By R. Edwin Pearce
Historically, if you asked a CFO to tell you the first thing that popped into their mind when you mention accounts payable (AP) processing, they likely would have responded with some variation of “cost center.” The fact is, as a percentage of revenue, the costs associated with AP processing typically represent a small blip on the radar of most companies. But as companies have tightened their spending as a result of the recent economic downturn, that blip is now a significant opportunity.
More than 75 percent of AP departments report into the CFO, according to various studies. With CFOs keenly interested in cost containment and improved cash management, AP leaders would be well served to find ways to deliver strategic benefits to the organization. Notably, 56 percent of CFOs believe AP represents a more strategic opportunity for improvements than it did two years ago.
One reason CFOs are changing their tune on AP is that they are seeking ways to avoid further layoffs, while weathering the recession. To this end, most are tightening controls over employee spending and placing greater emphasis on measuring and monitoring the company’s financial health.
These types of activities are clearly in the AP department’s wheelhouse.
CFOs are looking past the traditional paper-encumbered stereotype of AP and focusing more closely on the tremendous amount of financial data that flows through AP. From this perspective, they see AP as a means to improving working capital management, reducing supply chain risk, and greatly reducing the incidence of fraud. Most importantly, CFOs recognize that AP can help a company improve its cash position by extending days payables outstanding, avoiding late payments, capturing early-pay and volume discounts, and ensuring that payments and orders are compliant with contracts.
At many companies, AP no longer is merely a back-office transaction function where efficiency and low cost of operations are the only requisites for success; AP processes are being more tightly linked with treasury functions to help maximize working capital management. This is part of an overall move to align core processes across business functions to support corporate strategic initiatives.
While this increased corporate standing is good news for AP departments, they must also be ready for CFOs to more closely assess their performance based on key criteria such as costs, service delivery, error rates, timeliness of responses to inquiries, compliance, and vendor relationships.
This makes it imperative that AP departments continue their automation initiatives. Not only does automation help AP departments improve on-time payment performance, reduce errors, slash costs and enable greater visibility into financial data. But it also delivers the quantifiable data on process performance that CFOs will require as AP evolves into more strategic partner for their organization.
R. Edwin Pearce is executive vice president of sales and corporate development for eGistics, Inc., a provider of e-document solutions. He can be reached at 214-256-4607 or via epearce@egisticsinc.com.
A blog dedicated to the presentation and discussion of ideas about the storage and management of information for financial services.
Monday, January 17, 2011
Wednesday, January 5, 2011
Seeding the Cloud
By Randy Davis
A recent article in Banking & Payments Industry Update #1447 greeted the new year with prognostications about the use of cloud computing by traditionally conservative stalwarts such as "large banks" (who have been reluctant to outsource anything). Another article in Document Imaging Report (Dec. 23, 2010) waxed prolific on the growing influence of cloud computing on enterprise software, citing predictions by Saugatuck "that as much as 40% of new software sold in 2014 will be cloud-based."
OK. We experienced similar enthusiasm with the advent of ERP, CRM and the paperless society, and we'll see how this cloud euphoria plays out.
Don't get me wrong. I like the cloud, and believe that it will endure as a viable technology for the foreseeable future. I also like the flexibility it can provide in the rapid delivery of "pay as you go" services. In fact, eGistics has been a "cloud player" for almost 16 years, and is strongly moving forward with new, exciting services rooted in a cloud infrastructure. Using a well-worn cliche, "Watch This Space" for upcoming announcements regarding a new cloud e-document storage management service offering, as well as a "Platform as a Service" offering that enables companies to quickly enable their own applications to utilize e-document capabilities.
In the lyrical words of Bob Dylan, "the times they are a changin'," and, looking back on the economy of 2010, we can only say, thank heavens! We at eGistics look forward to working with you to provide new, cost effective and innovative solutions that will enhance your own service offerings to your customers and users.
By the way, please take our poll at the bottom of this blog page to indicate your company's interest in using the cloud!
