The pandemic that remains: manual procurement process

In the pandemic era, most businesses are in survival mode, while tech companies are moving towards becoming super-apps without any specialization. After the pandemic, businesses adapt technology implementation to nudge against future pandemics with that “super-apps” mindset without realizing that the concept fails. Hence, businesses might adopt a sole system without knowing that other integrated capabilities must be implemented for an exponential result of automation. Some modern industries have moved forward with this concept, but the procurement area is still left behind. Businesses are stuck with manual processes while wondering if their problem can be solved with a finger snap.

A notable restaurant chain in Indonesia owns and operates more than 20 branches that serve freshly produced food and beverages to end customers. As they are required to serve fresh food based on customers' demand, their procurement process is divided into two major categories: (1.) Decentralized procurement, where the goods will be ordered by & delivered directly to the restaurant kitchen, and (2.) Centralized procurement, where the goods will be ordered by & delivered to the central warehouse before being distributed to the restaurant kitchen.

Advancing Digitalization as a Remedy

Surely, ERP and other internal tools can help centralize information, easing communication within an organization. However, adding an external variable, such as communication with suppliers, causes all of the ideal business processes to blur.

All headaches can be cured by implementing digital document exchange from Paper.id. The communication between suppliers and the buyer can be digitalized, centralized, and integrated into the ERP. Here is how Paper.id helps the buyer:

1. PO creation can be done in ERP by the finance team in headquarters and does not require printing and sending manually, resulting in increased productivity per person. Additional human resources in headquarters are not needed.
2. PO will be sent automatically based on the suppliers' email and phone number registered in ERP or paper.id database, eliminating PO to be sent to the wrong recipient.
3. PO sending from headquarters and PO confirmation from the supplier can be visible to the finance and operation teams, minimizing the effort for the operation to do order confirmation. Furthermore, the Supplier can only send an invoice based on a GR-ed PO if all required documents are attached. The rule can be customized depending on the supplier type and the transaction.

Reduced Invoice Processing Time, Maintained Supplier Relationship

By restricting the invoice submission rule, the finance team has confidence that the invoiced item has been received and the required supporting documents are complete. Paper.id three-way-matching enables the invoice amount to be matched against PO, drastically reducing invoice processing time and human error by up to 80%. Automated checking ensures payment is made at the right amount.

It's also a win for both suppliers and the operational team in the branch or store. Suppliers' risk of revising the invoice is reduced by submitting the invoice based on the GR-ed PO with the mandatory data. Moreover, invoice sending in real-time cuts up to 5-day payment term. Hence, they will be paid faster. The operation team can know which PO has been received, invoiced, and paid. Therefore, they know where the current bottleneck is to send another PO.

Management can now run the business at peace. All POs sent are matched with the contract due to the order centralization at headquarters. The supplier portal also helps to implement customized rules in digital invoices. Digitalization is also leveraged to reduce headcount in finance and procurement, resulting in an efficient and productive workforce with fewer errors and disputes. All information is centralized and integrated into the supplier portal and ERP, resulting in data correctness that can be analyzed in real-time anywhere and everywhere, without waiting to be imputed by their staff.

We believe that each business is unique, along with its complexity. That’s why we built our modular product, complemented by experienced business consultants who are ready to tailor our solution based on your primary needs. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

Slow and Unsure, Human Interference is the Root of Most Evil.

Research states that processing a single invoice requires 3 - 10 days on average, depending on the company itself. The processing time depends on several factors, such as the complexity of the business process, the frequency of transactions, headcount in processing invoices, and technology adoption. We all know that considering headcount in the calculation will not be scalable as the business grows.

It is an unproven myth that the payment can be delayed by 3 - 10 days due to the processing time. In fact, not only does the processing take up so much headcount cost, it also risks the business in several ways: (1.) executed late payment, which affects supplier trust and impedes operation, (2.) financial penalty caused by late payment fee, and (3.) increased error rate due to human error, leading to false data or wrong payment.

Facing The Law of Diminishing Returns

One of the growing cafe chain faces this issue when scaling from dozens to hundreds of branches, as they must keep the number of headcounts streamlined and the invoice processing time shorter. They realize that their business in handling fresh produce is complex, frequent, and needs to be executed in time. Hustling using existing human resources will increase the error rate, resulting in wrong payments being executed.

