractionAutomatedbusiness rulesAutomated workflowPO, Non-POREJECTED INVOICES RETURNED TO SUPPLIERAP SUPPORTHelp desk for vendorinquiriesVendor maintenance6Compliance and APrecords managementAccounts PayableReconciliationsMonth-end, year-endroutines – Accruals1099, TaxReports and ad hocanalyses/specialprojects

/1/2/3centralizes the receipt,scans and converts paper or digital invoices into data and images that arerouted to your ERP, AP workflow andcontent management systems. All data,including line-item detail, is capturedfor validation later on. Manual data entry is replaced with intelligent capture,which should reach more than 95% accuracy and reduce labor cost by up tohalf. Images are indexed for easy searchand link to ERP. Paper invoices do notenter the workflow.Invoice processingvalidates the invoice and completes the approval process, whether it is a purchase order ornon-purchase order invoice. Automated,rules-based workflow matches the datacaptured from invoices against the datain the master files, such as ERP, vendormaster, purchase order system, paid invoices, etc. The output is valid invoicesset up in ERP. Invalid ones are returnedto the vendor. Approval is completedusing staff assisted by automatedmatching and workflow. Approval timemay be reduced from weeks to days.InvoIcE PAymEnT services may includeboth electronic and check payments.Canon staff reviews payment file andpresents to client for final release. Wemanage bank payment files and reconciliation.Invoice intakeAccounts Payable7

/4AP Support services include vendormaintenance and inquiry help desk,maintenance of AP records, reconciliation and analysis, reporting, maintaining policy, procedures and internalcontrols, administering programs suchas P-Card, regulatory compliance forT&E, IRS reporting, tax and month-endand year-end routines such as accrualsand 1099s.8Accounts Payable/5/6Flexible delivery optionsStreamlining the invoice process toreduce cycle time and costCanon AP services can be providedat the client site, through the Canon business processing centers in the U.S.and offshore or in combination to meetbusiness requirements. The service canbe implemented in a modular step-bystep process. For example, start with invoice intake, which provides significantimprovements quickly. Then, a dvanceto processing services offshore. Withslight modification, our technologyplatform, which includes scanning,workflow and ECM, can be leveragedfor other processes to provide evenmore value.The policies, procedures and disciplinein procurement and receiving drive thenumber of exceptions in the invoiceprocess. That’s why when working tostreamline the invoice process, Canonexperts begin with the procure-to-pay(P2P) process. We can centralize thereceipt of paper invoices and scanning either at our facilities or yours.We can integrate the invoice processwith P2P systems. Before entering theinvoice in your ERP, we interrogateeach invoice against your master data,which we exchange nightly. Only validinvoices enter ERP, greatly reducingthe work associated with duplicate orinvalid invoices. For non-PO invoices,we leverage digital workflow to collect approval and track status. For POinvoices, we leverage line-item matching technology to speed approval andreduce errors. It all adds up to havingthe ability to pay invoices on time and maximize discounts.

/7/8Using automation to reduceerrors, improve productivityand lower costUsing automation to improvecomplianceOpen standard and scalable, the Canoninvoice automation platform can be integrated with virtually any ERP, ECMor P2P system. Automating capture,data conversion, validation, matchingand workflow reduces the invoice processing time to days. Productivity mayincrease from 1,000 to 10,000 invoicesper FTE per month.Compliance with business and regulatory requirements such as the Sarbanes-Oxley Act is necessary andimportant. The Canon AP solution offers consistent workflow processes thathelp maintain accurate records. Byovercoming gaps in tracking, accessingand updating data, the system can helpimprove client compliance.Effective accounts payable processingis essential for every organization. WithCanon, you can achieve significantly elevated AP performance without investment in technology. At the same time,you can significantly reduce the total costof AP processing and strengthen controlswith a consistent metrics and businessrules-driven process.To learn more about how Canon BusinessProcess Services can improve your a ccountspayable process, call us at 1-888-623-2668or visit www.cbps.canon.comAccounts Payable9

client Experiences using canon AP ServicesInvoice intake.20kInvoices processed monthly10Accounts PayableA European cosmetics manufacturerimplemented an automated invoiceprocessing workflow globally. Thecompany’s U.S. operations receiveapproximately 20,000 paper invoicesper month. Management asked Canonto centralize receipt, scan, convertthe data and upload it into their newworkflow. Using Canon BusinessProcess Services BPO facilities andAP platform, we implemented thereceipt process via USPS PO box, fax,email and FTP addresses.We implemented the scan and OCRprocess, capturing even line-itemdetail. Then, we went one stepfurther. Using nightly file exchange,we implemented invoice validationso we can check and prevent invalidduplicate invoices from entering theprocess. Invalid invoices are rejectedand sent to the supplier managers.The client never sees paper invoices.

AP processing.3number of days’ averagereceipt until ready to payA leading pharmaceutical company,receiving 15,000 invoices a month,implemented a new invoice imagingand workflow system, feeding OracleERP, to speed up invoice processingand reduce costs. Unexpected resultswere encountered. The number ofon-time invoice payments droppedfrom 40% to 5%. The cost per invoicewas in the 20 range.Canon was brought in to do a rootcause analysis and turn around thesituation. Subsequently, the client outsourced the 18-person APdepartment to Canon.Canonstreamlined the invoice processusing Six Sigma process expertiseand immediately reduced staff by20% and the cycle time from eightdays to three. In phase two, thecapture and processing workflowautomation will be implementedcorrectly along with offshore processing. The average cycle timeand cost will be reduced further.AP and P2Pintegration.80%of invoices paid on timeA regional bank receiving 20,000 invoices per month using a P2P systemfor PO invoices wanted to reducethe cost and cycle time of processing10,000 non-PO invoices and also jointhe non-PO invoices with the P2Psystem. Canon integrated front-endcapture to the P2P system with automated validation workflow to prevent duplicate invoices from entering the system. Invoice receipt anddata conversion were centralizedin the Canon BPO center as well asprocessing of invoices locally. Thenumber of invoices reaching ontime payment increased from 40%to 80%. All invoices are processed inone paperless P2P system.Accounts Payable11