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e-Invoicing Business CaseThis business case has been prepared for clients to explain the proposed e-Invoicing project, outlining its scope, project team members, timetables and the financial savings from implementation. The document is a guide and can be adapted to individual situations.How to use this document – this is a template with suggested text for each section. You can use this text or substitute it with your own, it is only intended as a guide. All text in blue gives information about what each section of the business case is for (remove when the business case is complete) and financial and other information particular to your organization needs to be inserted where you see red, bold text in square brackets.Distribution list – this business case needs to be sent to all interested parties, otherwise known as stakeholders. This group will include groups both inside and outside the Finance department, and some groups outside the organization. Here is a list (not exhaustive) of the relevant stakeholders that need to be on the distribution list:Accounts PayableTreasuryManagement AccountsProcurementOrganization Leads and Purchase Order RaisersITSuppliersIt is imperative that that these groups are involved in the initial project discussions and all the way through the project implementation and final project sign off. Many projects fail to deliver the promised cash savings and operational efficiencies due to lack of stakeholder support from an early stage in the project lifecycle. Executive Project SummaryThis is a high level summary of the key points in the document and should be able to read as a standalone document. It is good practice to write this section of the organization case after the detailed sections of the business case have been completed, in order to ensure all key information has been included in the Project Summary. Think about the recipients - typically senior management and/or board members.The Accounts Payable function plays an important role in any organization, both within the Finance function and outside it. It plays an integral role in cash flow decisions made by Treasury, provides information to organization leads, suppliers, Procurement and Management Accounts.The highly transactional nature of the Accounts Payable function makes it a prime candidate for automation. The current processes are manual and effort intensive, requiring a large number of AP employees to ensure purchase orders/invoices are processed and suppliers are paid. Error rates are high and significant amounts of time are spent chasing organization leads and/or purchase order raisers for invoice authorisation. The current cost of processing a supplier invoice is [$ X] – use the Cost per Invoice calculator in Appendix A. The average cost per invoice of an organization that has implemented e-Invoicing is [$ X].BenefitsThe e-Invoicing project will deliver a number of financial and non-financial benefits:1). Revolutionise the AP Department. Implementing the e-Invoicing solution will transform the AP department from a slow, manual, transaction focused department to a pro-active part of the Finance function that delivers a seamless processing function and is free to spend more resource time resolving queries and eliminating errors.2). Maximise AP Cash Flow Opportunities. Releasing AP resources to focus on value added tasks with increased the opportunities for realising Early Payment Discounts offered by suppliers and eliminating the occurrence of Late payment Charges.3). Improved Supplier Relationships. By reducing the invoice receiving, processing and payment time, AP employees will have more time to deal with queries resulting from supplier invoices and deal with them in a more timely manner. The implementation of the Supplier Internet Portal will also provide accurate and timely information to the supplier without the need to contact the AP department. Quicker payments and query resolution put Procurement in a stronger position when it comes to renegotiating supplier contracts.4). Information Reporting. The e-Invoicing system will provide timely and accurate reporting to all parts of the organization. These reports will provide information to Procurement and Treasury and assist them in the performance of their roles within the organization.Project ScopeThe scope of the project is [ Define which departments and/or physical locations will be transitioned to the new system ] and the project timeframe is [ weeks/months/years ]. The project team will be comprised of representatives from the impacted parts of the organization:Accounts PayableTreasuryProcurementITOrganization leadsPurchase Order Raisersand will work closely to deliver the project on time and in budget. The project rollout will be [ phased implementation / total changeover ] and it is anticipated that there will be little or no disruption to the AP invoice/expense processing function.RisksThe primary risks to the project are technology selection and procurement, and user and supplier acceptance of the new system. The first risk will be mitigated by analysis of the current AP processing issues and identification of the key requirement for the automated system that with replace the current manual one. To mitigate the second risk, early consultation with users and suppliers to understand their issues and requirements will be incorporated into the project requirements document. On-going consultation with these groups throughout the project implementation and targeted training workshops will ensure continued project alignment and user/supplier acceptance at project launch.FinancialsA Cost-Benefit analysis has been performed to ascertain the net savings of [ $ X ] that this project will deliver. The Return on Investment (ROI) has been calculated as [ X % ] for the project with a Payback Period of [ X Years ].Document Revisions and Reviewers/Approvers TablesUse the table below to keep an audit trail or document revisions.Revision DateAuthorVersionDetails of Changes MadeUse this table