Webinar Transcript ft. SourceDay’s In-House AP Automation Experts

Solving Direct Spend Invoice Woes With AP Automation

Just a few housekeeping items first. Please feel free to ask questions or provide comments throughout the webinar, we’ll do a Q&A at the end of our discussion with Clint and Colby. You can submit questions through the Q&A function on Zoom or via chat and I’ll be monitoring those throughout the webinar. If you have any audio or video issues with Zoom as we go through the webinar, please feel free to send me a chat, and I can try to help you, or try leaving and rejoining the webinar. That sometimes fixes the issue.

Also, don’t forget that a recording of the webinar will be sent out to everybody after this event. If you have to leave early or you miss anything, you will get that recording, including the Q&A portion. With all that being said, I’m going to hand it over to our panelists today and let them introduce themselves. So, again, thank you, all, for joining us, and I will let Phillip, Clint, and Colby, take it away from here.


Clint: All right, guys, hey. So, let’s talk a little about AP automation. Let me kick it off by introducing myself. This is Clint McRee, one of the co-founders of SourceDay. Prior to running SourceDay, I ran a manufacturing business here in Austin, Texas for 10 years. And after leaving that business, got into this startup, which is SourceDay. We started in the PO space, and then we got into the AP automation space. So, it’s been an exciting time for me for sure. Phillip?


Phillip: Yep, Phillip Pavelka. I’ve been with SourceDay just about five years. I’m from our solutions engineering group. I’m leading that group internally. I myself also came from the manufacturing space. I spent just about 12 years directly in contract manufacturing, a lot of that time was in operations. I spent a lot of my time with not only the purchasing team but also accounting, so I’m excited to talk about accounts payable and how SourceDay solves that solution. Colby?


Colby: Great. I am Colby Young, I’m the VP of our NetSuite business unit. I was an early hire, joining Clint to help grow the business. I have a background in consulting and have spent the last five and a half years really supporting the NetSuite ecosystem and growing our presence within manufacturing, distribution, and with retailers that are running NetSuite ERP. So, I’m excited to chat about AP automation and how we support clients.


Phillip: Okay, perfect. I think I’m going to kind of kick things off, get some conversations going. You know, I always like to start anytime, well, one, just shop-talking with anyone that we speak to, but I also really like to kind of start where things are at today. So, I have a question. And then I’ll kind of just throw it out there and then so we can talk about it, is my thought. And that’s about where companies are today. You know, where we feel how far behind, I would say, they are as far as where technology has come.

You know, my experience, just to kind of get it going, is I usually always see this as a four-stack method, right? when I talk to clients or clients I’ve talked to, they usually either have this physical stack, or they’ll give you this digital stack of invoices that someone’s manually shuffling through and ultimately trying to get to some form of vouchering. And that’s whether it’s a new stack of invoices they haven’t touched. And they have a stack of invoices that don’t have receipts, maybe something mismatched, and then, ultimately, they’re trying to get to match so they can push vouchers over.

I’m just curious, from Colby and Clint’s standpoint, I mean, do you all see the same? Anything to add to kind of current pains and processes that you’ve seen with companies today?


Clint: Well, I’ll just say this. When we started SourceDay back in 2013, it’s interesting how your customers and people you’re working with help sort of mold your business. Because we started off in supply chain really wanting to help customers solve a complicated supply chain problem and improve supplier performance. What happened naturally is because AP is linked to the suppliers through invoices, we naturally got pulled into that direction. And so, we found that there was not only a supply chain opportunity there for us, but there was an opportunity to help customers that we’re selling to solve a complicated AP automation problem.

And what we saw…and, you know, AP automation, guys, you guys know this, it’s been around for a long time. I’ve been hearing about AP automation probably over 10 years. But we haven’t seen a lot of adoption in AP automation in our customer base. And so, our customers are typically manufacturers, they’re wholesale distributors. When we started to sort of peel back the layer of the onion, we realized that AP automation in the world of manufacturing and wholesale distribution, where there’s cost of good materials, there’s direct spend, it’s a very complicated problem.

And so, we haven’t…there wasn’t a lot of AP automation actually adopted in those businesses. And so, well, as we started to help people automate and solve supply chain problems, we naturally started to see that we could help solve an AP automation problem. So, I would say today more than ever, the AP technology has really caught up with the complex demands and challenges that manufacturers and wholesale distributors have with processing AP and processing invoices.


