Everything you ever wanted to know about e-Invoicing but were afraid to ask.

1. Everything you ever wanted to know about e-Invoicing but were afraid to ask. Northern Lights IAPP February 15, 2007

2. Some Statistics • Paper is stubbornly entrenched • Critical information is not collected, data is poorly organized, and systems are not well integrated Domestic 17% 83% International 14% 86% Electronic Paper Source: Aberdeen 2006 A/P Benchmarking Survey

3. Some more Source: Aberdeen 2006 A/P Benchmarking Survey

4. Maximize liquidity/cash flow 50% Improve visibility into spending 37% Lower costs through automation &headcount reduction 37% 31% Improve invoice auditing Integration of purchasing, 30% payables, & treasury Goals for A/P Managers Source: Aberdeen 2006 A/P Benchmarking Survey

5. What’s Your Problem? EDI “strategic suppliers” Paper “everything in between” Volume of invoices P-Card (“nuisance spend”) Low Volume Suppliers High Volume Suppliers

6. So Why Do We Still Have So Many Paper Invoices? • Cost and time required to change (both buyers & suppliers) • No industry standards: Buyers & Suppliers use different accounting systems • Regulatory compliance differs from country to country • Computers which were supposed to eliminate paper just make it easier to print invoices!! Volume of invoices volume of invoices by supplier Distribution of suppliers

7. Historical Attempts to Solve the Problem • Scanning (for data entry from image) • Outsourcing • OCR • What do all these have in common? • They don’t eliminate the paper! • Why spend all that money to take something that STARTED as data, convert it to paper, and then convert it BACK to data? • An invoice starts life as data!

8. So, What is e-Invoicing? • Invoice arrives from a supplier in electronic format which can be uploaded directly into ERP, processing systems and/or workflows-rather than on paper • No “touch-points”: No mail room prep, delivery to AP, AP data entry, scanning, indexing etc. • Biggest bottleneck in processing is time between invoice receipt and when it is entered in system

9. What e-Invoicing is NOT • Email delivery of a scanned image • Then printing it out so it can be keyed in. Hello? • Having paper invoices sent to an outsourcer for keying • More efficient “handling” of paper invoices • Scanning • OCR

10. Why is e-Invoicing “hot”? • Continual pressure to reduce operating costs: • Investors & management in the private sector • Taxpayers & politicians in the public sector E-Invoicing greatly reduces or eliminates the risk associated with loss, delay and human error • Complex compliance requirements: • Taxing authorities in EU • Transparency, visibility & accountability in the US (Sarbanes-Oxley) – certification of internal controls • Paper invoice processing undermines both drivers: • People/Cost Intensive • Error Prone • Slow

11. Accounts Receivable Accounts Payable • Transmits electronic invoices directly from their billing system • Uses the format of their choice. • Or uses an online web form to enter and transmit invoices • Receives electronic invoices directly into their financial system • In the format of their choice • Receives a digital image of each invoice, along with line level detail How it works E-Invoice service provider • Receives invoices from seller • Validates invoice fields • Validates tax compliance • Stores electronic images in a secure online data warehouse • Transmits invoices to buyer

12. Since Buyers can’t receive all these formats, they specify one — However, typically only a small percentage of suppliers can support it Suppliers have different ERP systems which generate invoice outputs in different formats Buyer Buyer Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier The Challenge Facing Buyers

13. Buyer Supplier Supplier Supplier Supplier Supplier The e-Invoicing Solution Suppliers export invoice data from theirexisting systems in the format of their choice, or enter invoices on a web-form. Electronically translate the data into the format of the buyer’s choice. Buyers connect once to receive ALL invoices from ALL suppliers

14. It’s not that difficult to start • No new Hardware (no annual maintenance) • No new Software (no annual maintenance) • Limited IT Involvement • No Professional Services • Works seamlessly with ANY accounting system (on either end) • Supplier contact, enrollment in the program and all technical details are handled by someone else!

15. Reduced Cost Improved Cycle Time Increased Financial Control Purchasing Compliance/Visibility The Immediate Benefits Supplier Electronic

16. How E-Invoicing “E-nables” • Same day receipt of invoices • 100% of data, 100% accurate • Reduced exceptions • Validation before delivery • Virtual Centralized Receipt • Immediate visibility into current liabilities • Full control over when to pay • This has perhaps the biggest implication in terms of dollars – let’s see how…

17. Three Ways to Save Your Company TONS of $$$ • Dynamic Discounting • Paying within terms • Float stretch management • I guarantee your CFO, Controller and/or Treasurer will be all ears!

18. Dynamic Discounting Concept • Vendors will accept a discount, sometimes substantial, to get their money now • Cash flow reasons, primarily • Vendors see a list of invoices in a vendor portal which are ready for payment, then click “Pay me now” • Available discounts can be throttled up or down depending on your cash • So popular that a “run” on the bank is possible!

19. A graph!

20. Dynamic Discounting Example • $500 million in spend • 60% PO, 40% non-P.O. • 50% auto match on PO • $500mil x 60% x 50% = $150mil • $500 mil x 40% = $200mil • $350mil available x 2% = $7,000,000 • $7,000,000 x 5% avg = $350,000

21. Payingwithin Negotiated Terms • How many of you capture 100% of the negotiated discounts across your spend? • Have you ever calculated what that is? • $500 mil in spend, lets say 20% of that is 2/10 net 30 = $2,000,000 • You do the math

22. Float Stretch Management • Vendor base with no discount terms • Net 30, but how often to do pay sooner? • 27 days, 20 days, 15 days? • A “Charming” vendor, with a friend in AP? • Pushy inquiry calls? • Pay on exactly the 30th day • “Either discount or we will pay to terms” • “ethical” stretch

23. This all sounds great Kevin, BUT… • It’s worthless unless the suppliers participate! • What’s in it for them? • No more printing, stuffing, mailing, postage • No more delays • No more “Did you get my invoice?” • If it requires a lot of effort on their part, they are much less likely to participate • No hardware or software installation • Does not change their normal routine • If done correctly, participation rates of 75%-85% of invoice volume are very achievable

24. Keys for Supplier Participation • Strong and Clear Message, with a consequence • Proactive Follow-Up With Suppliers • An Effective Enrollment/Enablement Process • Regular Reporting & Visibility into The Process • Managing Your Partner Carefully • Arranging Performance Guarantees

25. Keys for Successful Implementation • Executive Sponsorship • Well defined vision for AP; how e-Invoicing fits within/supports that vision • Clearly Defined Goals & Objectives • Cross Functional Support • Strong Project Champion • Rigorous Project Management • Communication, Communication, Communication

26. You’re in Good Company

27. Thank you Kevin Burney Director of Sales, Central US Tel: 415.772.8095 Cell: 920.342.0812 Fax: 415.956.7811 Email: kevin.burney@ob10.com