let your suppliers do the work: how to set up ers/self-billing with your most suitable suppliers
TRANSCRIPT
This presentation includes forward-looking statements. Actual future conditions (including economic conditions, energy demand, and energy supply) could differ materially due to changes in technology, the development of new supply sources, political events, demographic changes, and other factors discussed herein (and in Item 1 of ExxonMobil’s latest report on Form 10-K). This material is not to be reproduced without the permission of Exxon Mobil Corporation.
ERS / Self-billingLet your suppliers do the work:How to setup ERS / Self-billing with your most suitable suppliers?
AP Tech Summit6th – 8th December
Leonardo Pucciatti, Payables Project Manager, ExxonMobilRichard Slovak, ERS Center of Excellence Supervisor, ExxonMobil
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Agenda
• Prague Payables Center perspective
• ERS / Self-billing
• ERS benefits
• ERS potential issues
• ERS in Prague Payables Center
• Case for change
• ERS CoE concept
• How to identify supplier?
• How to setup supplier to ERS?
• Success factors
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Prague Payables Center• ExxonMobil BSC Prague provides Payables services to ExxonMobil affiliates in 30 countries
• International environment, young population with high language skills
• Prague Payables Center covering 1.5M transactions annually
Payables sites
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ERS / Self-billing
Evaluated Receipt Settlement (ERS) is a standard SAP process to produce invoices
on behalf of suppliers based on purchase order and goods receipt
Create and send Purchase OrderProcurement
Supplier Delivers goods & services
Goods receiver Create Goods receipt
Payables ERS Invoice automatically generated
ERS Copy Invoice sent to Vendor
Payment Received
Original ERS invoice electronically archived
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ERS BenefitsBenefits for Customer:
•Reduce paper (no mail, no filing, long term eArchiving)
•Eliminate invoice processing
•Minimize recycles for non-matching invoices
•Optimize Payables control step
•Prevent aged open items on liability account (GRIR account)
•Facilitate VAT treatment
•No change in the upfront PtP process
Benefits for Supplier:
•Increase on-time payments
•Eliminate the risk of “lost” invoices
•Reduce costs for invoice handling and mailing
Pre-check and scanning
Troubleshooting and controls Payment and accounting
Controls and troubleshooting
Helpline and payment
Paper invoicing processERS invoicing process
Invoice processing
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ERS potential issues
Potential ERS issues:
•Implementation cost not meeting benefits
•No timely and accurate goods receipts
•Frequent price updates
•Contract price not including all costs
•Supplier not able to reconcile payments
ERS is a great invoicing tool . . .. . . if selectively applied
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ERS in Prague Payables Center
• ERS adopted in ExxonMobil Europe since 1999
• Successful ERS expansion project in 2006-2007
• Challenging expansion after project close-out• Expansion ownership was in Procurement
• Limited knowledge on ERS process and VAT implications• Expertise on end-to-end PtP process necessary
• ERS end-to-end process split across organization• Procurement identify ERS vendors and setup contracts• Payables perform controls, troubleshooting and helpdesk
• Concentration of the ERS end-to-end process in one team was the choice
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Case for change
Procurement
•Identification of ERS candidates•Load contracts to SAP•Interface with vendor and client•Problem solving
Payables
•Setup vendor master•Check control reports•Helpline•ERS invoice corrections
Suppliers
Clients
Weaknesses
•No clear owner of ERS end-to-end process
•No Procurement incentive to ERS expansion
•Significant training effort in Procurement
•Limited tax knowledge in Procurement
•ERS candidate selection does not consider
existing invoicing issues
•ERS process expertise segmented across
organizations
•Poor diagnostic of the problems
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ERS CoE concept
ERS CoE
Suppliers
Procurement
IT Tax
Goods receivers
Payables
• Ensure tax compliance
• Training and support to ensure accuracy and timeliness
• Implementation process• Helpline
• Optimal agreement setup
• Solving technical issues
• Informing about cut-over plan
Strengths
•Clear ownership of ERS process
•ERS process expertise centralized
•Preventive analysis to identify ERS candidates
•Negotiate ERS with vendors
•Lead cut-over process
•Review complex scenarios with tax
•Concentrate all operation ERS activities
•Unique helpline for vendors and clients
•Promote improvement opportunities
•Interface with IT to enhance system
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How to identify the supplier?
• Supplier A – providing transportation services for sales
• Supplier B – delivering chemical products for chemical plants
KPIs (annual) Supplier A Supplier B
Invoice volume 25 120
Avg. no. of deliveries per inv. 50 1
Invoice recycling 1% 20%
FI invoices 0% 0%
LVT invoices 0% 25%
Price changes annual monthly
Non-contract POs 0% 10%
Payables KPIs
Procurement KPIsExam
ple
for d
emon
stra
tion
purp
ose
only
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How to setup supplier to ERS?
Identify ERS candidates
Fill in ERS request form with supplier details
Contact vendor to propose ERS agreement (Procurement support if
needed)
Obtain singed ERS agreement from vendor
Initiate cutover plan for ERS implementation:• Communication to clients and awareness training• Communication to Procurement and Payables Operational Team• Clean-up of vendor account• Request vendor master update• SAP agreement and open POs update
Request the supplier to stop issue invoices
Perform final ERS feasibility check on the
selected supplier
Hand-over ERS request form and copy of ERS agreement to
Procurement
Filing completed ERS request form and copy
of ERS agreement
Periodic check to ensure
flawless ERS process
ERS CoE
Procurement
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ERS potential issues
Potential ERS issues:
•Implementation cost not meeting benefits
•No timely and accurate goods receipts
•Frequent price updates
•Contract price not including all costs
•Supplier not able to reconcile payments
ERS is a great invoicing tool . . .. . . if selectively applied
Suggestions:
•Apply it for mid / high volume suppliers
•Good receivers awareness
•Use PtP KPIs to select ERS candidates
•Negotiate delivered price
•Provide support and helpline to suppliers
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Success factors
• Clear ownership of the ERS end-to-end process
• Deep knowledge of PtP process and tax implications
• Accurate selection of ERS candidates
• Structured cut-over plan for each new ERS vendor
• Awareness and training of all involved parties
• Strong interface with Procurement, Tax and IT
• Parallel work to reduce recycles and expand ERS opportunities
• Management buy-in: Cascade ERS efficiencies to the clients
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Summary
Concentrate ERS end-to-end process in one team• Drive continuous improvement• Prompt errors detection prevent re-occurrences and helps identify
contract adjustments• Unique ERS focal point for the whole organization
Use Payables and Procurement metrics to select ERS candidates• ERS works well if „traditional“ paper process works well
Awareness of all involved parties is a key factor• Time spend in training has a good pay back
Distribute the benefits
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Questions