let your suppliers do the work: how to set up ers/self-billing with your most suitable suppliers

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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-billing Let your suppliers do the work: How to setup ERS / Self-billing with your most suitable suppliers? AP Tech Summit 6th – 8th December Leonardo Pucciatti, Payables Project Manager, ExxonMobil Richard Slovak, ERS Center of Excellence Supervisor, ExxonMobil

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Page 1: Let your suppliers do the work: how to set up ERS/self-billing with your most suitable suppliers

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

Page 2: Let your suppliers do the work: how to set up ERS/self-billing with your most suitable suppliers

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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

Page 3: Let your suppliers do the work: how to set up ERS/self-billing with your most suitable suppliers

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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