The Case for Outsourcing Accounts Payable...The Case for Outsourcing Accounts Payable . The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 11 . 4/12/2016 . Expertise

The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 4/12/2016

The Case for Outsourcing Accounts Payable

Presented by Lynn Belletti BNY Mellon Transaction Processing Director

The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 2 4/12/2016

The world is changing. How will you respond to the new pressures of regulatory controls for both the U.S. and non - U.S.environments?



The world is changing. How will you respond to a shrinking global environment? Do you need international currency and language capabilities?



The world is changing. We are slowly emerging from a difficult economic environment. Do you need to contribute to the bottom line in your organization?



Quick Question:

What has affected Accounts Payable?




• 1099/1042S Reporting & Withholding

• Graham-Leach-Bliley 1999

• Sarbanes-Oxley 2002

• Patriot Act 2001

• OFAC 2003

• UK Anti-Bribery act

• Sales & Use Tax, VAT, GST, PST

• Escheat Laws

• Globalization

Quick Question:

What has affected Accounts Payable?


All of this has made AP more than just a simple back office function


• 1099/1042S Reporting & Withholding

• Graham-Leach-Bliley 1999

• Sarbanes-Oxley 2002

• Patriot Act 2001

• OFAC 2003

• UK Anti-Bribery act

• Sales & Use Tax, VAT, GST, PST

• Escheat Laws

• Globalization


So why outsource?



So why outsource?

Because no one can do it all.



Our Story:

BNY Mellon operates in 35 countries We process Accounts Payable and Travel & Entertainment in 25 countries • 14 locations have some regulatory control for outsourced processing • 13 locations have data privacy legislation • 12 locations have some local regulatory notification or approval processes

We process in 19 local currencies • 10 different local languages are used for invoices and receipts • We deal with 23 different types of ‘tax’ related to invoice processing including four

countries where withholding is part of the tax compliance requirements



Expertise – Regulatory pressures and anti-corruption and fraud requirements have grown significantly. Do you have in-house knowledge to ensure your compliance?



Expertise – Regulatory pressures and anti-corruption and fraud requirements have grown significantly. Do you have in-house knowledge to ensure your compliance? Staffing Cost – We are all challenged today to do more with less. Is your staff already running thin?



Expertise – Regulatory pressures and anti-corruption and fraud requirements have grown significantly. Do you have in-house knowledge to ensure your compliance? Staffing Cost – We are all challenged today to do more with less. Is your staff already running thin? Technology – Do you have access to e-Invoicing solutions? Scanning? Automated workflows? OCR?



Expertise – Regulatory pressures and anti-corruption and fraud requirements have grown significantly. Do you have in-house knowledge to ensure your compliance? Staffing Cost – We are all challenged today to do more with less. Is your staff already running thin? Technology – Do you have access to e-Invoicing solutions? Scanning? Automated workflows? OCR? Strategic Goals – What is your company’s core competency? Are you just paying bills or are you able to contribute to your company’s bottom line?



Expertise – Regulatory pressures and anti-corruption and fraud requirements have grown significantly. Do you have in-house knowledge to ensure your compliance? Staffing Cost – We are all challenged today to do more with less. Is your staff already running thin? Technology – Do you have access to e-Invoicing solutions? Scanning? Automated workflows? OCR? Strategic Goals – What is your company’s core competency? Are you just paying bills or are you able to contribute to your company’s bottom line? Globalization – Does your company have dealings outside of the U.S. where currency, taxes and language represent difficult challenges?



Expertise – Regulatory pressures and anti-corruption and fraud requirements have grown significantly. Do you have in-house knowledge to ensure your compliance? Staffing Cost – We are all challenged today to do more with less. Is your staff already running thin? Technology – Do you have access to e-Invoicing solutions? Scanning? Automated workflows? OCR? Strategic Goals – What is your company’s core competency? Are you just paying bills or are you able to contribute to your company’s bottom line? Globalization – Does your company have dealings outside of the U.S. where currency, taxes and language represent difficult challenges? ‘Big Data’ – Is your management asking for data on what they spend? Is your vendor master file consistent? Do you need to ensure consistency in what is input across your business units?



So maybe you need to outsource?

Because you can do it all.



Do Your Homework:

Preparation is Essential

• Know your processing costs – staff, system and operational costs

• Know your key volumes – for invoices, expense reports and payments,

locations, languages and currencies

• Identify your requirements – what processes do you want to outsource?

Invoice processing? Accounting? Tax compliance?

• Identify your key stakeholders – your management, your key business

partners in tax, HR, technology, compliance & risk

• Identify the key business process outsourcers and their capabilities

• Understand your regulatory environment – what approvals are needed for

processing at an outsourced provider? Or storing data outside of your own firewall?

Or outside of the originating local area?


Start Your Project:


• Gain your management’s backing

• Document your expected benefits – draft your business case

• Engage with your organization’s procurement team – ensure that proper

confidentiality agreements are in place

• Identify your key team – what other areas need to be involved in your project?