for the business case Reviewers and ApproversNamePositionReviewerReviewer & ApproverSignature of ApproverDateCurrent SituationThis section is used to give a detailed overview of the current Accounts Payable function within your organization. Include information about employee numbers, a description of the current process and issues currently faced by the department.The Accounts Payable function is part of the Finance function and currently employs [ X ] employees. Its principle function is to process and pay suppliers invoices, employee expense claims and employees travel advances - this is done using a highly manual process requiring significant levels of human intervention. The department currently faces a number of issues with high error rates as a result of this manual process. It is also unable to react quickly to the changing nature of supplier invoicing methods (emails, document imaging, etc.) and is not taking advantage of the benefits that can be achieved from implementing new technologies.Currently, a supplier invoice is received in the AP department and is manually matched to the relevant purchase order, if one has been raised. This activity occupies a large proportion of the AP employees on a daily basis. Providing the invoice matches the purchase order, it is [sent for authorisation/passed for payment]. If there is a discrepancy between the supplier invoice and the purchase order, a query is raised with the supplier and/or the purchase order raiser. This can be a lengthy process and take up significant amounts of time for the AP employees, purchase order raiser and supplier.Once the query has been resolved, the invoice is [sent for authorisation/passed for payment]. This involves identifying which invoices are due for payment and applying any credit notes that have been issued by the supplier. During this process, opportunities to take advantage of Early Payment discounts offer by suppliers can be lost as AP employees are swamped by large volumes of invoices. Penalties for late payment can also be incurred unintentionally due to the volumes of invoices being processed.Another significant work load for AP employees can be the reconciliation of supplier accounts, especially when processing errors cause incorrect amounts to be paid. Both the AP employee and supplier can become involved in lengthy communications and investigations to identify the nature of the discrepancy and agree a process to resolve it. This workflow diagram shows the current AP supplier invoicing process. Use your own workflow diagram or other visual representation that represents your organization’s AP processes.The current cost of processing a supplier invoice is [$ X]. This is calculated by taking the total number of invoices processed in a year and dividing it by the annual cost of the AP department. Companies that have automated their AP function have an invoice processing cost of [$ X], [%] lower than our current cost per invoice.The AP department currently processes [ X ] invoices per annum, as well as [ X ] expense claims. The total value of the invoices and expense claims processed per annum is [ $ X].The main issues faced by the AP department are as follows:1). High Processing Costs. The annual volume of transaction processed by the AP department, coupled with the manual processes currently employed, give a cost per invoice of [$ X], compared with the average for companies that have implemented the e-Invoicing solution of [$ X ].2). High Error Rates. Because of the high level of human involvement in AP document processing, the number of errors made is significantly higher than with an automated system.3). Lost Cash Flow Opportunities. Early payment discounts offered by suppliers are frequently missed, due to the volumes of transactions being manually processed.4). Supplier Relations. Continued errors and lengthy query resolution damage relationships with suppliers and put Procurement in a weaker position when it comes to renegotiating contracts.5). Lack of Quality Information for Decision Making. The Treasury department relies on accurate and timely information in order to plan the organization’s cash flow and financial resource utilisation. Information provided by the AP department is currently manually collated and inaccurate.Proposed SolutionThis section is where you explain how the e-Invoicing solution will resolve the current issues in the AP department and how it will deliver processing efficiencies and cost benefits.The e-Invoicing solution is an automated system that removes a significant amount of human interaction from the AP process. By automating the receipt, processing and payment of supplier invoices, employee expense claims and travel advances, AP employees are released from transactional tasks to concentrate on value added work – reducing errors by identifying the root cause, resolving queries and delivering timely and accurate information for working capital analysis and supplier contract renegotiations.The principle area of organization that will be impacted is the AP department, which will have all or most of its current manual processes overhauled and replaced by the e-Invoicing solution. All purchase order raisers will also be impacted as the current manual system is replaced with an automated one. Procurement, Treasury and Management Accounts will have new sources of timely and accurate information and suppliers will have an internet portal that allows them to access invoice authorisation progress and payment details online. The e-Invoicing system will deliver the main areas of automation:1). Invoice Receipt. This will allow the AP department to capitalise on new technologies and accept invoices from suppliers electronically. Expense reports and travel advances will also be submitted through the e-Invoicing system. Electronic tagging will record when the invoice is received and match it the purchase order, if applicable. Any differences will be flagged and the AP employees will start the investigation to resolve the issue. This removes the manual task of opening and