Accenture Federal Services

Federal Financial Management Using Analytics to Improve Procure-To-Pay

With today’s heightened sense of fiscal responsibility, the pressure to improve

the integrity and accuracy of the federal payments and the procure-to-pay

(P2P) process is higher than ever. The Improper Payment Elimination and

Recovery Act of 2010, signed by President Obama, has increased pressure

to combat improper payments (reported at $116 billion in FY 2011) by

establishing goals to prevent or recover these payments. As a result, there is

more incentive than ever for federal agencies to improve their P2P processes

and reduce wasteful spending.

Procure to Pay InefficienciesLarge federal procurement systems often lack the visibility and actionable feedback to improve the P2P process. Agencies are continuing to spend wastefully by retaining excess manual processes, maintaining inaccurate master vendor databases, and overlooking internal controls and vendor compliance.

Procurement OverspendingBased on Accenture’s research, 40 percent of procurements exceed a “reasonable” price and 4 percent of vendors possess similar attributes to those banned from receiving government contracts. As a result, agencies are exposing themselves to price risk and avoidable overpayments, as well as working with untrustworthy vendors.

With P2P analytics, federal agencies can analyze and identify the root causes of improper payments and therefore prevent them. Analytics can address key business challenges such as vendor master clean up, payment term alignment, economies of scale, process efficiencies, compliance within internal controls, payment efficiencies and innovation, strategic cost reduction and preferred vendor spend analysis. Accenture’s P2P analytics can improve federal agencies’ processes and transform these challenges into opportunities for additional cash-in-hand revenue.

Agencies have historically monitored procurements based on “business rules” related to the individual dollar value of a contract. Accenture’s advanced analytic approach moves beyond simple business rules. Accenture uses a proprietary, flexible and highly automated technology platform to perform P2P analytics across the transaction lifecycle—from data extraction through report generation. Accenture analytics quickly process large volumes of data and accurately identify process inefficiencies that reduce manual effort. As a result, Accenture analytics provide comprehensive and detailed reports that combine insight and help drive value within agencies.

Accenture has already demonstrated the value of its P2P analytics for the Department of Defense (DoD) by optimizing relevant supply chain data to produce accurate and optimized systems. This resulted in saving the DoD $1 billion over a five-year period.

Accenture’s P2P analytics focus on three distinct and integrated service elements:

1. Payment Accuracy2. Available Cash3. Process Effectiveness

P2P Data12-18 Months

Vendor Master

Payment History

Purchase Orders

Standard PaymentTerms

WACC

AccentureP2P Analytics

PaymentAccuracy

AvailableCash

ProcessEffectiveness

Enhanced Payment AccuracyAgencies need to make sure they are procuring from the right vendors at the right price. Accenture’s approach examines payment history and vendors to identify potential historic duplicate and erroneous payments. Our recommendations will identify root cause errors and justify the need for ongoing prevention of duplicate payments.

Our approach also looks at historical performance, to include examining the vendor master database. P2P analytics can identify duplicate, active vendors with no activity and other problems in the vendor master file that can increase the chance of duplicate payments and other errors. Benefits of regular maintenance and constant monitoring of the vendor master record include:

• Reducingvendorselectiontimewhencreatingpurchaseorders or entering invoices.

• Improvingreportingcapabilitiesbyeliminatingunnecessarydata.

The review of payments provides visibility into the agency P2P process to improve accuracy and efficiency in both pre- and post-procurement scenarios. Additionally, regular maintenance of the vendor file and constant monitoring can help minimize these duplicate payments.

Available CashWith the proper cash management strategies in place, agencies can identify misallocated funding and unlock it for more productive uses. A leader in ATM technology turned to Accenture to provide greater insight into its P2P process. Over a one-month period, Accenture extracted key data for analysis to identify duplicate or erroneous payments, optimize payment terms, and effect process improvement. The benefits were immediate and sustainable with as much as $4.5 million in improvements to the company’s available cash.

Improved Process EffectivenessThe process effectiveness element of the procure-to-pay analytic tool can provide real long-term value when appropriate process controls are put into place. Through the use of Accenture’s unmatched consulting expertise and vast analytical resources, P2P analytics will provide detailed answers to whether the client’s processes are running at optimum levels. If not, P2P analytics can help improve margins, accelerate processing, eliminate errors and improve overall customer satisfaction.

• ArecentimplementationofanadvancedAccentureanalyticaltool for a large defense organization secured a total five-year net savings of $215 million with more than 700 business processes redesigned.

• Accenturehelpedalargestatetransportationagencycreatealeaner, more efficient organization that prioritized project spend for savings of $40 million in 2010.

Additionally, vendors with a high number of low-value transactions generate high processing costs, which can be reduced with

consolidated billing. Consolidating billing allows purchasing and finance teams to focus on an analysis effort for high-dollar areas where value can be added. Accenture analytics capabilities provide clients with a detailed, data-driven analysis of their P2P process in identifying opportunities for further process improvement and additional cost savings. Accenture’s experience in supply chain, business intelligence and financial management uniquely positions us to deliver winning P2P solutions across the complex and diverse federal landscape.

Toward Improved P2P ProcessesNot only does Accenture have the capability to deploy sophisticated P2P systems in complex environments, we also offer layers of advanced analytics to further enhance analytic capability. Accenture has worked with numerous federal clients to enable real cost savings and process improvement. We draw on our understanding of analytics and our deep knowledge of payment functions to assess the potential of analytics to improve payment accuracy and fraud prevention and ensure efficient payment process compliance.

The Power of P2P AnalyticsWith Accenture’s P2P analytics, agencies can:

• Optimizeprocessesthatwillleadtofewererrorsand directly identify bottom-line cost savings

• Simplifypurchaseordercompliance• Improvevendormasterfilemaintenance• Achievestrategicvendoroptimization• Usethebestpaymenttermsforeachvendor• ImprovevendorrelationshipsthroughreducedP2Pcycle

times and consolidated billing• Improvematerialspendstratification

P2P Analytics Offering

Working Capital

PaymentAccuracy

Process Effectiveness

Days PayableOutstanding

Historic AccountsPayable Review

Manual Vs. ElectronicProcess Analysis

CashDiscounts

Historic ContractCompliance Review

ProcurementCompliance

Cycle Time

Accounts PayablePayment Accuracy

Vendor Masterand Maintenance

Vendor ComplianceManagement

SpendAnalytics

Copyright © 2012 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

For More Information To learn more on Accenture’s Financial Management offerings, please contact:

Kevin Greerkevin.t.greer@accenturefederal.com+1 571 414 4503

Also visit www.accenture.com/federal for contract numbers, period of performance, service descriptions and program contacts.

Accenture Federal Services, based in Arlington, VA, a wholly owned subsidiary of Accenture LLP, helps US federal agencies build the government of the future.

To find out how Accenture is reducing improper payments in the federal government visit us at www.accenture.com/improperpayments.

To find out how Accenture Profit and Recovery Analytics can improve your procure-to-pay process visit us at www.accenture.com/profitrecovery.

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.