As they scaled, all procurement processes are centralized in headquarters. The order is delivered to the central warehouse or the branch, depending on the type of goods. Hence, the requirement will come from the branch and executed in headquarters. Using hard copy, the approval process in the branch and headquarters slows down the purchasing. Implementing the approver’s SLA (Service Level Agreement) can mitigate the slow approval, but still, without proper facility, the quality of the checker must be decreased to meet the SLA. This problem might not be critical in the ordering process but will be critical in invoice approval. Before executing invoice payment, the finance team must check the correctness of the invoice. The checking consists of three layers:

1. Is the identity and legal aspects in the invoice submitted legitimate? The invoice will be checked to see if it comes from the relevant suppliers and sent to the correct buyer. The legal aspect is also checked. Sometimes buyer requires stamp duty (materai) for the invoice with more than 5 million rupiahs.
2. Is the invoice submitted completely with supporting documents? The invoice must contain all required information, such as the item quantity, unit price, discount, tax, tax id, etc. The mandatory supporting documents, such as the tax invoice, GR (Good Receipt), PO, and the signed contract for this purchase, must be attached.
3. Is the information in the invoice aligned with the supporting docs? The most well-known invoice checking is called three-way-matching. The business has to ensure that the invoiced item has been received and the price stated is aligned with the order price in the PO. Therefore, invoice data will be matched against the GR and PO simultaneously. Furthermore, the supporting documents will be checked to see if the information aligns with the invoice.

These steps are carefully executed via hardcopy by the finance team at the headquarters to minimize the financial risk of making wrong payment. It takes a long time due to the vast frequency of the transactions and the abundance of information that need to be checked. A bigger problem comes from invoices that do not comply the invoice checking criteria. All of these cases must be revised by the suppliers completely, leading to a lose-lose situation where suppliers will not be paid on time, and the finance team has to do double work.

The correct invoice must be approved by the finance manager, to ensure that the invoice is correct from a high-level point of view. After the invoice has been approved, a payment request is created to trigger payment. The manager or director must also approve payment requests to minimize the risk of fraud. Both the approvals are still using hardcopy and taking 3 working days.

The Big & Fast Win: Hacking Growth at Scale with Supplier Portal

Analytically, it can be noticed that the wrong invoice submission from suppliers and wrong data input from the invoice received have a snowball effect. If the document submitted is complete and correct, the checking can be done at once. Suppliers are incentivized to do this since they expect payment to be received without any delay. The solution will be to provide a smart invoicing portal for suppliers to let them self-serve. Paper.id supplier portal enables the supplier to submit the invoice based on the PO received and processed with customized rules. Suppliers must submit the invoice with customized attachments & data depending on the type of the transactions. All invoices can be stamped by digital stamp duty (e-meterai). Furthermore, traditional suppliers can also utilize this technology since it is accessible via mobile and WhatsApp.

Not only does it ensure that the invoice received is legally acceptable and complete in terms of data and supporting documents, but the invoice can also be checked against PO and GR, making the checking process of the invoice done within seconds. All documents are centralized and can be seen by permitted members, minimizing internal disputes. Any dispute with suppliers can be resolved in the supplier portal, where both supplier and buyer can chat with real-time notifications embedded in the document. Paper.id user experience provides best-class collaboration tools to bride supplier and buyer.

The Major Impact

Approval module can be implemented not only for invoices but also for payment requests or even POs. By doing this, every approver can be notified in real-time, and approval can be done anywhere via mobile, cutting the approval time from 3 days to less than one day. A digital invoice has additional strength points where no human is required to input data from hardcopy to the buyers’ ERP system. Paper.id supplier portal enables document exchange to be digitally executed and integrated into the ERP via API integration.

By adapting Paper.id, businesses can now cut the invoice processing time from 3 - 10 days to less than a day scalably. Productivity is increased, and cost can be reduced by up to 80%. We gatekeep the invoice submission, automatically check data relevance, provide swift approval, and democratize data to relevant stakeholders. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

Modern Slavery: Slaves to Manual Procurement Processes

A mid-sized company that processes 100,000 pages of documents annually would take up to 5,000 person-hours if a document is processed at 3 minutes. This calculation remains fair even if the company has yet to fully leverage integrated digital capabilities. The 100,000 pages might be spread out in creating and sending PO, getting PO confirmations, inputting data to the ERP system, creating GR, receiving invoices, and processing payment. The end-to-end operational activity within procure to pay can be reduced to 80% from 3 minutes average per page to 36 seconds. These savings matter a lot, not only for current conditions but also for better cost in business expansion. The cost-to-expansion ratio will be more significant as the scale of the companies goes wider, as seen in diagram 1.

Examining the Seed of Indirect Cost

How does a company spend so much time processing documents? Let's look at one of the mid-size food and beverage retail companies, serving fresh produce goods to 5 of their restaurants. The procure-to-pay process begins when the restaurant creates a PR (Purchase Requisition) based on current stock. The PR was approved by the branch manager and converted to PO (Purchase Order) by the procurement team. The PO is then printed, stamped by stamp duty (meterai), signed by the procurement manager, and scanned. The scanned PO will be sent via email and hardcopy to the suppliers. On the next day, the procurement will ask for order confirmation from the suppliers. If the suppliers disapprove, the PO will be canceled in the ERP system, and procurement will have to create another one. The cycle repeats. The average rate of PO is not confirmed by suppliers is around 30%. If the suppliers give confirmation, procurement will create a PO confirmation document in the ERP system.