Colby: I agree. And looking at the NetSuite ecosystem, which, you know, I’ve spent the last five years diving fully into it, there are a lot of AP players. But to Clint’s point of the complexities that come with direct spend, most of them started on the expense management, so indirect spend, side. Just to make sure kind of we’re all speaking the same language, right? Indirect spend being your expenses to run the business, it does not go into cost of goods sold, it lies on the balance sheet as an expense when it gets consumed. Office supplies, you know, chairs, monitors, desk, things like that.

Direct spend being all things going into cost of goods sold for a manufacturer, distributor, retailer. And having those AP solutions starting with expense management, which oftentimes it’s just a two-way match, the complexities of partial shipments, and freight charges, and everything that we run up against, they don’t have to deal with those complexities.

And so, when you look at the AP space and where we’ve come at it from is starting with direct spend. We really tackled the hardest part of it first, which we’ve spent years and years working with clients and developing a solution needed to tackle those complexities.

And I think that’s, like, a big point that the market is starting to recognize. It’s really two religions, an indirect world and a direct world. Having a solution that tries to span both doesn’t really handle what those clients need. We’re seeing that more and more as we get folks live on our solution and are tackling all the nuances that come across with cost of goods sold from global suppliers.


Phillip: It’s interesting, and this is kind of another question, I would be curious if y’all are seeing the same thing, you know, from Colby and Clint’s perspective. I feel in our industry and the customers that we have, AP automation and the direct spend really is more to them focused on payments. How do I stop running checks through a printer? And me and Clint worked together at a contract manufacturer. I mean, that was something that we did, remember, back in the day, was we were printing checks. And what we thought was automation was having an ACH connected to our bank, and it was, like, revolutionary to our department.

So, do you believe why so many companies haven’t reached out for automation on the direct spend side is just lack of knowledge, not knowing that there’s a way to fix everything prior to payment? Because, to me, that’s where all the time is spent. Running checks was a pain, for sure. But I think everything prior to that voucher transaction in the ERP is way more painful. And in my mind, I think there’s a lack of knowledge in these companies of knowing that there’s solutions like ours out there that can automate that first 70% of the process when it comes to accounting.


Clint: Yeah, so I totally agree with that. Phillip, when we were running a manufacturing business, we had a lot of paper processes, as you know. And I go back to my original comment, and that is I feel like that, yes, you’re right, I think a lot of people are not aware that there are solutions out there that can take away a lot of the manual processes they have. Even though companies today say, “Hey, we want to digitize everything, we want to go paperless,” they’re still not aware that these types of solutions exist for them.

But also, two, the other thing is, I go back to my statement about the fact that the AP solutions are now beginning to catch up to where the demands or what the needs are. One of the biggest challenges is not only reading an invoice and processing a supplier invoice, but it’s getting the data back into the ERP and actually using the data from the ERP to be able to do the three-way matching to ensure that the invoice is correct, to ensure that the PO is correct, and to ensure to the receiving transaction is correct.

To be able to do that correctly, you’ve got to have an integration into the customer’s ERP. A lot of the indirect solutions, like Colby was mentioning, don’t really have that level of integration. They might have a very light sort of GL integration to be able to pass transactions back and forth in terms of dollars in GL. But they’re not fulfilling the receipt transaction, or they’re not vouchering the invoice back into the ERP. And that’s something, I think, that prevents a lot of organizations from doing that because it becomes very much a double entry for them. They can have a solution that does the “matching,” but then still, they have to go in there and manually input the data in the ERP. And so that’s what, I think, has been one of the hurdles as well, on top of the understanding or knowing about it, Phillip.


Colby: Yeah. And just to piggyback, depending on what ERP you’re running, and, again, I’m focused more on NetSuite, so a lot of my subject matter expertise is around how that system works, it has capabilities to do a match and create a bill. However, to do that, you have to manually input all of that invoice data. There’s no OCR technology that comes along with NetSuite.

So it’s gathering those invoices from disparate solutions, whether it’s email, or snail mail, or some folks still using fax, and then manually putting that data in. And then it can do the match and create a bill. So it has that kind of “quasi” automation that, I think, people get caught up on. “Oh, it can do an automated three-way match.” Well, yeah, but you manually have to input that data in there.

People don’t really think about the full continuum of what automation really means for AP. Getting that information, especially for a growing organization, which most of these NetSuite clients are scaling quickly and they’re trying to keep up with growth, it becomes unsustainable. Getting those invoices via email, or fax, or snail mail, and manually putting that into NetSuite so it can do a “three-way” match of fields is impossible.

