Visibility Whitepaper - CFO's Guide to Spend Visibility

| Whitepaper 

CFO’s Guide to Spend 

Visibility 

www.procurify.com 

@procurify 

Procurify | CFO’s Guide to Spend Visibility 1

How Can Finance Improve 

Visibility in the Corporate 

Spending Process? 

Finance professionals, from the CFO down, face many problems in corporate 

spending. Chief among these issues remains visibility into the overall spending 

process. Compounding the issue is that the need for visibility has never been 

greater. 

For example, a recent study by Aberdeen Group* has shown that a best-in-class 

Accounts Payable system that provides appropriate visibility can reduce the payment 

cycle to just under four days. 

Invoice Processing 

Time (Days) 

Invoice Processing 

Cost ($US) 

Early Payment Discount 

Capture Rate (%) 

Best-in-Class: 3.7 Days 

Industry Average: 8.8 Days 

Laggard: 14.3 Days 

Best-in-Class: $4 

Industry Average: $9.6 

Laggard: $23.3 

Best-in-Class: 65.8% 

Industry Average: 42.7% 

Laggard: 8.9% 

Improving invoice processing time keeps suppliers happy and enables 

finance departments to capture 90% of available vendor discounts 

available. That will make the CFO and the CEO even happier, to be sure. 

Digitization and automation of the accounts payable process has offered many 

advantagse over the pencil, paper and green eyeshade tools of yesteryear. However, 

obstacles still exist that create friction and thus costs of time and money in 

reconciling all the accounts. 

Tyagi, Ankita. “From the Shadows to the Forefront: AP Automation and the Strategic Vision”. Aberdeen Group. Web. Oct, 2013. 


P.O. #59 

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P.O. #63P.O. #22 

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The Problems 

The approval process 

A significant gripe for finance departments is that the lion’s share of incoming 

invoices do not have sufficient backup authority. Are these invoices genuine? Do they 

accurately reflect what was ordered? These and other questions need answers before 

the invoices can be paid. 

Without proper backup, and the ability to verify invoices against assets in the audit 

trail, finance cannot know which invoices were approved. And if the invoices were 

approved, did the correct people approve them? Perhaps, an invoice was approved 

but the total value of the goods and services on the invoice exceeds the approver’s 

budgetary privileges. What happens then? 


Such a scenario creates the need for a one-to-one relationship of each invoice to each 

approver. And, each invoice must have a dependency with the person who ordered 

the goods on the invoice if that person is not the approver. Finally, the appropriate 

department within the company needs to have a reference on the invoice. 

Without these requirements in plain sight, invoices can fall into an 

actual, or virtual, pile. 

There they wait until the person who sent the invoice contacts the person who made 

the order and complains about payment being more than 90 days later. Then that 

person has to a make a personal visit to finance to discuss the unpaid bill – nobody 

wants that! 


Delivering the goods 

In the procurement process, the only thing more important than paying vendor 

invoices on time remains the correct and timely delivery of the goods. Because 

finance exists at the end of the procurement process, it has no way of knowing the 

history behind invoices – that only happens when finance gets critical inputs. 

First and foremost, finance needs to know if the goods listed on the 

invoice actually made it to the shipping and receiving bay. 

Shipping and receiving needs to verify that the correct number of items of each type 

have been stocked in the warehouse. Receiving also needs to quality check the goods 

in order to verify lack of defects. 


State of delivery 

As any savvy veteran of the “corporate wars” knows, finance does not just pay 

invoices. There is no vendor ATM near the CFO’s office. And before finance even 

thinks about paying a vendor invoice, it first needs to check that the selected vendor 

is an approved vendor for the organization. 

For the finance function, payment of invoices is considered the last link in the 

procurement process. For visibility purposes, finance needs to know that the goods 

and services ordered were, in fact, received and in good shape. One method to 

ensure this critical info is received is to partner, or establish a go-to contact with the 

receiving team. Then, it could just be a matter of picking up the phone, walking down 

the hall, or emailing the submitter to inquire about the status of the delivered goods. 

Another potential way of understanding the state of received goods could include 

instant messaging, but auditing remians difficult. People always move around in 

finance and other departments, and no relationship is built to last. 

And what happens if the goods received are defective in some way? Or what if the 

delivery is short? If the goods are defective, finance needs to interface with a system 

to return the goods in question for repair or replacement. If the goods are short, 

finance needs to have a way to create a credit in the system, or another method of 

making reparations for the shortage. 