Once the goods are delivered, a GR (Goods Receipt) is created. The hard copy of the GR must be sent to the suppliers, acting as a base for invoicing. The finance department will receive the invoice with the attached PO, GR, tax invoice, and other supporting documents. The finance team will check the data in the invoice to see if it aligns with the supporting documents. If the documents are incomplete or do not align, the invoice must be revised, and the cycle of the invoicing process repeats. The rate of incorrect invoices is around 20%.

The correct invoice will then go through an approval process. The finance manager will double-check and sign the invoice. Once approved, the invoice will be inputted into the ERP system as a base of payment. Approximately 10% of the time, human errors occur during data input, requiring the process to be repeated. After being inputted, a Payment Request is created. Once the payment request is approved, the payment will be executed. Table 1 shows the estimation of each process for a single order.

On How the Magic Works

Table 1 also shows how the implementation of supplier portal helps the workforce more efficient by bridging the document exchange between a supplier and a buyer. As you can see, the amount of time is reduced by up to 72%, and by eliminating unnecessary errors such as incomplete invoices from suppliers or missing data input from hardcopy invoices to ERP, an 80% time reduction is achievable.

The food and beverage company does 161 procurement transactions per month, or 1,932 per year, and requires around 5,000 person-hours for the procure-to-pay. They are not aware of how this cost jeopardizes their business. By utilizing technology, the cost can be reduced significantly.

How does the technology work? It is simple. Integrated into the ERP, all the created PR in ERP will be approved via paper.id. The approved PR can be converted to the PO and synced automatically between the ERP and paper.id. Our approval system is backed up with notifications and can be accessed via mobile to speed up the approval process. After approval, multiple POs can be stamped and sent at once via WhatsApp, email, and SMS. The supplier can receive and confirm the PO in mobile and then proceed to delivery.

Received goods will be marked as GR creation in ERP, synced to paper.id. After the GR is connected to the PO, the GR will be sent digitally to the supplier as a basis for invoicing. A customized rule is applied for invoicing: only a complete invoice can be sent to the buyer. Paper.id system can automatically check the information within an invoice and match it against GR and PO. After the invoice is correct, the approval workflow will be in place. After an approved invoice is listed, the finance team can make one payment request for up to 50 invoices, for full or partial payment. Approval goes at one time for the payment (for 50 invoices) and is triggered at once at the bank platform.

We believe that each business is unique, along with its complexity. That’s why we built our modular product, complemented by experienced business consultants who are ready to tailor our solution based on your primary needs. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

Doing the Impossible: Multiple Right Payment, with Minimum Check

Imagine that all the effort put into checking a single invoice is mainly to prevent wrong payments made to a supplier, yet wrong payments can still occur. A company accidentally made double payments to its 276 suppliers due to unreconciled payments, directly impacting its financial health as some suppliers still need to refund the excess money.

What is the Cost of Preventing Wrong Payment?

A coffee roasting company that receives supply from multiple sources realizes this issue and wants to prevent the risk as best as possible, at scale. They send POs to numerous suppliers, depending on the specialty of the sourced coffee that the suppliers have. The invoice will be accepted after the order has been received and marked by GR. The checking process begins, and the payment will be executed after all of the information is matched. There are some failure points in which payment can be at risk:

1. Pre-Payment
   At this point, the supplier might input the wrong amount into their invoices, be it compared to the GR or the PO. Also, in the high ordering frequency industry, there might be some cases where the invoice is sent based on the wrong PO. Airtight checks must be in place to ensure payment is made for the correct amount, resulting in a very high effort invested in this process.
2. Payment
   Payment considerably begins when a payment request is created based on the invoice input in ERP. An error may occur due to human error when inputting the invoice amount. Therefore, the assigned person must be thorough. An approval workflow is usually applied based on the invoice amount to limit the risk of wrong payment.
3. After Payment
   After payment has been made, it is also worth verifying if the payment has been made correctly. The finance team can give a notification to the supplier or ask if the funds have been received or not, ensuring that the payment has been reconciled from both sides.

The companies invest a lot of effort continuously, yet information transparency needs to be improved. Disputes with suppliers often happen, especially in invoicing and payment reconciliation, resulting in unsmooth operations in procure-to-pay. Moreover, it is hard for the managers to know what happen at the operational level due to uncentralized documents and data.

How Paper.id Pay the Given Price for You to Ensure Right Payment?

Using paper.id will significantly reduce the operational effort and minimize human errors that cause false payments. Furthermore, paper.id ensures seamless information flow between suppliers and buyers, as well as across operational and managerial layers.

Paper.id automatically checks the invoice amount in regard to the PO and GR. After checking, paper.id also facilitates the approval processes at multiple layers. In case of disputes, Paper.id can facilitate communication between the supplier and buyer via chat capabilities embedded in the document. All document changes will be captured in paper.id and can be accessed by both parties, leaving transparency to all to minimize fraud.