recording of supplier invoices and expense claims which is a time consuming activity for AP employees.2). Invoice Processing. Using the organization’s own levels of authority and sign off rules, the invoice will move through the automated processing system seamlessly. There will be no need for human intervention unless there is a query with an invoice that has not already been matched with a purchase order. When all checks have been made by the system, the invoice will be marked for payment and passed to the automated payment part of the system. This frees up AP employees to concentrate on securing Early Payment Discounts and avoiding Late Payment Penalties.3). Invoice Payment. The e-Invoicing solution can make drastic changes in the speed of payment as direct payments to supplier and employee accounts through ACH can remove the need to manually generated cheques and other manual payments. System reports can provide information on outstanding supplier balances, both current and future, to facilitate better cash flow planning.4). Supplier Account Reconciliation and Query Resolution. Using the online portal, suppliers can submit invoices, check on the authorisation status of submitted invoices, respond to queries and view payment details. This will reduce the number of telephone calls and emails that AP employees routinely have to deal with and improve supplier relations.5). Management Reporting. The e-Invoicing will provide information on supplier payments, cash flow requirements, cost management and supplier information for the Treasury and Procurement departments to utilise when assessing and renegotiating contracts with suppliers. This information is currently collated manually and is often inaccurate due to resourcing constraints and human error.Project DetailUse this section to give a detailed explanation of the scope of the project, including timeframes, implementation plans, project team, IT requirements and affected parties (stakeholders).The project proposed by this business case will replace the existing manual Accounts Payable system with an automated system which will drastically reduce the current supplier invoice processing time. It will also make significant improvements in AP error rates and free up AP employees to perform more value added tasks.The project timeframe is [ define total project length in weeks/months/years ]. The proposal is to address the following areas of the AP process:1). Invoice Receipt. The aim of the project is to optimise technology to increase the number of ways in which the AP department can receive documents from suppliers and employees;2). Invoice Processing. The automated system will deliver significant financial savings by drastically reducing the invoicing processing cost, as well as delivering a reduced error rate;3). Invoice Payment. By reducing the amount of time involved in processing supplier invoices, AP employees will be able to focus on maximising Early Payment Discount opportunities and reducing Late Payment Charges, improving cash flow and working capital.The intention is to implement a [ phased implementation / total changeover ]. The stages of the project are as follows:An analysis of the current situation, discussing the issues and problems of the existing system with all stakeholders;Proposed changes, including any manual processes that will remain in place to complement the e-Invoicing solution;Implementation of the proposed solution, including IT changes required to support the new system and training for all users (including suppliers);Post project review.[ The intention is to target a defined section of invoices initially (e.g. all invoices covered by a current purchase order) and then expand the scope of the project to include all other supplier invoices, followed by employee expense claims and travel advances. This will allow the project team to assess the effectiveness of the project implementation plan, and make changes where necessary. ]One key consideration of the project is the technology required to deliver the savings. The IT department is committing [ Name ] to the project and they have been involved from the project inception. The e-Invoicing system will require [ Give details of the IT infrastructure required to host the e-Invoicing system ] and [ X hours/days/weeks/months ] will be required to put the technology in place to deliver the automated system.There will also be training requirements for all users of the system – AP employees, purchase order raisers, employees submitting expense claims, suppliers, Procurement and Treasury – and these requirements will be based on the level and frequency of usage. It is intended to train AP employees first as they will be the main department impacted by the new system. The department will be split into three training groups so as to not impact the current workload of the department and the project implementation timetable.Project TeamDetail the key individuals who will make up the project team. Here is a suggested (but not exhaustive) list of project team members:Accounts Payable ManagerAccounts Payable team memberTreasury and or Management Accounts representativeProcurement representativeIT representativeOrganization Leads/Purchase Order Raiser representativeOrganization DepartmentProject Member TitleProject Member NameAccounts PayableAP ManagerAccounts PayableAP SupervisorITIT TechnicianOrganization LeadsPurchase Orders RaisersProcurementOrganization Account ManagerTreasuryFinancial AnalystImplementation PlanThis table shows the stages of the project from inception to completion and sign off. Adapt the Projects Stages to your own project plan.Project StagesDeliverablesStakeholder(s)Project LengthDelivery datePlanning and AnalysisIdentify scope of project, plan timetable and identify project teamALLIT development and systems changesSoftware and hardware changes, testing AP, IT, ProcurementMove from manual to automated systemImplement e-Invoicing solution though out organization (all areas in scope)AP, IT, Procurement, Organization Leads, TreasuryTrainingProvide