People are absolutely starting to put in budget, “Hey, we need an AP solution to keep up.” We’re talking to NetSuite clients who do 100,000 invoices a year. I mean, that’s…they cannot keep up with that without a solution. So now it’s, what’s the right solution? What is the one that can handle the complexities of direct spend, especially if you think about direct spend of drop shipments?

In the NetSuite world, you don’t even always create a receipt, you’ll create what’s called an item fulfillment in NetSuite. So there’s a lot of nuances with direct spend when you have a growing organization, you have drop shipments on top of it. You know, just throwing humans at that problem is impossible. And really getting in the details of how the AP solution’s automation works is hyper important.


Phillip: Yeah, and you mentioned a few interesting things there, Colby, which I think kind of brings us to another big topic. One is I’ve heard that as well, right? Where someone goes, “Oh, my ERP does three-way matching.” And yeah, it’s true, once you manually key everything in. I always ask the question to them, too, “Okay, so let’s say you’re going to lean on the ERP to do the matching. Well, if you put dirty data in, right, so if we put something in and it does have a problem, someone’s got to manually get it back out of there.” Or you’ve got to live with that forever, right? Someone’s going to do housekeeping eventually.

I think that’s a good place for us to talk about what three-way matching is to SourceDay, right? What are our integration points that we’re hitting to actually pull matches? And then I also like to talk about, you know, how we match in SourceDay is all pre-ERP. What we want to do is to make sure it’s clean before you ever get it. So, before anything goes to your ERP system, and you’re going to make a transaction that has to get back out if it’s wrong, we need to make sure that that transaction can be processed.

I think this frontward validation that our solution is doing is super important, not only just for automation but for the trust of the ERP. And that was something else I want to talk about a little bit later. Do you trust your ERP today? I think will be a big question that as everyone’s watching this start thinking about. Like, do you trust the system? But I would like y’all’s feedback on, you know, how important it is, and which you all probably had feedback from maybe current customers who you’ve spoken to of having clean data going into the ERP upfront prior to finally getting one’s data in the ERP.


Clint: Well, the three of us have traveled all over the country. We’ve sat in just about every ERP conference that there is, and we always hear the one common theme. And that is that people that have ERP systems don’t trust the system. And that’s probably the number one complaint actually. And it’s interesting because it’s not an ERP software problem, the software is fine. It’s really a data problem.

I’m sure we’re going to hit on this in a minute, but one of the key things is when you’re trying to process AP automation, go fast with that, and get the invoices cranked out and get the suppliers paid, one of the things that stalls you out is when you’re dealing with incorrect data.

So, for example, if a purchase order is inaccurate or the receiving transaction is inaccurate, those things show up in AP and in trying to process those payments. When we can get the data accurate at the origination of the data or upstream, then when the payments go through downstream, if everything’s accurate, we’re going to have a higher-percentage chance that the invoice can be read, three-way matched exactly, verbatim all three ways, and then vouchered very quickly. It’s when any one of those data points is inaccurate that that particular invoice gets kicked out to a pile and now has to be worked manually. So yeah, I think it’s vitally critical, and not only from an AP perspective but across the entire organization.


Colby: Yeah, for any organization, data integrity is paramount. You think about planning, and scheduling, and finance, and sales, I mean, its data, data, data all day long. We live in data, right? We get asked about our forecasts, we get asked about ROT. I mean, it’s all about numbers and KPIs. And that’s no different in a procure-to-pay situation. And a lot of people forget how important the purchase order management side is to AP. They think about, “Okay, we need to automate AP. We need to get AP. We need to pay fast.”

Well, if you stop and think about all the steps it takes prior to that, to even get to that spot, you know, it is a just a ton of manual back-and-forth process that results in bad data in the ERP. And sometimes it’s not always even bad data in NetSuite, CSI, Visual, whatever ERP you’re running. Maybe it’s the supplier looking at that data because that PO was rev’d four times, and they’re invoicing off the second rev, and you’re on the fourth rev.

And we talk a lot about internally…we have data scientists that are looking at the data in SourceDay, 52% of every purchase order changes. So you know half your purchase orders are going to change, which means half of your purchase orders either might have bad data in the ERP or maybe your supplier is invoicing off the old rev’d purchase order.