Happy New Year!
A recent article in Banking & Payments Industry Update #1447 greeted the new year with prognostications about the use of cloud computing by traditionally conservative stalwarts such as "large banks" (who have been reluctant to outsource anything). Another article in Document Imaging Report (Dec. 23, 2010) waxed prolific on the growing influence of cloud computing on enterprise software, citing predictions by Saugatuck "that as much as 40% of new software sold in 2014 will be cloud-based."
OK. We experienced similar enthusiasm with the advent of ERP, CRM and the paperless society, and we'll see how this cloud euphoria plays out.
Don't get me wrong. I like the cloud, and believe that it will endure as a viable technology for the foreseeable future. I also like the flexibility it can provide in the rapid delivery of "pay as you go" services. In fact, eGistics has been a "cloud player" for almost 16 years, and is strongly moving forward with new, exciting services rooted in a cloud infrastructure. Using a well-worn cliche, "Watch This Space" for upcoming announcements regarding a new cloud e-document storage management service offering, as well as a "Platform as a Service" offering that enables companies to quickly enable their own applications to utilize e-document capabilities.
In the lyrical words of Bob Dylan, "the times they are a changin'," and, looking back on the economy of 2010, we can only say, thank heavens! We at eGistics look forward to working with you to provide new, cost effective and innovative solutions that will enhance your own service offerings to your customers and users.
By the way, please take our poll at the bottom of this blog page to indicate your company's interest in using the cloud!
Happy New Year!
Wednesday, December 8, 2010
Cloud computing's "green" credentials
By R. Edwin Pearce
The market for cloud computing has expanded quickly over the past few years, largely driven by its ability to deliver impressive economic benefits to cash-strapped organizations. But a new study finds that not only can cloud computing keep operations in the black, it also can help them be "green."
Pike Research reports that the growth of cloud computing will have important implications for both energy consumption and greenhouse gas (GHG) emissions. In fact, by 2020 cloud computing will lead to a 38 percent reduction in worldwide data center energy expenditures, compared to a business-as-usual scenario, Pike Research reports.
“The growth of cloud computing will have a very significant positive effect on data center energy consumption,” says Pike Research Senior Analyst Eric Woods. “Few, if any, clean technologies have the capability to reduce energy expenditures and GHG production with so little business disruption. Software-as-a-service, infrastructure-as-a-service, and platform-as-a-service are all inherently more efficient models than conventional alternatives, and their adoption will be one of the largest contributing factors to the greening of enterprise IT.”
To be sure, cloud computing's "green" credentials and environmental impact aren't the top reasons for organizations to deploy the technology. But they are certainly key incremental benefits, particularly for organizations that list environmental sustainability among their strategic objectives.
R. Edwin Pearce is executive vice president of sales and corporate development for eGistics, Inc., a leading provider of hosted document management solutions. Pearce can be reached at 214-256-4607 or via epearce@egisticsinc.com.
The market for cloud computing has expanded quickly over the past few years, largely driven by its ability to deliver impressive economic benefits to cash-strapped organizations. But a new study finds that not only can cloud computing keep operations in the black, it also can help them be "green."
Pike Research reports that the growth of cloud computing will have important implications for both energy consumption and greenhouse gas (GHG) emissions. In fact, by 2020 cloud computing will lead to a 38 percent reduction in worldwide data center energy expenditures, compared to a business-as-usual scenario, Pike Research reports.
“The growth of cloud computing will have a very significant positive effect on data center energy consumption,” says Pike Research Senior Analyst Eric Woods. “Few, if any, clean technologies have the capability to reduce energy expenditures and GHG production with so little business disruption. Software-as-a-service, infrastructure-as-a-service, and platform-as-a-service are all inherently more efficient models than conventional alternatives, and their adoption will be one of the largest contributing factors to the greening of enterprise IT.”
To be sure, cloud computing's "green" credentials and environmental impact aren't the top reasons for organizations to deploy the technology. But they are certainly key incremental benefits, particularly for organizations that list environmental sustainability among their strategic objectives.
