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Analysis: Verizon Wireless Dials Up Accounting Efficiency
Xign on-demand order-to-pay software adopted in bid to improve payment efficiency and visibility.
Companies can save as much as 60 percent on the cost of accounts payable (AP) transactions by using electronic alternatives to paper-invoice processing, according to technology analyst firm Aberdeen Group. What's more, alternatives such as e-invoicing, purchasing cards and ACH (Automated Clearing House) settlement can help companies gain substantial discounts under early payment terms.
With hefty AP processing volume of 30,000 to 50,000 invoices per month, mobile phone giant Verizon Wireless recently adopted Xign on-demand order-to-pay software with hopes of improving payment efficiency and visibility. Xign counts more than 25,000 suppliers in its payment network, and it's particularly strong in the mobile telco industry, where it also counts Sprint and T-Mobile as customers.
"Many of our largest suppliers are part of the Xign network, and at least one of those was clamoring for use of the service because they felt it would speed our ability to pay them," says Joe Selewicz, staff vice president and assistant controller at Verizon Wireless, a joint venture between Verizon and Vodofone that serves more than 50 million voice and data customers.
Since adopting the end-to-end payment software late last year, Verizon Wireless has identified 450 major suppliers in the Xign network that it plans to bring onboard in a three-phase process. In the first phase, completed in mid-January, the company began sending purchase orders electronically to 75 major vendors and those suppliers now submit both PO and non-PO invoices back to Verizon Wireless electronically through Xign. At the end of the process, Verizon Wireless also pays those invoices electronically through the Xign network, and it can do so on the most favorable terms because rules on the discount structure of each supplier are applied by the software. Xign 8.0 can consolidate all invoicing and settlement transaction information regardless of origin, bringing together ERP, imaging, Web entry and purchasing cards, creating a single compliance reporting record for accounts payable.
"There will certainly be labor savings for every couple of thousand invoices that are automated," says Selewicz, pointing to the data-entry labor tied to paper-based invoice processing. "More importantly, we'll be able to manage our cash flow much better because we'll know what's in the system before it's processed, and we'll pay earlier only if induced to do so through discounts. From a treasury standpoint, we can do much more accurate cash forecasting. We know, through vendor terms, when we're going to pay down to the date."
Slewicz says it's too soon to gauge the extent of labor and time savings, but he says Xign's approach will also cut down on vendor and internal queries to AP because users can sign into the hosted, Web-based software and see what's pending and what's paid.
Even if Verizon Wireless brings on every supplier in the Xign network, it will still receive plenty of paper invoices from among its total of more than 40,000 suppliers. The company currently relies on an imaging system to capture and share invoices electronically, but it relies on data-entry operators rather than optical character recognition (OCR) technologies to extract the key data. As recently reported, many imaging capture vendors now offer systems that successfully automate more than 80 percent of the data extraction from variable documents such as invoices.
Nonetheless, the best way around the cost and delays of paper-based processes is to eliminate the paperwork altogether, so there's little wonder that Xign and competitors including Prime Revenue and Ariba are gaining support from suppliers and customers that deal with headaches of processing tens of thousands each month.
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