So you have multiple touchpoints where bad data can happen that results in a mismatch, that even if you have automation at that point, now it’s back to manual process to go fix it. It’s really important as people think about AP to not just think about how do we match, and how do we pay? But how do we make sure all that data is right, so an AP solution actually helps? You’re doing automation, it’s something that has a good chance of getting you what you need.


Phillip: Yeah. And I think it’s important, too, just to kind of point out, since we’re talking about matching, is, when it comes to direct spend, one thing I’ll just kind of iterate that, I think, sometimes kind of slips the minds of anyone that we speak to is the complexity of how you have to match it. It’s one thing to have an invoice and have someone OCR that invoice. And that’s not unheard of, that’s been done. Clint spoke to it earlier, and Colby did, too, as far as the integration to the ERP of truly pulling the data out and looking at what’s currently on your order, what’s currently in your receipt, so what’s been fulfilled.

But it’s not even as easy as just simply saying, “Okay, well, I expected 10 on a PO, 10 came in, and the invoice was 10.” People are dealing with partial shipments, you’re going to have partial receipts, you can have multiple receipt transactions that need to go to one voucher or to one invoice. So they may invoice you for 100 and then maybe 3 receipts that equal that 100. And those are things that everyone needs to take into account that takes a lot of the time that SourceDay is automating, right?

It’s the day-to-day. And think about this as well. I would say, on average, everyone I’ve spoken to up to this point, and there’s companies outside of this statistic, but I would say 75% to 85% of invoices typically match with most organizations. If you can think about the time you’re spending on 75% to 85% of invoices that don’t have any issues, to me, that feels like it’s not any beneficial time. There’s no strategic time that that person’s spending, it’s kind of a lost amount of time.

I think automating that 75% to 85%, you know, adding things, like Colby and Clint spoke to, on the front end to really assist the collaboration between your buyers and suppliers. And also, I’ll just kind of point this out. Usually, when there’s a problem with the mismatch, what are we going to do with it? You’re going to give it to the buyer, right? You’re just going to put it right back in the front of the process.

I think having that tight collaboration before the invoice comes in, and what we find is, it stops it from going backwards again. But I would love y’all’s comments, too. I think y’all have heard the same, I guess, Clint and Colby, as far as match rates and the impacts and, I think, if we can pull that out of there daily and say, “Look, just go focus on that 25% to 15%.


Colby: Just thinking about percentages, is…because, Phillip, you’re talking about percentages that match, in all technology, you know, quick time to value, where do we get the biggest bang for our buck? Where do we need to utilize technology to take care of problems quickly? And you’re absolutely right. Looking at… we have 70% of invoices that are matching, but now let’s think about what percentage of those are indirect or direct? For a manufacturer, distributor, or retailer, 80% to 90% of their invoices are cost of goods sold invoices.

And that’s where people need to be focusing. Where do we implement technology to take care of a big chunk? And that’s where the complexities come in. And so that’s when organizations are thinking about, “All right, we need to tackle this,” looking at, “All right, where can I get the most done in the quickest time to value possible?” is what we certainly would recommend when looking at business processes.


Clint: Yeah, you said it right, and I would add to that is, if you think about this statement, we’re paying…you know, our customers pay their AP team good money to figure out how to pay their suppliers. So I mean, it’s like that doesn’t make any sense. And then when you layer in that 80% of their invoices probably match, now you’re paying someone to do something that can probably be done with automation. And one of the things that we always started out with SourceDay, whether you’re a client of us from the supply chain perspective with purchase order management, or AP, or both, to Colby’s point, is helping companies manage by exception.

And we’re bubbling up those exceptions. So, if you knew 25% of your invoices were bad, wouldn’t you like to know which ones those are? And you could focus on those immediately. But for most companies, they can’t, they’re processing the 80% of the ones that are good, spending all their time and energy on that, and having very little time to focus on the 25% that need their attention.

And so that’s where really automation comes in for a lot of these companies, is to offload what works well, “Hey, I can automate these, I can match these. I can auto vouch for them, and get them into my pay queue very easily with very little touch. And that affords me more time and energy to focus on that 25% or 20% that’s not good that needs my attention.” That’s much more valuable to our customers than spending time on something that’s basically just a process.