• Document your requirements – ensure that you give the potential suppliers solid

details of the processes you are expecting them to propose on

• Establish key project timeline and dates

• Prioritize your decision criteria – know what is essential

• Meet with potential suppliers – try to narrow down your provider listing to make the

selection process less complicated


Key Procurement Process Stages:


• Document your proposal requirements (R.F.I./R.F.P.)

• Identify your key potential suppliers’ contact details

• Ensure any necessary non-disclosure agreements are in place

• Validate that any potential supplier will meet your regulatory requirements as a service provider

(OFAC, financial stability, tax documentation)

• Distribute proposal requirements and provide opportunity for suppliers to answer questions

• Ensure all communications with potential vendors are documented and provide equal access to

information for all responses

• Review responses and narrow the supplier candidates

• Invite suppliers to meet with you and orally explain their solution and proposal. Provide equal time

and opportunity to all vendors.

• Fine tune any proposal financial details and clarify all responses.

• Evaluate the proposals and notify suppliers of your decision.


When it comes down to it though, it has to make sense from a business perspective.

You are going to need a positive business case


Costs to Consider Run Rate Expense Impact:

• Staff costs – do you expect to reduce head count, office space, or other costs such as paper or office products?

Travel changes?

• Systems costs – may or may not change

• Current outsourced systems or services – are you paying for any services or systems that have some run off time

before you can eliminate?

One Time Transition Expense:

• Severance - for displaced staff

• Technical developments - required to support outsourcer processing

• Training and Communication - for processors, end users and impacted business managers

• Travel – for transition purposes


Timelines and Project Plan

2013 2015 2016 2014

Key Milestone Timeline

Complete RFP Requirements

Identify suppliers & Distribute RFP

Presentations and Q&A on RFP responses

Down-select; Site visits completed

Select vendor, plan transition

Lift & Shift and plan for end state

Development of tech solutions

Gain regulatory and data privacy approvals

Transition locations to end state solution Building and driving an aggressive timeline is essential. Remember, you may face staff issues once the word is out.


Contract and SLA Preparation

Each organization has its own requirements for dealing with contractual development, but some points that should be anticipated include the following: Contract Guidance • Statement of Services to be Provided – Must be clear and concise but accurately reflect all included duties to be

performed including any provided systems and location of performance

• Confidentiality – Outsourced workers will have and possibly be storing company, employee or other business confidential information and protection must be afforded in accordance with the requirements of where you do business and your business needs

• Business Continuity Requirements and Disaster Recovery Plans

• Requirements for staffing for your processing including use of any subcontractors and headcount transition

• Implementation responsibilities and transition activities and dates (treat as a project)

• Terms and Termination Expectations including renewal provisions

• Intellectual Property Rights

• Governance and Audit Requirements

• Warranties, Insurance and Indemnification Requirements

• Dispute Resolution

• Service Fees and Invoicing Requirements


Contract and SLA Preparation

Each organization has its own requirements for dealing with contractual development, but some points that should be anticipated include the following: SLA Requirements • Define metrics to be provided, purpose for the SLA, expected results and measurement process

• Ensure that metrics include timeliness, expected volume of work to be achieved, quality levels to be observed and any system or customer service availability requirements

• Document expected SLA reporting requirements and timelines

• Identify remedy for any missed SLA measurements


Prior to Outsourcing: AP FTE head count = 88 located in over 25 different locations We had a mixture of outsourcing, off-shoring and in-house processing

Oversight is Essential

After Outsourcing: AP FTE head count = 11 local oversight & payment processing We now have all areas outsourced (some are still in progress)

Global Oversight is now provided by 9 centralized team members operating in 3 major regions: US, EMEA and APAC to cover multiple time zones. Oversight Duties include: • Weekly meetings to review processing results and issues • Development projects and testing • Policy and Procedure development and review

• Oversight for reconciliation • Business customer advocate • KPI monitoring and SLA adherence


Oversight is Essential

Governance Structure


A few extra ‘words to the wise’

• Document everything. You are now dependent upon someone else to execute your rules and processes. Take nothing for granted. If it isn’t written down, it doesn’t get done.

• Have a strong SLA in place. Make sure all processes have a defined

(and agreed) deliverable. Make your service provider accountable. • Keep close oversight on all processes. Require regular meetings to discuss

outcome, issues and changes. Require key reporting both what you may have now but also to include SLA required results.

• Ensure a proper escalation and communication plan exists for your end users.

Make sure your supplier addresses issues promptly. • Require improvements from your service provider. Tie compensation

into results. Agree to price reductions as process efficiency improves. • Survey your results. Manage performance and perception with your

key stakeholders.


Thank you

Documents

The Case for Outsourcing Accounts Payable...The Case for Outsourcing Accounts Payable . The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 11 . 4/12/2016 . Expertise