R. Edwin Pearce is executive vice president of sales and corporate development for eGistics, Inc., a leading provider of hosted document management solutions. Pearce can be reached at 214-256-4607 or via epearce@egisticsinc.com.
Monday, December 6, 2010
Cloud computing growing up fast
By R. Edwin Pearce
The next year will be big for cloud computing, with the technology transitioning from “early adopter status” into a mainstream platform for IT. That’s according to IDC, a leading research and advisory firm, which ranked the maturation of cloud computing among its top IT predictions for 2011.
IDC predicts that spending on public IT cloud services will grow at more than five times the rate of the IT industry in 2011, up 30 percent from 2010, as organizations move a wider range of business applications into the cloud. Small and medium-sized business cloud use will surge in 2011, with adoption of some cloud resources topping 33 percent among U.S. midsize firms by year’s end.
“[Cloud computing] can no longer be invested in, or managed, as sandbox efforts around the edges of the market. Instead, they are rapidly becoming the market itself and must be addressed accordingly,” warns Frank Gens, senior vice president and chief analyst at Framingham, MA-based IDC.
Gens is exactly right. Organizations of all sizes are taking a hard look at cloud-based solutions as a way to avoid the hefty capital investments and ongoing maintenance and upgrade costs associated with traditional on-premise solutions, and to ensure their IT infrastructure remains up-to-date.
In addition to changing the way organizations access business applications, the growth of cloud computing also will bring mobile banking and payments one step closer to reality, IDC predicts. But this also is true of mobile applications in other industries, most notably healthcare and insurance.
What do you think?
R. Edwin Pearce is executive vice president of sales and corporate development at eGistics, Inc. (www.egisticsinc.com), a leading provider of hosted solutions for payments and document automation. He can be reached at 214-256-4607 or via e-mail at epearce@egisticsinc.com.
The next year will be big for cloud computing, with the technology transitioning from “early adopter status” into a mainstream platform for IT. That’s according to IDC, a leading research and advisory firm, which ranked the maturation of cloud computing among its top IT predictions for 2011.
IDC predicts that spending on public IT cloud services will grow at more than five times the rate of the IT industry in 2011, up 30 percent from 2010, as organizations move a wider range of business applications into the cloud. Small and medium-sized business cloud use will surge in 2011, with adoption of some cloud resources topping 33 percent among U.S. midsize firms by year’s end.
“[Cloud computing] can no longer be invested in, or managed, as sandbox efforts around the edges of the market. Instead, they are rapidly becoming the market itself and must be addressed accordingly,” warns Frank Gens, senior vice president and chief analyst at Framingham, MA-based IDC.
Gens is exactly right. Organizations of all sizes are taking a hard look at cloud-based solutions as a way to avoid the hefty capital investments and ongoing maintenance and upgrade costs associated with traditional on-premise solutions, and to ensure their IT infrastructure remains up-to-date.
In addition to changing the way organizations access business applications, the growth of cloud computing also will bring mobile banking and payments one step closer to reality, IDC predicts. But this also is true of mobile applications in other industries, most notably healthcare and insurance.
What do you think?
R. Edwin Pearce is executive vice president of sales and corporate development at eGistics, Inc. (www.egisticsinc.com), a leading provider of hosted solutions for payments and document automation. He can be reached at 214-256-4607 or via e-mail at epearce@egisticsinc.com.
Thursday, September 30, 2010
Healthcare Payables: From Bad to Worse?
By Amer Khan (akhan@egisticsinc.com) of eGistics (www.egisticsinc.com)
Effectively managing the payables process is a big job for most companies, but for healthcare organizations, it is a particularly tall order -- and it's about to get a lot more challenging.
The problem in managing healthcare payables stems from the byzantine network of buyer and seller relationships employed by most healthcare organizations, combined with the increasingly complex procurement processes and contracts that healthcare organizations use to purchase goods and services. Every day, the typical healthcare organization receives a mountain of invoices from many different suppliers, most under different contracts with potentially different payment arrangements.
