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8/15/2006
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Onsite: Verizon Wireless Dials Up Payables Efficiency and Visibility

Verizon Wireless has mastered payables with online order-to-pay software, cutting down on paperwork, maximizing discounts and improving cash-flow management.

"Can you pay me now?" OK, that's not quite the slogan for Verizon Wireless, but having tapped into a Web-based payment network, the mobile phone giant now lets many of its biggest and most active suppliers answer that question in self-service fashion. What's more, Verizon has gained a much better handle on outstanding payments due, and it's taking better advantage of early payment terms.

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 research firm The Aberdeen Group. In addition, alternatives such as e-invoicing, purchasing cards and ACH (automated clearing house) settlement can help companies gain substantial discounts.

Verizon's hefty volume of 30,000 to 50,000 invoices per month trickled in through an extensive and highly distributed purchasing network, and its AP department often had little idea of what to expect in terms of incoming invoice volumes or totals. Late last year, the company signed on with on-demand, order-to-pay software provider Xign with hopes of improving payment efficiency and visibility. Xign has more than 25,000 suppliers in its payment network, and it's particularly strong in the mobile telco industry, where it also counts Sprint Nextel and T-Mobile as customers.

"Many of our largest suppliers are part of the Xign network," says Joe Selewicz, staff vice president and assistant controller at Verizon Wireless. "The key metric we looked at is that the network represented 50 percent of our purchasing spend, and at least one vendor was clamoring for us to use the service because it felt it would speed our ability to pay them."

Electronic Integration

Verizon Wireless developed integrations from its PeopleSoft ERP system and pilot-tested the payment network with five major vendors in mid-January. The company then identified 450 major suppliers in the Xign network and another 450 outside the network that it planned to bring onboard.

As of August, more than 650 vendors had signed on. Those suppliers now submit both purchase order (PO) and non-PO invoices to Verizon Wireless electronically through Xign. At the end of the process, the telco 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.

"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 important, 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."

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