Paying the piper 

Every person in every department that orders supplies and services from vendors 

really just cares about one thing—getting their stuff in a timely manner. Whether it’s 

the department admin who is re-ordering composition books and sticky notes for 

engineers, or the shop floor manager for the local wrought iron fence company who 

needs solder for his welders, these people have a need and want it fulfilled as soon 

as possible. 

They do worry about the cost, but only as a secondary concern. 

For certain, you can believe that they will take the side of their vendors when they 

hear that these suppliers have not been paid. How many times has an entry level rep 

in accounts payable gotten a terse email forward about a “delinquent” invoice from 

a department’s vendor? Or how about a hostile voicemail from that aforementioned 

department admin? Nobody loves those poor lost souls down in finance! But the 

simple fact of the matter is that finance does not just pay any old invoice put into its 

queue. 

Before the finance department can even begin to think about paying vendor invoices, 

it needs to know who these vendors are. And all finance departments have a process 

for onboarding vendors into their systems. Some are very old school and might send 

a set of hard copy forms to be filled out—in triplicate! (Be sure to press down hard 

with your pen!) 


More enlightened buying organizations may send a zip file of Excel spreadsheet 

attachments via email that need to be downloaded, unarchived, saved, opened and 

renamed under a new file name with all the necessary payment information. After 

that tedious experience, the vendor rep needs to email the attachments back to the 

company. 

An additional wrinkle can occur when vendors are individual contractors 

or freelancers. 

Some of these vendors may not look favorably upon sending an email attachment 

across the unsecured Internet with all of their sensitive financial information such as 

Social Security Number, bank account number, mailing address and so on. 

However, once the vendors’ information has been received and set up in the system, 

finance is ready to deal with its invoices. At that point, finance checks the invoice 

from the vendor against the system. Provided the vendor does exist as an officially 

approved vendor, the invoice payment can proceed into the payment process. 


Care and feeding of CFOs (or dealing with CFO issues) 

People have long been told to follow the money. When in doubt, the person paying 

the bills should receive the most attention. In a corporation, that person is the Chief 

Financial Officer. 

When the CFO opens their wallet, the company virtually stops what it’s 

doing, turns its head and watches. 

However, the CFO has other responsibilities in addition to writing checks. The 

CFO has to keep an eye on the most critical vendors that can make or break the 

company. If these suppliers do not get their invoices paid in full and on time, the 

corporate machinery can grind to a halt. As the de facto second in command at 

most corporations, the CFO has as their No. 2 duty - the fiscal provisioning of these 

mission-critical vendors. 

Like the rest of the finance department, the CFO needs proof the vendors have 

delivered the goods and/or services as ordered. And, like the rest of the finance 

department, the CFO’s time really is money—just much more so! However, unlike the 

bulk of finance, the CFO does not have the time or the opportunity to chase down 

forms and attachments in file drawers or email inboxes. But the CFO still needs to get 

these records when necessary. 


Unfortunately, outside of the top 20 percent of vendors with which the 

company does business, the supplier records will probably not be readily 

accessible. 

And heaven forbid the vendor in question for a 

particular invoice has been inactive for a substantial 

period of time. In that case, its records may have been 

shipped offsite to a secure “cold storage” facility, which 

will make it very difficult to access, to say the least. After 

all they don’t call it Iron Mountain for nothing! 

Even if these vendor invoices and other records exist electronically, if they happen 

to be kept in an on-premises storage and retrieval system, they could be very 

cumbersome to access. CFOs—especially CFOs of publicly traded companies—are 

on the road a lot, talking to investors and may have to wait to get back into the office 

to log in and see what they can see. By then, it could be too late! That 80 percent 

of vendors who constitute 20 percent of corporate spend must have their records 

properly systematized. 


Counting on vendor discounts 

To the uninitiated, a frequently overlooked and ill-considered role of the CFO remains 

that of chief haggler. 

Without a proper process put into place, vendors can achieve very high 

levels of spending on a company’s balance sheet. 

While this is undoubtedly good for the vendor, the company should not allow this 

threshold to be breached without a pre-negotiated quid pro quo. 

Therefore, the CFO needs knowledge of spending volume by vendor in order to 

establish volume discounts. Also, discounts for early payment (e.g., 2/10 net 30) exist 

with many vendors that the CFO should be aware of to potentially taken advantage 

of. A manual, disorganized or disparate computerized invoicing system will preclude 

this possibility from coming to pass. 