When you mix in the unusually high number of suppliers that most healthcare organizations use -- a hospital might have thousands of suppliers compared to a few dozen for a big law firm -- you can see how the payables process can quickly become complicated. For instance, on a given day, a hospital might receive invoices for everything from Band-Aids to the pricey cardiology equipment it leases.
The healthcare industry's attempts to address the inefficiencies of the payables continuum have delivered mixed results. Several years ago, group purchasing organizations (GPOs) started sprouting up, allowing healthcare organizations to buy a range of goods and services from a single entity, rather than dealing with multiple vendors. While GPOs have enabled their customers to maximize discounts and reduce the number of vendors they do business with, there are still many cases where healthcare providers must source goods and services directly (such as buying from local suppliers), meaning they still must maintain a high number of supplier relationships.
Here's the scary part: the problem is likely to get worse. Every innovation in the healthcare industry -- whether it's new technologies, new devices or new drugs -- may create more suppliers, generating more invoices, contracts, payment arrangements, and, in some cases, acquisition channels. With our nation focusing like never before on innovations in healthcare, providers have no time to waste.
And while healthcare organizations are focusing tremendous amounts of time and resources on "big issues" such as meeting new requirements for electronic health records (EHRs) and ICD-10, driving down the costs associated with payables can deliver significant benefits as well, and in short order.
So, how can healthcare organizations accomplish this?
Since manual processes don't scale, the healthcare industry will need to rethink its approach to payables. The answer starts with eliminating paper at the earliest point possible in the process.
Whether it's converting paper invoices to electronic images, or convincing business partners to provide electronic invoices in the first place, eliminating paper simplifies and automates the payables process. It allows healthcare providers to apply automated rules for processing, and to initiate an electronic payment with detailed remittance information so the supplier can automatically post the receivables. With these types of solutions, providers can solve their current business challenges and lay a solid foundation to manage the increasingly complex payable environment that is sure to come.
What do you think?
Effectively managing the payables process is a big job for most companies, but for healthcare organizations, it is a particularly tall order -- and it's about to get a lot more challenging.
The problem in managing healthcare payables stems from the byzantine network of buyer and seller relationships employed by most healthcare organizations, combined with the increasingly complex procurement processes and contracts that healthcare organizations use to purchase goods and services. Every day, the typical healthcare organization receives a mountain of invoices from many different suppliers, most under different contracts with potentially different payment arrangements.
When you mix in the unusually high number of suppliers that most healthcare organizations use -- a hospital might have thousands of suppliers compared to a few dozen for a big law firm -- you can see how the payables process can quickly become complicated. For instance, on a given day, a hospital might receive invoices for everything from Band-Aids to the pricey cardiology equipment it leases.
The healthcare industry's attempts to address the inefficiencies of the payables continuum have delivered mixed results. Several years ago, group purchasing organizations (GPOs) started sprouting up, allowing healthcare organizations to buy a range of goods and services from a single entity, rather than dealing with multiple vendors. While GPOs have enabled their customers to maximize discounts and reduce the number of vendors they do business with, there are still many cases where healthcare providers must source goods and services directly (such as buying from local suppliers), meaning they still must maintain a high number of supplier relationships.
Here's the scary part: the problem is likely to get worse. Every innovation in the healthcare industry -- whether it's new technologies, new devices or new drugs -- may create more suppliers, generating more invoices, contracts, payment arrangements, and, in some cases, acquisition channels. With our nation focusing like never before on innovations in healthcare, providers have no time to waste.
And while healthcare organizations are focusing tremendous amounts of time and resources on "big issues" such as meeting new requirements for electronic health records (EHRs) and ICD-10, driving down the costs associated with payables can deliver significant benefits as well, and in short order.
So, how can healthcare organizations accomplish this?