Multiple approved invoices can be paid at once, allowing coffee companies to pay 50 of their suppliers at one time. Leaving only one approval process required each month for the payment process. The payment request is connected to the invoice and the supplier master data to ensure payment will arrive in the correct supplier bank account. Host-to-host payment in Paper.id also provides that payment can be made instantly without having to open another platform and do manual input for payment. After the payment had been made, within 15 minutes, the fund arrived at all suppliers. In short, Paper.id helps to ensure correct payment via:

1. Ensuring invoice amount is right
2. Multiple invoices paid at once using a host-to-host connection
3. The Bank Account is validated, and payment refers to master data.

After the transaction is successfully made, the 50 payment reconciliation will be in place, changing the invoice status from unpaid to paid to both buyer and supplier (via the supplier portal). WhatsApp notifications will be sent in real-time to ensure all parties are informed. All of this process is centralized in Paper.id and can be accessed by both the operational team and managers.

Simple yet Unthinkable: What Automation Can Do for Financial Metrics

Selling poses a dilemma in a business-to-business setting; on one hand, businesses need to boost revenue via sales and grow their market share to maximize profit. On the other hand, collection and fraud exist, jeopardizing cash flow and profitability. The risk is high in several industries with fewer sales frequency and tall ticket sizes, such as the construction and infrastructure industries. The risk can be diversified for some sectors with higher sales frequency and lower ticket size, such as fast-moving consumer goods and raw food materials.

A flour production and distribution company faced this dilemma. They diversify the risk of bad debt by setting credit limits for each buyer. The company owner solely does a visit to each of their buyer after repeating several sales cycles and assigns a credit limit based on his judgment. After that, the salesman can sell the flour with payment terms 7 - 14 days after the goods have been received and invoiced. By doing so to maximize revenue, they have to find as many buyers as possible to boost revenue.

For the owner, implementing terms of payment has a positive and negative impact on his business: On one hand, his cash flow will lean toward a more negative cash flow, and additional operational cost is required as a larger headcount is needed to do collection and more complex payment reconciliation. On the other hand, the payment term adds a competitive advantage compared to competitors. Problems arise when many buyers forget to pay on the due date. Buyers often don’t have the urgency to make payment if they don’t have to make the following order, which happens in both low and high seasons. In the low season, the sales cycle is slower. In the high season, buyers often overestimate the purchasing value. Both lead to less frequent orders and late payments.

The cost of implementing the term of payment

Payment reconciliation is getting more complicated. The flour supplier must match the payment and invoice issued 14 days ago. This complication is getting real where it has 2,000 buyers across the region, sometimes making partial payments. At a glance, the flour business now has to:

• maintain and monitor the credit limit usage for each buyer
• approve if sales above the credit limit are required
• send an invoice after the goods have been received
• remind the buyer to make payment before and on the due date
• collecting payment and do payment reconciliation
• adjust the credit limit of the buyer after payment is received

Not only in the operational layer, in term of financial the late payment from buyers have a significant impact. The cash flow runs negatively, and the finance team doesn’t know how to prioritize collection. The payment reconciliation slows and scattered, resulting in delayed Day Sales Outstanding (DSO) analytics. Not to mention the loss from fraud executed by buyers or sales due to using cash for payment. At the end of the period, the finance team found that the DSO was three times longer than predicted, at around 40 days, and the bad debt grew to 3.5% of the revenue.

Centralized, Streamlined Information Flow, Accessible in Anywhere

The issue is minimized drastically using Paper.id, where the invoicing process can be digitized and centralized. Thousands of invoices can be created at one time. Paper.id automatically measures the credit limit for each buyer and blocks the invoice creation process if the limit is exceeded. Management and the owner can approve any sales above the credit limit. After that, invoices can be sent in real-time via email, WhatsApp, and SMS. The buyer will automatically receive invoice reminders before, on, and after the due date. Once the payment has been made, Paper.id automatically matches and reconciles the payment and invoice, whether for partial or full payment. By doing this, the buyers’ credit limit will be refilled. Real-time notifications, including payment confirmations and invoice reminders, will also be sent to both the buyer and the supplier.

From the buyers' perspective, they are reminded, and all invoices are neatly listed to ease their operations. Multiple payment methods, including card payment, are provided to prolong their payment term further. Using digital payment instead of cash also gives them trust that their money will arrive at the correct destination without fraud.

After two months of change management, the company fully adopted digital invoicing & payment, resulting in less than ten days DSO in total and below half percent bad debt. This achievement can be done with a scalable finance team focusing on strategic improvement and collecting impactful bad debt as the operational and analytics have been automated by paper.id. The sales team can also focus more on market expansion and building a more intense relationship with the buyer, resulting in a more timely payment for the business.

We believe that each business is unique, along with its complexity. That’s why we built our modular product, complemented by experienced business consultants who are ready to tailor our solution based on your primary needs. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

Profitable Fraud-Free Business with Minimum Cost, too Good to be True?