The Solution 

With all of these potential problems in the procurement process, 

accounts payable professionals could be pitied. And, it would be fair if 

some then thought there was no solution to their problem. 

SaaS 

But, in the age of cloud computing and high-speed, broadband Internet 

access, a Software-as-a-Service (SaaS) procurement solution can take 

on these many finance invoice payment issues, consolidate them and 

liberate corporate financial executives! 


Creating an effective invoice process 

1. The Structure 

First of all, a cloud-based procurement and accounts payable process needs to be 

properly structured. When an invoice is submitted, these should not be left in the 

hands of the order makers. Invoices should flow transparently from the vendor and 

its billing system into the company and its procurement system. 

2. The Match 

Once the invoices are received, they will automatically be matched against the 

correct purchase orders (POs). The procurement system will also check for the 

correct approvers on the invoice and that it matches the approver on the PO. 

A second level match should also be made against the name of the person who 

placed the original order. In a best-case scenario, the approver and the purchase 

requester will not be the same person. In fact, the approver will likely not be the 

same as the order maker most of the time. This serves as a good check and balance 

for authenticating invoices. Invoice forgers can likely identify PO approvers without 

that much difficulty. But to be able to correctly identify the person who placed the 

order, who may only occasionally make a purchase, will be an order of magnitude 

more difficult. 

3. The Double-Check 

Lastly, a well-designed cloud procurement solution will check submitted invoices 

against the departmental code and department name. Very often, one or the other 

will be incorrect even on legitimate invoices. However, an intelligent procurement 

process will have rules to deal with invoice inconsistencies and be able to 

compensate for them. 


Receiving and inventory 

A SaaS-based procurement system not only needs to correctly pay invoices that 

have been checked for accuracy and authorization, but also sort all the items on the 

invoice and properly record them in inventory. The cloud procurement application 

will maintain unique IDs for each inventory SKU to enable this capability. 

And when invoices do not match against physical inventory, the deficiency is 

immediately recorded and flagged for attention. With all invoices automatically 

matched against the appropriate POs, the finance department can pay them with 

confidence that only approved vendors exist inside the application. 


CFO harmony 

The ultimate goal of a SaaS-based procurement-invoicing solution—or any 

application for that matter—exists to provide smooth and harmonious service to 

the finance department and the CFO. With vendors being paid on time, a company 

ensures continuous delivery of supplies. 

And the beauty of a cloud solution remains that all steps of the procurement process 

exist online and are accessible from anywhere. With proper data backup systems, the 

information is archived and readily available in the cloud, ensuring record-keeping 

against any possible disputes or potential audits in the future. 

Cloud computing procurement and invoicing also streamlines processing 

and approvals, taking redundant and unnecessary human touches out of 

the system. 

It also liberates the process from the confines of the office, putting it in the hands of 

the finance professionals—including the CFO—who may be on the go or otherwise 

out of the office with seamlessly linked mobile applications tied to the cloud solution. 

Not to mention one of the most important goals of the CFO is actualized with the 

implementation of cloud procurement: discounts. Centralized securely in the cloud, 

all invoices are tallied and marked against buying thresholds, and when achieved 

they are activated, saving the corporation money and the CFO black ink. 


THE BENEFITS 

All invoices seen, approved and allocated correctly 

The benefits of a cloud-based procurement system, where all invoices are seen, 

approved and allocated correctly can be delivered by the Procurify SaaS solution. 

In addition, Procurify can help eliminate maverick spending and duplication when 

implemented in finance and rolled out to all department buyers. With Procurify’s 

mobile app capability, finance can serve as the always vigilant eye in the sky catching 

the culprits red-handed and/or preempting the attempt. 

Procurify provides a streamlined PO system that accelerates approvals and speeds 

up the overall purchasing cycle. Thus, discounts for volume as well as early payment 

can be achieved at their optimum levels. 

It ensures accounting transactions remain accurate and recorded properly. 

Ultimately, transparency and validity in the entire order-quote-to-invoice-cash-out 

process exist throughout, giving the CFO and the whole finance function peace of 

mind. Having confidence in a “bulletproof” procurement and invoicing Procurify 

solution will give everyone freedom to focus on the job at hand and not second guess 

IT choices. 


www.procurify.com 

@procurify

Visibility Whitepaper - CFO's Guide to Spend Visibility

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