Accounts Payable’s Role in e-Commerce

1. 18th Annual Forum IAPP San Diego, CA Accounts Payable’s Role in e-Commerce Workshop #610 Jeff Joseph, CAPP, CPCP PPL Services Corp. Manager-Accounts Payable jajoseph@pplweb.com Tim McKee Account Executive Enporion, Inc. tmckee@enporion.com

2. Accounts Payable’s Role in e-Commerce Overview • Who is PPL? • PPL’s electronic invoice process prior to partnering with Enporion • Who is Enporion? • Services provided by Enporion • How Purchasing headed the initiative of growing electronic invoicing • How Enporion helped PPL to reach their goals • How PPL went about gaining supplier participation • Single invoice interface from PPL to Enporion • The results • Payment terms • Electronic invoicing for services • Integrated Cash System (ICS)

3. Accounts Payable’s Role in e-Commerce Who is PPL? FORTUNE 500® global energy holding company. Headquarters: Allentown, Pa. PPL Corporation includes: PPL Generation LLC PPL EnergyPlus LLC PPL Electric Utilities Corp. PPL Gas Utilities Corp. PPL Services Corp.

4. Accounts Payable’s Role in e-Commerce

5. Accounts Payable’s Role in e-Commerce PPL’s electronic invoice process prior to partnering with Enporion 2004 Traditional EDI 5,700 invoices (7%) Web Entry 40 invoices (less than 1%) Paper 77,000 invoices (93%)

6. Accounts Payable’s Role in e-Commerce Who is Enporion?

7. Accounts Payable’s Role in e-Commerce How Purchasing headed the initiative of growing electronic invoicing The Purchasing Department used Enporion for their eCommerce market place for purchasing related activity. The next step was to complete the eCommerce circle by enabling suppliers to use electronic invoices.

8. What is a successful e-invoice program? Accounts Payable’s Role in e-Commerce • Provides process efficiencies • Less paper = Less data entry • Reduction in time spent dealing with errors & issues • Enables data visibility • Internal • External via Remittance Advice & Payment Status • Is supplier focused • Flexible connection options • Easily implementable • Pays for itself • Hard $ = Early Pay Discounts • Soft $ = Quantifiable process savings

9. What are the key ingredients? Accounts Payable’s Role in e-Commerce • Preparation • Identify the transactions to be automated • Purchase Order • Change Order/Purchase Order Response • Invoice • Remittance Advice/Payment Status • Create a Requirements Documents that can be shared with suppliers • The supplier interface should validate your business requirements up front • Automatic notification generated for suppliers submitting non-compliant transactions

10. What are the key ingredients? Accounts Payable’s Role in e-Commerce • Teamwork • A.P. & Purchasing must work together on implementation • Purchasing owns the supplier relationship • Purchasing owns content on the front end • Keep the lines of communication open through the entire process • Set joint goals & objectives tied to program success

11. What are the key ingredients? Accounts Payable’s Role in e-Commerce • Teamwork (Part 2) • The primary beneficiary of process efficiencies is AP so be sure to spell out the benefits for Purchasing • Improved supplier relations • Increased leverage in negotiations • Less time consumed investigating errors & issues • Reduced Soft Costs: • Cost of paper PO = $30 • Cost of electronic PO = $13

12. What are the key ingredients? Accounts Payable’s Role in e-Commerce • Supplier Adoption!!!!! • Provide suppliers with easy access to the tools they will need to fully participate • Supplier Enablement Portal • Self Registration/Requirements Documents/Training Materials • Provide options for connecting • EDI/XML • Email/Web Interface • Make it easy • Very little key entry via PO Flip • Identify the supplier value proposition up front • Increase in on-time payments • Increase in early pay • They are making their customer happy

13. Accounts Payable’s Role in e-Commerce • Single invoice interface from PPL to Enporion Order Manager (PO flip) creates a XML file that is sent to PPL The Integrated option allows suppliers to send files in multiple formats to Enporion. Enporion converts the files to XML. PPL manages one interface from Enporion in one format rather than many files from many suppliers like traditional EDI.

14. Accounts Payable’s Role in e-Commerce The Results 2007 Enporion 25,000 invoices (30%) up from 7% in 2004 Paper 58,000 invoices (70%) down from 93% in 2004 2008 – currently over 40%

15. Accounts Payable’s Role in e-Commerce • Payment Terms Electronic invoicing decreases the cycle process time from vendor to the A/P system. Now buyers can negotiate discount payment terms creating extra income for PPL.

16. Accounts Payable’s Role in e-Commerce Electronic invoicing for services So far, electronic invoices have been for material orders that do not require paper invoice documentation since the approval is based on the matching process for price and quantity. What next’s? Electronic invoices for services. Contractors will enter their invoices using Enporion’s Order Manager website, but will also attach a document of the invoice or other required supporting documentation. PPL will receive the file and turn the attachment into an image which will be indexed to the voucher that is created. The voucher will be approved in PPL’s workflow process.

17. PPL’s Next Step is to Fully Integrate the Physical & Financial Supply Chains • One “version of the truth” facilitated by an independent marketplace • Elimination of company maintained contract managers, procurement systems, etc.

18. Human Resources Financial Supply Chain ACH ACH ACH CHECKS CHECKS CHECKS DATA DATA DATA WIRES WIRES WIRES The Ultimate Solution: The Settlement Hub • Payment obligations processed within various front-office silos • Create back-office “hay piles” – i.e. siloed data bases and settlement instructions • With Treasurers manually ”bailing the hay” to create: • Patchwork corporate data bases • Last minute cash forecasts & disbursements • Multiple settlement processes & related controls SILOS – The Traditional Back-Office Settlement Model Interest & Dividends Goods & Services Payments Payroll Treasurer

19. Accounts Payable’s Role in e-Commerce Integrated Cash System (ICS) Enporion and PPL have partnered to build a settlement hub that will be used by the Treasury Department to integrate to all PPL front office systems to manage receipts/receivables and disbursements/payables. A detailed picture of PPL’s planned Settlement Hub looks like this:

20. Questions ???