Fast Moving Consumer Goods and food raw material distribution lines in Indonesia consist of two categories: modern market and traditional market. Both categories have their challenges. For businesses, selling to a modern market means managing their cash flow due to longer payment terms. But, to sell to a traditional market means enterprises have to streamline their operations in order-to-cash and deal with (1.) bad debt caused by manual invoicing processes and (2.) fraud due to high usage of cash instead of digital payment. Two functions are conflicted in dealing with bad debt and fraud: sales and finance. Both play an essential role in order-to-cash.

The Common Ways, Not The Best Practices of Order-to-Cash

The invoicing process will go as follows: Hardcopy invoices will be sent together with the goods. The collector will visit the store on the due date to collect the payment. Using cash, the buyer's payment will be received by a collector. The buyer will receive a payment receipt as proof of payment. After that, the cash will be handed over to the finance team. The finance team will then perform a reconciliation. They will provide a receipt to the collector as proof that the payment has been settled. The payment amount stated in the buyer and collector receipt shall be the same as the amount received by the finance department. The finance function will keep this flow to be in place.

One of the coconut supplier companies producing coconut oil, milk, and other coconut products is facing a tricky situation. The owner put more emphasis on the sales function to win the market share aggressively. The business runs well continuously until one day, the finance team finds a significant problem: the business runs on a negative margin, caused by bad debt and fraud due to conventional invoicing and payment processes. Both bad debt and fraud contribute up to 5% of the revenue. The owner realizes that he must balance the sales and operations with the usage of technology and digital payment.

On Handling Bad Debt,Most of the company's bad debt comes from (1.) long-due invoices that have not been well processed and are overwritten by other invoices and (2.) partial payment from customers that are not fully paid. Understandably, the finance team might experience delays in doing cash payment reconciliation while the company pushes for more sales. Therefore, the invoices will be overwritten. Adapting digital invoicing and digital payment will match each payment to each invoice individually, whether for full or partial payment. In this way, no invoices will be left forgotten to be paid.

Paper.id provides digital invoices and payments with automatic reconciliation. It can also complement the order-to-cash with automated payment reminders and a simple interface for buyers to list and track their orders, invoices, and payments.

On Handling FraudUsing cash, the company suffers losses due to buyers using counterfeit money and money theft by cash collectors. The difference in the reconciliation data between the finance and the collector teams indicates fraud. Using digital payment reduces potential fraud since it eliminates the usage of counterfeit money, minimizes operational costs for collection, and enables the money to be received directly to the company’s bank account.

Paper.id provides many payment methods for buyers to ease change management, from conventional order-to-cash to digital ones. Credit card payments are also accepted to enable buyers to get prolonged payment terms from banks. If the buyer is persistent in using cash, reconciliation from the buyer, collector, and finance team can also be streamlined. All of the information regarding money flow will be transparent within authorized functions.

The Best Practices Has Been Written on The Wall: Digitalization

Adapting to paper.id, more than 85% of the payment volume of the business is now digitized, leaving the fraud and bad debt ratio at nearly 0%. The business also experiences lower Days Sales Outstanding (DSO) and lower operational costs. Business owners also can balance sales and risk strategically by looking at real-time analytics. We believe that each business is unique, along with its complexity. That’s why we built our modular product and complement our solution with experienced business consultants ready to tailor our solution based on your primary needs. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

Faster Invoicing, Faster Payment, Faster Business Growth

Logistics is a complex industry due to the high traffic of goods and documents. The document relationship and goods are very complicated. Many Purchase Orders (POs) received must be connected to many Delivery Orders (DOs). After completing the job, the invoice must be sent to the client and matched against the payment received.

The Ceiling of a Growing Business is Their Operation

Logistics industries have various business models. One of our clients manages the mid-mile services for businesses across Indonesia. They use a franchise business model to hack their growth. The franchisee opens branches nationwide and acts as a pickup and drop point for B2B delivery, serving mostly mid-to-small businesses. The headquarters provides delivery services for the franchisees. They pick up the goods and deliver them to the right distribution center. From the distribution center, the sister company will continue the delivery to the last mile. Not only do they serve the franchisee, but also they serve end customers coming from large enterprises. Both franchisees and large enterprises can order delivery services at any time and will be billed at the end of the month with a credit limit given.

Implementing these business models, the company experiences rapid growth. They predicted they could promptly serve hundreds of customers by streamlining their billing process, but a different problem arose. Due to top-notch services and franchisee schemes, they are growing to have thousands of customers that need to be served quickly. Hence, the operation at the end of every month is super packed. The team often requires overtime, but the invoicing process is still late, not to mention the high effort in collecting and reconciling payments.

Zooming in on the finance team's activity, they recap the monthly transactions and create an Excel sheet containing the number of bills that must be invoiced for each customer. The finance team then will generate the invoice by using their ERP system, print, sign, ask for approval, and stamp the approved invoice with a duty stamp (meterai). The invoice will then be scanned as a backup file on their local server. Then, the hard copy will be sent to each client across the county. On the due date, the finance team will make phone call to do collection. Every evening, the bank account will be checked to ensure the payment has been received, and the payment will be matched against the invoices.