workshopsALLProject Launch & PromotionRoll out to organizationALLPost Project ReviewAnalyse effectiveness of project implementation and evaluate cost benefitsALLRisksThis section highlights the project risks to the reader so that they have a full understanding of the implications of going ahead with the project implementation.As with any project, there are a number of associated risks that must be considered when planning an implementation such as this.1). Technology. The backbone of an automated system is the technology that is used to run and support it. Great care must be taken at the inception stage of the project to ensure that the right solution is chosen as poor decisions at this stage will affect the implementation and user acceptance of the proposed solution. Considerations must be made on hardware requirements, both for now and in the future. Have all the current issues and their causes been correctly identified and does the proposed solution resolve them? Will the new system incur annual maintenance costs over and above those detailed in the solution supplier’s quote and does the proposed system have the development potential to grow with the organization?2). User Acceptance. This is a very important consideration for the project proposer(s). If the system is rejected by the users, the whole project will have been a waste of time and resources and may generate bad feeling within the organization. All stakeholders/users must be consulted at the inception stage of the project to understand their issues and frustrations with the current system in order to build those requirements into the proposed solution. These stakeholders/users must also be involved (where possible) in the project implementation and kept informed of its progress.3). Supplier Acceptance. One of the main benefits of implementing an automated e-Invoicing solution is to improve supplier relations by providing timely information about invoice authorisation progress, planned supplier payment and queries with supplier invoices. The e-Invoicing system delivers this through the Supplier Internet Portal and it is imperative that the suppliers receive training to use this portal, but are also involved in a consultative capacity (through the Procurement department) at an early stage of the project so that they understand the positive benefits for them. If suppliers do not engage with the system, resources gained from automating the internal process will be redirected to dealing with supplier telephone calls and emails, rather that the value added work envisaged in the project benefits.4). Resources. The project team assigned to deliver the may not remain the same through the life of the project. This can have a disrupting effect of the project’s progress. The skills required from each team member to deliver the project need to be evaluated and an alternative resource identified should a team member not be able to complete the project. Of course, holidays and other absences need to be factored into the project timetable, where possible.5). Funding. This is crucial – if there are insufficient funds to complete the project it will have been a waste of time. It is imperative that the financial analysis (see below) is thorough and includes a contingency amount for unforeseen expense. All annual costs must be accounted for as these can often be cited as a reason for dropping a system after it been implemented, because the organization had not realised how much it would cost to maintain it. If the business case promises cost savings, ensure that they can be delivered within the stated timeframe.Alternative OptionsThe purpose of this business case is to propose a solution to an identified problem(s). However, the alternative options should be considered in order that the reader has all the information to make an informed decision.Alternative OptionAssessment of Alternative OptionDo NothingContinued inefficiencies and loss cash flow opportunities (Early Payment Discounts/Late Payment Penalties)Inaccurate information for cash flow and supplier managementLimited capability of current AP resources to deal with organizational growthAP OutsourcingSignificant disruption of organization processes whilst outsourcing takes placeNegative employees relations as a result of AP redundanciesAssociated costs of employees redundanciesConcerns over data securityDevelop an internal solutionTime consuming, costly and frequently not fit for purposeLack of IT development resourcePartial implementation of e-Invoicing solutionNot all benefits will be realised as e-Invoicing is an end-to end solutionIssues with support from e-Invoicing supplier if only part of solution is implementedLoss of functionalityFinancialsThis section details the cost of the project, the cost savings that the project will deliver and shows the Return on Investment (ROI). A Cost-Benefit analysis allows the reader to see how the up front and annual costs will deliver tangible benefits to the organization which will help improve its bottom line. Make sure that you include all costs, both one off and annual, so that the reader can see the true cost of the project. Ensure all savings identified are clearly understood and can be delivered.The costs of the e-Invoicing project are far outweighed by the benefits, both financial and non-financial, that it will bring to the organization. The Cost-Benefit analysis below shows the costs and benefits that will be delivered by the project over a three year period.Cost Benefit AnalysisCostsDescriptionYear 0Year 1Year 2Year 3Up Front InvestmentCapital costs of hardware, software and any other capital investment required to implement the e-Invoicing solution[ $ X ]Implementation CostsAll expenses associated with implementing the project, e.g. consulting, training, temporary employees to provide cover, etc.