Working together with vendors to assure timely payment can be challenging for organizations that have multiple financial systems or manual, paper-based processes for payment.

While every company has a core financial system in place for managing payables, it is often the exceptions and manual steps that significantly affect process performance. The core transactional systems, however, are often too expensive and complex to extend. For this reason, many companies have concluded that they can better manage accounts payable processes by complementing their financial systems with BPM.

BPM Opportunity

Companies looking to extend accounts payable capabilities are applying BPM to diverse processes. As a complement to their existing transactional financial systems, these companies are hoping to realize the following benefits from BPM:

• Simplify process participation. Instead of requiring employees and partners to learn complex financial systems, provide simple interfaces that allow more diverse participants to submit, review and approve payables more efficiently.
• Orchestrate efficient exception handling. Define processes for key process exceptions that closely manage resolution using notifications, dead-lines and escalations.
• Leverage existing transactional and imaging systems. Standards-based integration enables reading and posting transactions and documents while introducing more extensible Web-based forms and interfaces.
• Provide real-time visibility to process performance. Give managers the ability to understand where the process bottlenecks are and control resolution in real-time — no matter how many systems or organizations are involved.
• Enforce policy compliance. Ensure that payables policies are followed and automatically generate an audit trail of every step in a process.

Lombardi In Action

A leading toy manufacturer has extended their vendor management capabilities to allow vendors to submit invoices for payment through a BPM portal. While their existing ERP solution provided some basic capabilities for this, they concluded that it would be too expensive and complex to extend it to their vendors. Instead, they deployed BPM to allow vendors to submit invoices. After submission, these invoices would be routed to the appropriate vendor management teams for approval. After approval, payment authorizations are sent to the ERP application automatically. With BPM, the toy manufacturer now has an accurate understanding of the status of invoices, where the bottlenecks lie, and their overall performance from time of submission to final payment.