Breaking the Mindset, Breaking the Ceiling

Using paper.id as a digitalization tool, the company finds that headcount can be more productive, and the cost of sending hardcopy can be eliminated. The impact is considered a significant saving for the company since the cost of sending documents is sometimes as high as sending a kilogram of goods. Moreover, the adopted invoicing process can be scaled.
Here is the time saved when using the conventional invoicing process vs embracing the digitalization of Paper.id.

The time required for invoicing process is tremendous since thousands of invoices are created, requiring many headcounts for this process. Paper.id can scalably automate this process: The user uploads the required Excel sheet with a predefined format, and thousands of invoices can be created simultaneously. Users now select which invoice must be stamped with the duty-stamp and which media the invoice must be sent via email, WhatsApp, or SMS. Paper.id automatic payment reminder and payment reconciliation also help our users.

Learn how Paper.id can help your business. Contact us now.

Traditional wasted activity in the modern world: payment reconciliation

How do you match the payment received against the invoice sent if you’re working in a business with a high frequency of transactions? It’s a mess, isn’t it? It starts at 3 PM when the finance guy will look at each bank statement. Businesses usually have more than three bank accounts, depending on the company's size. Any received payment will be traced by the finance by looking at the three aspects: (1.) the sender, which can be traced from the bank account of the payor or by a virtual account that receives the payment; (2.) the amount of the payment, and (3.) the invoice that is being paid. The invoice that is being paid is usually not stated clearly. The finance team must open the list of outstanding invoices from the client and match them manually based on the payment amount, which sometimes does not match. If the payment came for multiple invoices or partial payment, then the finance team has to make their judgment on how to match the invoice amount with the payment made. Usually, the finance team will reconcile the payment against the invoice with the oldest due date to get a better Day Sales Outstanding (DSO).

Have you successfully imagined the mess? The process above does not mention the collection process from the customers who have not made payment for their due invoices. Understandably, the finance team cannot do the payment reconciliation continuously when the payment is made. Furthermore, a delay might occur since the settlement time of a Virtual Account may vary, ranging between 2 - 3 days. Therefore, the management cannot know the payment and their A/R performance in real-time. It might take around 3 - 4 days, assuming the reconciliation process will take one day. This complexity happened frequently in several industries, such as FMCG, raw food suppliers, manufacturing, and logistics.

The Antidote Comes by Sewing Up Payment and Automation

Digitalization by using payment platforms like Paper.id is the antidote. By sending invoices digitally, the system can trace the billing traffic to the end client and match the payment to the respective transaction. Smart reconciliation logic can advise the finance team to do reconciliation based on longest-due invoices. This solution resulted in real-time payment reconciliation without the finance team doing the hustle. Management can also receive the payment information even if the fund has not been settled.

Not only does it function, but paper.id is also built for B2B and focuses on user experience. Payment reconciliation is in place not only for the A/R side but also for the A/P side. Once payment has been made, a WhatsApp notification will be triggered to both the payor and receiver for information transparency. The settlement offered by paper.id is faster than the industry standard. It also has a B2B fraud detection system for your peace of mind.

The reconciliation data can be connected via API to your ERP system, and the money received can be settled in your bank account. You don’t have to worry about double input or additional work by doing so. All information is centralized in your ERP, and all your money is centralized in your preferred bank account. Paper.id acts as a bridge for digitalization between you, your customer, and your supplier.

One of the challenges in adapting digital payment is the change management, which can be handled smoothly by our users in logistics industry. They emphasized the flexibility of payment offered by paper.id to their customers. Multiple banks are now available for bank transfers, making the B2B payment faster and cheaper. Also, card payment and installment are also available for those who require a purchase but have limited cash. The flow of information will be smooth and transparent for both supplier and customer, leaving less dispute to happen in the future.

The Major Impact Created from Minor Changes

Our client has also adopted digital payment on the A/P side, where they can pay up to 50 suppliers with various bank accounts at one time to enjoy automatic real-time reconciliation notifications. When cash is unavailable, our client can use card payment to prolong their payment term. Via card payment, the fund will still be settled fast at the suppliers' bank account, leaving a win-win for everybody in the business.

We believe that each business is unique, along with its complexity. That’s why we built our modular product and complement our solution with experienced business consultants ready to tailor our solution based on your primary needs. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

In Business We Can Choose to Play Smart, not Play Hard

Everybody knows that payment comes with a cost, especially when using financing facilities to prolong the payment term. The cost of financing will be expensive using unsecured loan products. Therefore, financing and payment infrastructure are made to serve the payor better in terms of security, speed, and price (relative to the payment speed or tenure). Whoever players can provide payment and financing at ease, with fair prices and trusted rails, will be preferred by the market.

A 4PL company has successfully leveraged technology to turn payment from a cost center to a profit center. A 4PL company outsourced some 3PL players depending on their specialty in logistics industries. Their 3PL utilizes their fleet and outsources some from the local transporter. The local transporter must be paid in advance to perform deliveries, but the 3PL companies offer a term of payment to their client to fulfill the requirements of their clients. This condition has shaped the best practices in the logistics industry. Therefore, 3PL companies must balance their assets and cash flow.