[ $ X ]Annual CostsSoftware and hardware maintenance contracts, additional training[ $ X ][ $ X ][ $ X ]BenefitsDescriptionYear 0Year 1Year 2Year 3Reduction in AP Invoice Processing CostsSavings from efficiencies and better utilisation of AP resources[ $ X ][ $ X ][ $ X ]Reduction in Payment Processing CostsSavings achieved by moving to direct supplier payments from manually produced cheques[ $ X ][ $ X ][ $ X ]Error Rate ReductionsSavings from better utilisation of AP employees resources due to fewer incorrect payments and internal error corrections[ $ X ][ $ X ][ $ X ]Employee Reductions / Increased Profitability of Current AP EmployeesSavings from lower number of AP employees to process current invoicing volumes or saved costs from not having to employ additional AP employees to deal with increased invoicing volumes[ $ X ][ $ X ][ $ X ]Enhanced Visibility and Working Capital ControlSavings generated from optimising Early Payment Discounts and minimising Late Payment Penalties, better Working Capital management[ $ X ][ $ X ][ $ X ]Net Savings[ $ X ][ $ X ][ $ X ][ $ X ]Discounted Return on Investment (ROI) and Payback PeriodThis is the ratio of money gained or lost (whether realised or unrealised) on a project, relative to the amount of money invested in the project. The ROI formula is as follows:Total Present value of Benefits Total Present Value of Costsand is expressed as a percentage or a ratio. Present value, also known as present discounted value, is the value on a given date of a payment or series of payments made at other times (source: Wikipedia). The formula for Present Value is: C . ( 1 + i? ) ( 1 + i? ) ( 1 + i? )where C is the valuei is the annual interest rateIn calculating the ROI for the e-Invoicing project, you must take into account all financial benefits and costs, both one-off and annual. Here is a list of project investment and annual running costs that should be included in the calculation:Project Investment (On-Off Costs)All hardware, software and other IT development costsProject consulting feesTraining costsTemporary employees required to enable AP employees to implement the project and take part in training workshopsAnnual (On-Going Costs)Employment costs for the AP departmentNon-employment costs for the AP department (including operating expenses)Annual hardware and software maintenance feesAnnual retraining costsData storageConsumables, including printing, fax and postage/courier costsEarly Payment Discounts lost/Late Payment Charges incurredTotal cost of invoice processingThe ROI can be calculated by year or on the project as a whole.A full analysis of the project costs and savings has been made and the ROI has been calculated as follows:Year 1 - [ X % ]Year 2 - [ X % ]Year 3 - [ X % ]Another good measure for evaluating the financial performance of the project is the PayBack Period. This shows the point at which the benefits of the project repay the costs of implementing it. This KPI is usually expressed in years.and the Payback Period for the project is [ X years ] AssumptionsA number of assumptions will have been made in putting this business case together. It is important that the reader understands what assumptions have been made in order to understand if they represent a risk to the project.The following assumptions have been made in putting this business case together:The project funding is available and will be approvedFull support has been obtained from the stakeholders and future system usersAll training requirements have been assessed and will be provided as part of the project implementation planAll resourcing requirements required for the project can be metThe project has senior management supportConclusionThis final section brings together the main points from the details sections of the business case to provide a summary of the key points for the reader. Make sure that all summaries and conclusions made in this section are also included in the Executive Project Summary at the beginning of this business case.The conclusion of this business case is that the implementation of the e-Invoicing automated AP solution would bring quantifiable benefits to the organization. It will bring the AP department in line with rest of the organization in utilising technology to deliver invoice processing efficiencies and cost savings. In summary, the benefits of implementing this solution are as follows:1). Revolutionise the AP Department. Implementing the e-Invoicing solution will transform the AP department from a slow, manual, transaction focused department to a pro-active part of the Finance function that delivers a seamless processing function and is free to spend more resource time resolving queries and eliminating errors.2). Maximise AP Cash Flow Opportunities. Releasing AP resources to focus on value added tasks with increased the opportunities for realising Early Payment Discounts offered by suppliers and eliminating the occurrence of Late payment Charges.3). Improved Supplier Relationships. By reducing the invoice receiving, processing and payment time, AP employees will have more time to deal with queries resulting from supplier invoices and deal with them in a more timely manner. The implementation of the Supplier Internet Portal will also provide accurate and timely information to the supplier without the need to contact the AP department. Quicker payments and query resolution put Procurement in a stronger position when it comes to renegotiating supplier contracts.4). Information Reporting. The e-Invoicing system will provide timely and accurate reporting to all parts of the organization. These reports will provide information to Procurement and Treasury and assist them in the performance of their roles within the organization.It is recommended that the e-Invoicing project should be implemented, subject to senior management approval and the investment funding required being secured.Appendix ACalculating the Cost per InvoiceThis is a quick method of calculating the Cost per Invoice for use in the business case. Make sure you include payroll costs within the annual running costs, plus any allocated organization overheads cost.Total Number of Invoices Processed and Paid AnnuallyAP Department’s annual running costs ................
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