Through Coupa's cloud platform, we track hundreds of metrics to both continually improve our platform and help our customers be successful.
The annual Coupa Benchmark is designed to help companies by publishing data on key finance and procurement performance indicators. The Benchmark includes metrics about ten critical areas we commonly find that companies can easily improve in once they gain insight into what is possible.
This week's featured benchmark is invoice OK-to-Pay hours. This metric (measured in total hours, not business hours) represents the length of time it takes for an incoming invoice to be approved for payment. This includes the time it takes for matching invoices to P.O.s and any approval cycles required.
According to our data, the average invoice OK-to-Pay time for a large company (over $1.5B in annual revenues) is 76 hours. Medium-sized ($250M to $1.5B in annual revenues) and small companies (below $250M in annual revenues) performed similarly, averaged 50 and 49 hours, respectively.
More options for finance
Invoice OK-to-Pay time is important for the finance executive as it affects their ability
to accurately manage working capital, accruals and general financial health. Just because
an invoice is ready to pay doesn’t mean that an organization needs to pay the invoice at
that time, but having it ready opens up more options. Shorter OK-to-Pay time actually delivers better control of the payment process, supporting the following scenarios:
• Taking advantage of payment discounts
• Eliminating late payments that alienate vendors
• Reducing accrued liability and moving it towards accounts payable (AP) liability
• Negotiating better terms and access to working capital loans
Reducing cycle times
Given these benefits, what can companies do to reduce cycle times?
Companies typically use either matching levels (i.e., a receipt for three-way approval),
invoice approvals, or a combination of both to verify that the invoice is ready for
There are opportunities for improvement and reducing cycle time in both areas.
With regard to matching levels, evaluate whether you really need to require a receipt for all spend categories. For example, it may be unnecessary to create a receipt for office supplies, but necessary for capital expenditures.
Adjusting receipt requirements can have a significant impact. Because employees often
don’t understand receipt requirements, process adoption is usually suboptimal and that creates bottlenecks.
Train or eliminate invoice approvers
Evaluate your data to see which types of invoices take longer to approve. You will likely
find that certain approvers take a longer time to approve invoices. Spend time with these
approvers to either train them or provide them with mobile approval capabilities. Most
approvals today happen on mobile devices.
Also, review the invoices that have multiple approvers. Most of the time, having a high
number of approvers does not translate into better accounting controls. Redundant
approvers can often simply be eliminated, resulting in faster processing times.
Ravi Thakur is Vice President, Customer Succes, for Coupa.
About The Coupa Benchmark
This data was extrapolated from customer usage metrics on the Coupa cloud platform, comprising hundreds of thousands of global users, over 750,000 suppliers, millions of transactions and billions of dollars of spending. The performance metrics are based on aggregate data; no individual companies are identified.
To avoid skew from very small organizations or those that are very new to Coupa, we've only included customers that have accrued a year's worth of spending and at least $5 million in P.O. spending through Coupa. For reported averages, the extreme outlying data points are eliminated to normalize the data. To learn more click here.
How do you get widespread adoption of your spend management initiative? It's critical to have an easy to use tool, but you also have to communicate. You have to let people know what you're doing and why you're doing it. It helps to take a page from marketing best practices, says Jim Heininger, a brand strategist whose firm Dixon-James has done award-winning work in procurement communications, such as the McDonald’s Corporation SpendSmart program.
Writing in SpendMatters recently, Jim shared five communications tips to build support for a new procurement initiative. His article caught our eye since we touched on this topic earlier this year, in a conversation with Andrew Bartolini who in this year's CPO Rising report suggested roadshows as a way to get the word out about your spend management initiative. Between Jim's and Andrews recommendations, we're starting to wonder if procurement shouldn't start thinking about having its own marketing department!
Here are Jim's tips:
1) Consider branding the initiative. Create an internal branded program to address the cultural and structural obstacles that need to be overcome for success. For example, if moving from a decentralized structure to a more centralized procurement approach, the branding needs to convey the value and simplicity of everyone working together under one common system. Make the name or brand of your initiative aspirational to get people excited. Keep it short and simple, and if possible, articulate the goal and aim of the project.
A couple of months ago, our CEO, Rob Bernshteyn wrote The One Question Not to Ask Your Startup SaaS Vendor. That question is, “how much individual attention will I get?”an article titled
Rob’s point was that while attention is important, the core value proposition from SaaS is the ability to leverage crowd-sourced best practices gleaned from data collected from all the users of the platform, versus the individual customizations that were prevalent in the on-premise software world.
The article resonated with me, (as well as some other SaaS folks) because as the leader of a SaaS customer success organization, I have to balance executing on the traditional customer service principle, “the customer is always right” with bringing customers into alignment with best practices that we know will ultimately lead to customer success. In my position, you don’t want to be the yes-man, but you don’t want to be the no-man either.