The Opportunities That Lie in Payment Terms within B2B Transaction

For the 3PL companies, investing in more assets is risky in the long term; not only will their business process be more complex due to maintenance and depreciation, but it will also increase the fixed cost of their business. But, in some cases, they cannot handle the required cash flow to ask local transporters to perform deliveries for big projects. They need flexibility in receiving cash and are willing to reduce their profit margin. Applying for financing facilities from a bank is not an option due to the lengthy process, and using multi-finance and peer-to-peer lending is also not feasible due to the high cost of funds. What can be done is simply: (1.) provide an early payment discount to their buyer, and (2.) pay in advance to the local transporter but with credit card payment to prolong the payment term. Unfortunately, they don’t know that option two is available, although the local transporter does not accept card payments.

The 4PL companies, acting as clients of the 3PL business, leverage this situation. They are willing to pay in advance just before delivery if the early payment discount matches their requirements. By doing this way, the 4PL companies pay around 14 to 30 days in advance, depending on the 3PL. Although they have no cash in hand, they perform the payment with a credit card and pay a percentage of a service fee. The discount offered by 3PL is higher than the service fee, leaving some percentage of the spread that acts as a profit for the company. By doing this, the more volume they pay in advance, the more profit they get without sacrificing anything, including cash flow. Moreover, by adjusting the payment date, the companies can enjoy a prolonged payment term from banks of up to 45 days, resulting in an additional 15 - 31 days of payment term enjoyed by the 4PL.

Leveraging More Bonus on Supply Chain Digital Platform

Paper.id can facilitate card payments to your suppliers even if they are not accepting card payments. Multiple invoices can be paid at once, ensuring seamless and scalable payment processes. Our technology enables automatic payment reconciliation and real-time notification for the payor and receiver. Therefore, the supplier will know their invoice has been paid and settled into their bank account in time.

Not only helping on the payables side, Paper.id invoicing and payment solutions can be adopted to the receivables side, where the invoice sent to the customer can be paid by multiple payment methods, including most major banks in Indonesia and credit cards. Hence, a paper.id user can provide additional payment terms to their customer by leveraging credit card payment.

All of these commercial benefit is also wrapped by intelligent technology that ease the finance, procurement, and sales operations by ensuring seamless and automated procure-to-pay and order-to-cash, resulting in faster invoice processing, reduced operational effort, decreased Day Sales Outstanding (DSO), and minimized fraud. We believe that each business is unique, along with its complexity. That’s why we built our modular product and complement our solution with experienced business consultants ready to tailor our solution based on your primary needs. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

Daily Procurement Confusion, “When Will My Goods Arrived?”

As an operational expert, a client of paper.id knows that bringing the required material to the manufacturing factory is complicated, especially if the output of the manufacturing process is customized and project-based. The lack of simple materials, such as bolts and nuts, can stop the production process, and the risk of late delivery to the end client can snowball.

When a project comes, the planning department starts to identify the material required to produce the necessary products. The Purchase Requisition (PR) will be created and forwarded to the procurement department. A tender will be executed quickly if the required materials have no supplier. Based on the PR, The procurement will create a Purchase Order (PO) for the respective supplier. Each supplier requires a different PO since it contains not only the product that will be ordered but also the details of the order term, such as when and where the goods shall be delivered, the incoterm, and the payment term. After a PO is created, the PO has to be printed, signed and scanned. The hard copy will be sent to the supplier. The digital version of the PO will also be sent to the supplier to speed up the ordering process.

The Complication Hidden from Management

The complexity begins the day after. The procurement must follow up on the PO that has been sent to receive the PO confirmation, which ensures that the supplier can fulfill the order entirely and comply with all terms stated in the PO. The PO must be canceled if the order confirmation is received. Thus, a new PO must be created for another supplier, and the cycle repeats. The confirmed order also must be followed up to guarantee that our order will be on time. We must be certain that the supplier pushes their best to produce the material. After the goods are ready, the procurement must track the Delivery Order (DO) to become confident that the goods are picked up, shipped, and handed over to third-party logistics. At this point, a delay might occur due to unscheduled delivery, bad weather, or a red line in the immigration line. In reality, partial delivery is often performed to minimize the effect of the delay.

After the goods arrive at the destination, the DO will be signed as proof that the third-party logistics has completed their job. Thereafter, the quality control staff will decide if the goods are qualified or not to be accepted. GR will be created based on the accepted goods and matched against the PO. Unfortunately, the GR is not carefully created and matched against the PO due to operational messiness in the field, leaving the procurement and operational team to remain unknown whether the goods have been received or not as the supplier sends the invoice, the invoice processing begins, where the invoice has to be matched against the PO and GR. At this point, procurement and finance must collect all the hard copies from PO, DO, and GR that may be scattered due to partial delivery.