Since manual processes don't scale, the healthcare industry will need to rethink its approach to payables. The answer starts with eliminating paper at the earliest point possible in the process.
Whether it's converting paper invoices to electronic images, or convincing business partners to provide electronic invoices in the first place, eliminating paper simplifies and automates the payables process. It allows healthcare providers to apply automated rules for processing, and to initiate an electronic payment with detailed remittance information so the supplier can automatically post the receivables. With these types of solutions, providers can solve their current business challenges and lay a solid foundation to manage the increasingly complex payable environment that is sure to come.
What do you think?
Friday, August 20, 2010
Robbing Peter to Pay Paul? NACHA vs Reg E
Randy Davis, VP (egisticsinc.com)
On September 1, 2009 NACHA issued a Request for Comment on a proposal to amend the NACHA operating rules regarding the time frame for ACH adjustment entries. In brief the proposed rule change would extend the period during which a Receiving Depository Financial Institution (RDFI) may transmit an adjustment entry to its ACH Operator from 60 calendar days to 90. The rationale of the extension is to give RDFIs enough time to submit adjustment entries for "virtually all" credits owed to consumers under Reg E. The goal is to narrow/close the time gap between NACHA re-credit obligations and Reg E re-credit obligations. The rule change is proposed (though it has yet to be balloted) for implementation in March 2011.
Currently Reg E theoretically could allow a credit to the consumer as many as 38 days past what the NACHA rules allow. Within the Reg E 90-day period, the RDFI is obligated to credit the consumer, but could be left holding the bag if the NACHA 60-day period has expired, resulting in expiration of the automated adjustment period with the ODFI. After that, the RDFI must pursue a warranty claim against the ODFI manually and outside the ACH network. Possible outcomes are as follows: A) Both the RDFI and ODFI incur costs to settle the RDFI's claim against the ODFI's warrant; B) The RDFI could request proof of authorization, which results in costs to the ODFI and Originator; C) The RDFI could decide not to pursue the claim and take the loss.
The Hoped-for Benefits
NACHA believes the rule change will 1) avoid RDFI losses, 2) avoid manual claim costs, and 3) reduce or avoid write-offs.
The Dreaded Costs
ODFIs will have to ensure that their systems can accept adjustments up to 90 days beyond the settlement date of the original entry.
Originators will be subject to more automated adjustments.
Everyone -- RDFIs, ODFIs, Originators and ACH Operators -- may need to store ACH records for "additional periods of time."
Who Wins and Loses?
Possible Loser: The ODFI loses because it will receive more automated claims that off-set any cost reductions.
Possible Winner: The RDFI wins because it reduces costs and write-offs.
Possible Winner: Originators win because it reduces the requirement to provide proofs of authorization.
Possible Winner: The ACH network wins as productivity and efficiency is improved.
Chime In
Do you agree with my assessment of winners and losers? Use the Comment box to let me know what I've missed, and to contribute to the discussion.
Take our poll at the bottom of this page to vote on who you think is the winner from the rule change!
 |
| Looking for winners and losers |
Currently Reg E theoretically could allow a credit to the consumer as many as 38 days past what the NACHA rules allow. Within the Reg E 90-day period, the RDFI is obligated to credit the consumer, but could be left holding the bag if the NACHA 60-day period has expired, resulting in expiration of the automated adjustment period with the ODFI. After that, the RDFI must pursue a warranty claim against the ODFI manually and outside the ACH network. Possible outcomes are as follows: A) Both the RDFI and ODFI incur costs to settle the RDFI's claim against the ODFI's warrant; B) The RDFI could request proof of authorization, which results in costs to the ODFI and Originator; C) The RDFI could decide not to pursue the claim and take the loss.
The Hoped-for Benefits
NACHA believes the rule change will 1) avoid RDFI losses, 2) avoid manual claim costs, and 3) reduce or avoid write-offs.
The Dreaded Costs
ODFIs will have to ensure that their systems can accept adjustments up to 90 days beyond the settlement date of the original entry.
Originators will be subject to more automated adjustments.