Say "no" to just saying no
When a customer wants to do something outside of a best practice, some organizations will just say, "No, you can't.” That leaves the customer frustrated and wondering what’s wrong with their way of doing things. It’s also not in the spirit of creating the kind of partnership that is critical for customer success with SaaS.
On the other hand if you just say yes, and you don’tdig deep enough, and talk to the right people, you can end up building something that institutionalizes a process that may not lead to success over the long term.
The answer is to dig deeper, and keep an open mind. I think the best approach is, "We do have the best practices in mind as we design our product, but what we really want is to work with you on what you're considering your best practices."
Instead of teaching implementation people to say no, customer success organizations need to say, "Let's look at your business process and really understand what it is you’re trying to achieve with it. Is there flexibility as long as we get the desired outcome? Can we configure the product to get there another way?"
Learning from the customer
There are also times when what a customer is doing makes us reconsider what we think are best practices. As the platform company, we have a lot of insight, but we don’t always know everything. Sometimes we learn from the customer.
For example, we had an Oil and Gas industry summit here recently. Companies in that space came and spent the day with our product managers to discuss some of the best practices for their industry. It gave us an opportunity to understand at a deeper level what they’re trying to do and see how we can take some generic features of our platform and make them configurable to support the requirements of their industry.
Another example: We have a customer that operates a thousand healthcare facilities. We met with their executive leadership to go through their wish list of changes they’d like to see in our product. Three out of their top ten were around how the people in their clinics order. Executive leaders wanted the ability to combine requisitions into a single purchase order to cut down on shipping costs.
That’s a fair requirement, but when we sat down with the people in the clinics, and looked at their workflow, what they actually wanted was to be able to track what they needed throughout the day and then be able to submit one consolidated, clinic-wide order.
The outcome, a single purchase order with reduced shipping costs, along with greater visibility into order tracking, was the same, but the workflow functionality was different than what the executive team was looking for.
Looking beyond face value
If we had taken the request at face value, we would have built something that wouldn't have necessarily made a lot of sense for the broader industry. Instead, it was an opportunity to deepen our knowledge of their business and build something that addressed a core industry requirement across the board. That’s a lot harder than just saying yes or no.
Part of the skill-set a young SaaS company needs to develop is the ability to see beyond the customer’s unique view of themselves and get to the core issue at hand. You have to then be able to take that, and create a product or a tweak that works for a broader audience and extend it to include implementation, best practices and collateral so that it’s a complete package.
My experience is that customers are far more open to “push back” than you might expect, so long as it is done in the spirit of partnership and “no” isn’t the first word out of your mouth. They actually want someone to dive in and to understand at a deeper level what they're trying to do and come back with recommendations that will help them be successful.
When we can bring case studies, and benchmarks and have the right conversations with the right people, we can often reach alignment on best practices. And when we can’t, we can usually align on a path toward getting to best practices over time.
Ultimately, it’s not about the customer always being right, or the platform provider always being right. It’s about working as partners to be right, and successful, together. I think that’s what SaaS providers are striving for. It’s what I’m striving for.
Ravi Thakur is Vice President, Customer Success at Coupa.
In the 2014 CPO Rising Report from Ardent Partners, final segment of our interview series with Andrew Bartolini, lead analyst at Ardent, we asked him, why now?the analyst firm announces a bold, year-long initiative to work toward an industry-standard definition of “spend under management.” In the
Bartolini believes refining that definition is crucial to helping organizations more accurately benchmark their performance in order to perform as well as they can, and that we’ve gotten to the point where this can be done. We agree, and want to be part of that conversation.
Today, Amit Duvedi, Vice President Business Strategy at Coupa shares his proposal for a new
“How much spend do you have under management?”
My role at Coupa is to help companies establish a business case for technology to better
optimize spend. This is usually one of the first questions I ask, so naturally
Through the Coupa cloud platform, we track hundreds ofmetrics to help us continually improve our platform and help our customers be successful.
The annual Coupa Benchmark is designed companies by sharing data on some of these key finance and procurement performance indicators. The Benchmark includes metrics about ten critical areas where we commonly find that companies do not know how good they can be. Over the coming weeks, we'll be sharing these with you in depth.
Today's featured benchmark is number of
Through the Coupa cloud platform, we track hundreds of Coupa Benchmark is designed to provide finance and procurement organizations with broad visibility and guidance by sharing data on some of these key performance indicators. It includes metrics about ten of the areas where we commonly find that companies do not know how good they can be. Over the coming weeks, we'll be sharing these with you in depth.metrics in order to help us continually improve our platform and help our customers be successful. The annual
This week's featured benchmark is Requsition-to-Order cycle time. This is
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