In manufacturing and other industries with thousands of materials and high ordering frequency, procurement has less visibility on (1.) material that is required to be ordered in the future, (2.) whether suppliers have confirmed the material ordered or not, (3.) whether the goods are in process, on delivery, or have been received, and (4.) whether the goods have been billed and paid or not. The visibility is critical to ensure the required material will not become a production bottleneck, not to mention the risk of double ordering or double payment that directly impacts the company’s financial health.

Be Pride with Your ERP, but it Still Requires a Complement

Using Paper.id Supplier Portal, the procure-to-pay process can be more collaborative by digitizing the interaction between the buyer and suppliers. Connected via API, PO created in ERP can automatically created in Paper.id. After approved within the platform, the digital PO can be sent to the suppliers and confirmed by the suppliers in just a click. The PO will be converted to DO to inform the buyer that the goods are in the delivery process. After being GR-ed, the PO will be matched against the GR to inform which materials have been received. By this method, each order can be monitored whether the material is in process, on delivery, or has been received. Invoice and payment status can also be read on Paper.id dashboard to prevent double payments to the suppliers.

The centralized information is not only accessible by the overall department to provide better decision-making but also to monitor the progress of the project and identify bottlenecks. Paper.id also helps the procurement and finance team reduce operational work via automatic document-matching capabilities. Communication with suppliers will also become more transparent as Paper.id records all changes regarding documents and facilitates discussion with suppliers at the document level.

With the paper.id supplier portal and proper change management, the manufacturing company can continuously plan, track, and monitor their procure-to-pay process with a lighter operational burden. This technology is also available for all industries with different business processes. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.

How to Receive Real-Time Analytics by Utilizing Business Partner

Most enterprise software offers real-time data and analytics. Ask somebody who has implemented a high-end internal system whether they enjoy the real-time analytics as promised. Let us bring you some examples:

Lagging information in the ordering process. Once the Purchase Order (PO) has been sent to the supplier, it is best to ask the supplier for the PO confirmation and state it to the ERP systems. PO confirmation can inform procurement to create another PO, inform the operation team of any potential delay in production, and inform the finance team of possible financial projection changes due to different suppliers required to be approached. The PO confirmation is usually missed to be updated in a thigh schedule or experiences a delay of up to one day on average. Furthermore, procurement rarely recaps the supplier's response time in confirming the PO. Although it is not crucial in the short term, it can be beneficial in the long term as a company evaluates the quality of the suppliers.

Lagging information in the goods delivery Admittedly, a good supplier will inform you once the goods are ready from their factory and ready to be picked up or already in the delivery process, but some software does not provide a module for procurement to input this information. Some suppliers might also not inform the Delivery Order (DO) or Airway Bill (AWB) before the procurement team does the follow-up. Complex operations might delay the information flow from supplier to buyer or buyer’s procurement while inputting data into their internal reporting tools.

Lagging information in payment reconciliation After the invoice has been checked, the finance team will execute payment for each due invoice. Ideally, they will have to inform the suppliers, and both parties will wait for the money to be settled, but what if the payor did not notify the supplier? The supplier must regularly check the bank account to do a reconciliation. The reconciliation will take up to one day from when the fund is settled.

Breaking the Myth: Eliminating the Root Cause of Information Delay

If you notice, the failure to deliver real-time information is caused by the manual data input rather than by the software, including the ERP itself. The ERP acts as a centralized software, serving as a backbone of all operations within a company. It is very resourceful and primarily required for a large-scale business to operate. But leveraging digitalization is never zero and one, is never black and white. Further digitalization must be implemented between a supplier and buyer via Paper.id supplier and buyer portal. Not only does it result in faster invoice processing, but it also enables real-time analytics and insight into payables and receivables areas. Moreover, it promotes reduced operational effort, decreased Day Sales Outstanding (DSO), and minimized fraud.

By using the supplier portal, suppliers have the opportunity and incentive to do PO confirmation to secure the order they received. The PO and the PO confirmation can be integrated into the ERP via API. Moreover, as a requirement for invoicing, the supplier can upload the DO and AWB when the goods are ready to be delivered. By doing this, manual input can be minimized, and so does the human error and lagging in information flow. Also, when the finance team executes payment, automatic reconciliation with real-time notifications will be provided both for buyer and supplier. When the fund is disbursed, the reconciliation and notification will also be triggered, leaving transparency of money flow to both parties. Of course, your enterprise can also receive real-time information on payment from your buyer by implementing a buyer portal.

How Real-Time Information Helps Business?

Real-time analytics helps many departments within a company make tactical decisions, mitigate future potential blockers, and acknowledge severe problems before they get bigger. Delays in analytics, though seemingly minor, can have hidden impacts on various aspects of the business.. With the paper.id supplier portal, buyer portal, and proper change management, all businesses can continuously track, and monitor their metrics in procure-to-pay and order-to-cash with a lighter operational burden. Learn more about how Paper.id can streamline your procure-to-pay and order-to-cash process and book our time now.