Electronic (Automated) Payables and P-Card Variations

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• ♦ Automated Payables Overview
• ♦ NAPCP Poll Results: Rate Your Understanding of Automated Payables
• ♦ NAPCP Poll Results: Automated Payables: What is Your Organization Doing?
• ♦ NAPCP Poll Results: How are Automated Payables Solutions Used?
• Purchasing Card Variations: Identifying and Utilizing Various "Hybrid” Card Products – NAPCP Consultant Series
• ePayables Case Study 
• Bank of America Payables Optimization Series Part 1 
• Bank of America Payables Optimization Series Part 2 
• Commercial Cards for AP Spend – by Bank of America
• Fill 'Er Up (an article on "un-funded" P-Cards) – by Lori Calabro, CFO Magazine 
• Content and Convergence: The future of B2B payments – by MasterCard Worldwide
• ♦ Technology and Automation

Automated Payables Overview

An automated payables solution combines electronic invoicing with payment automation. Automated payables solutions are known by several names: electronic payables, push payments, straight-through payments, buyer-initiated payments and electronic invoice presentment and payment (EIPP). Generally speaking, each provider of automated payables has its own proprietary name for the solution.

An automated payables solution may or may not fall within the realm of the card industry, as some function outside of the card infrastructure. However, solutions offered by various card providers do utilize the card networks without any card issuance per se. These solutions generally involve a supplier invoice and end-user approval process, followed by a "behind-the-scenes” payment to the supplier through the card network.

As with any payment system, there are benefits and challenges with automated payables. They promise to reduce the time necessary to post expenses to end-user organizations' internal accounting/finance systems, leading to better-managed cash flow and expenses. Because labor-intensive traditional payment systems (paper processing of invoices, checks, etc.) are eliminated, accounts payable personnel can focus on value-added tasks. The biggest challenges continue to be supplier enrollment, information technology (IT) and integration issues, and proper data transmission between trading partners.

Comparison Between the Traditional Purchasing Card Process and the
Automated Payables Process

	Traditional Purchasing Card Process	Automated Payables Process
Purchaser at end-user organization	Cardholder (purchaser) uses Purchasing Card to procure goods or services; may occur electronically or via direct contact with a supplier	Purchaser places order for goods or services—generally through a designated ERP system (may not be aware of how supplier will be paid)
Supplier	Receives order from cardholder, fulfills order and charges Purchasing Card account number—receiving payment via card infrastructure (e.g., merchant acquirer) within 2-3 days	Receives order (often via automated system), fulfills order and electronically submits invoice to end-user organization for payment
Receiver at end-user organization	Receives order; may or may not involve creation of electronic receipt	Receives order, creating an electronic receipt in designated system
Reconciliation and approval process at end-user organization	Cardholder reviews posted P-Card transactions (i.e., completes reconciliation process) and manager (or similar) provides secondary review and/or approval	Three-way match among electronic order, invoice and receiving data; issuing bank receives notification to facilitate payment of the order to supplier (may occur various ways, such as via a card account number, ACH, or EFT)
Accounting process at end-user organization	Goods/services—whether P-Card transactions or orders through automated payables process—are accounted for (i.e., "booked”) within finance system (e.g., general ledger) according to organization's accounting protocol
Separate from, but in addition to, procure-to-pay process for goods/services:
Issuing bank (i.e., card issuer)	"Fronts” dollars required to pay suppliers and bills end-user organization monthly (at a minimum) for all transaction activity
Accounts payable at end-user organization	Pays issuing bank for all transaction activity within invoiced period, facilitating appropriate entries to general ledger system