Everyone -- RDFIs, ODFIs, Originators and ACH Operators -- may need to store ACH records for "additional periods of time."
Who Wins and Loses?
Possible Loser: The ODFI loses because it will receive more automated claims that off-set any cost reductions.
Possible Winner: The RDFI wins because it reduces costs and write-offs.
Possible Winner: Originators win because it reduces the requirement to provide proofs of authorization.
Possible Winner: The ACH network wins as productivity and efficiency is improved.
Chime In
Do you agree with my assessment of winners and losers? Use the Comment box to let me know what I've missed, and to contribute to the discussion.
Take our poll at the bottom of this page to vote on who you think is the winner from the rule change!
Thursday, July 29, 2010
Beyond SAS 70
By R. Edwin Pearce (www.epearce@egisticsinc.com)
A new study from Gartner confirms something that eGistics (www.egisticsinc.com) has known for some time: there's a lot more to effective security, privacy and continuity than compliance with Statement on Auditing Standards (SAS) 70.
"SAS 70 is basically an expensive auditing process to support compliance with financial reporting rules like the Sarbanes-Oxley Act (SOX)," says French Caldwell, research vice president at Gartner. "Chief information security officers (CISOs), compliance and risk managers, vendor managers, procurement professionals, and others involved in the purchase or sale of IT services and software need to recognize that SAS 70 is not a security, continuity or privacy compliance standard."
Published by the American Institute of Certified Public Accountants (AICPA), SAS 70 provides a service provider's auditor with guidance on how it should report on process-related risks relevant to financial statements and transaction processing. Intended for use by the customer's auditor, the result of a SAS 70 is either a Type I attestation that the processes as documented are sufficient to meet specific control objectives, or a Type II attestation, which additionally includes an on-site evaluation to determine whether the processes and controls actually function as anticipated.
Gartner believes a SAS 70 Type II evaluation does provide a very high degree of assurance that the examined controls are effective. The performance of controls is evaluated over a period of time; it is not just a snapshot of control effectiveness. However, customers should never assume that the provider has implemented all the appropriate controls, Gartner says.
"To ensure that vendor controls are effective for security, privacy compliance and vendor risk management, SAS 70 ... and other national audit standard equivalents should be supplemented with self-assessments and agreed-upon audit procedures," Caldwell explains.
Interested in learning more? E-mail me at epearce@egisticsinc.com.
A new study from Gartner confirms something that eGistics (www.egisticsinc.com) has known for some time: there's a lot more to effective security, privacy and continuity than compliance with Statement on Auditing Standards (SAS) 70.
"SAS 70 is basically an expensive auditing process to support compliance with financial reporting rules like the Sarbanes-Oxley Act (SOX)," says French Caldwell, research vice president at Gartner. "Chief information security officers (CISOs), compliance and risk managers, vendor managers, procurement professionals, and others involved in the purchase or sale of IT services and software need to recognize that SAS 70 is not a security, continuity or privacy compliance standard."
Published by the American Institute of Certified Public Accountants (AICPA), SAS 70 provides a service provider's auditor with guidance on how it should report on process-related risks relevant to financial statements and transaction processing. Intended for use by the customer's auditor, the result of a SAS 70 is either a Type I attestation that the processes as documented are sufficient to meet specific control objectives, or a Type II attestation, which additionally includes an on-site evaluation to determine whether the processes and controls actually function as anticipated.
Gartner believes a SAS 70 Type II evaluation does provide a very high degree of assurance that the examined controls are effective. The performance of controls is evaluated over a period of time; it is not just a snapshot of control effectiveness. However, customers should never assume that the provider has implemented all the appropriate controls, Gartner says.
"To ensure that vendor controls are effective for security, privacy compliance and vendor risk management, SAS 70 ... and other national audit standard equivalents should be supplemented with self-assessments and agreed-upon audit procedures," Caldwell explains.
Interested in learning more? E-mail me at epearce@egisticsinc.com.
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