Phillip: Yeah, that makes me also think of a funny story, just speaking to, you know, spending all your time on things that are good. I was speaking with a customer, previous to SourceDay, and we were having this big conversation that a few weeks before we contacted them, we were having a conversation. They were trying to get material in, and the parts didn’t show up, they called the supplier, and they found that the supplier put them on credit hold. And I was like, “Oh, my gosh,” like they were on credit hold. But what happened? You guys, what’s crazy about the story is it was a $3 invoice. But it got stuck in a mismatched pile. Someone forgot about it, and it was laying on somebody’s desk, and 30-45 days went by, and they put me on credit hold for $3 and quit shipping.

So just think about, you know, bringing this stuff to your attention. And it’s not always just cash and saving money by processing things quickly. You’re protecting revenue because suppliers are really quick to put people on credit hold, especially right now. I think it speaks volumes of how big of an impact a miss from AP can have. And not just from, you know, again, a cash perspective, but directly to manufacturing and revenue.


Clint: That one part…I mean, we tell this story all the time because we run into it all the time. But that one part, if it’s used across many assemblies for them, could shut down a factory, you know, for a $3 credit hold. So yeah, I mean, even though that wasn’t a lot of dollar amount, it could have been if it would have impacted their ability to ship to their customers.

And so it’s not always about looking at the highest, biggest dollars. Sometimes you have to be able to quickly see even the small things are going to impact your business. So that managing by exception or bubbling things up by exception can be critical, whether it’s a cheap part or an expensive part.


Colby: Yeah, that sort of gave you all your gray hair right, Clint? That’s the excuse there? No, but to that…


Clint: No, but unfortunately, it happens all the time. But.


Colby: To that point, though, relationships with suppliers in the direct spend world are paramount. And a lot of people look at technology as, “Oh, that’s going to reduce my supplier relationships, right? I’m not going to speak to them as much.”

Well, it’s really not true. Utilizing technology is going to allow you to pay your suppliers faster, it’s going to allow you to, again, to Clint’s point, manage by exception and get the automation home and to pay them quickly. And then have proactive and productive conversations with suppliers about why things aren’t matching, and make sure you get on the same page, and make sure that credit hold never happens.

And say, “Hey, if we add this one field to the invoice, well, now we can pay you in 4 days instead of 45 days.” And that trickles down to the PO side as well saying, “Well, hey, if we’re able to have a productive conversation around why we’re not getting acknowledgments or why items are showing up late,” that increases the relationships with your suppliers, which is one of the biggest stakeholders to your whole organization. And that’s a very different world than indirect. Where indirect, you’re getting office supplies, yeah, if you need it, but the direct world, to Clint’s point, that could hold up an entire factory. And that’s really where we come in to make sure that not only are you embracing automation, but the relationships with your suppliers are increased.


Phillip: Yeah, and that kind of brings up another good piece of things, which is, you know, we’re talking about AP, with the complexities in AP, right, of all of the ways that we have to match. But truly, the best way to help AP, and, Colby, I think you and Clint brought this up, is to help on the PO side. The best way that we can really start automation for accounting is to get the match rates higher because that’s what we can automate. If you have a low match rate, automation, obviously, is going to be limited to the matching of the invoices.

So it may be nice just to kind of lean in a little bit on what is the importance of going one step farther back and giving the purchasing team a way to automate and close the loops on the purchase orders up front prior to the invoice coming in? And giving your suppliers a window into your system, right, your crystal ball, your ERP. So that before they even send an invoice, they can know exactly what you’re expecting to pay. And there’s no way that they can be confused on the side up front, right. That’s the visibility like leaning in a little heavier of the importance of that, and really the impacts that it can give to an accounting department.


Clint: Yeah, I mean, I can speak to that a little bit. I mean, we, of course, think it’s very critical. In fact, I get asked all the time, when customers, or prospects, or anyone’s asking me about our AP automation solution, “What are you guys doing differently than the other vendors that are out in the marketplace?” And because we run into more competition there than we do on our PO solution.

And the biggest thing that we do is we talk about the complexities of beating an invoice coming from a supplier and these kind of things. But it’s really the PO piece, working with the procurement teams, and the supply chain folks, your suppliers to get the POs right to begin with is so important on the downstream impact of helping AP get the velocity that you want in terms of processing invoices.

And Colby gave a great number, right, I mean, earlier. Fifty-two percent of your purchase orders are going to change. So if that 52% is changing and you’re not inputting that information into your ERP, well, 52% of your purchase orders are wrong. And so 52% of invoices are wrong, then 52% of the invoices coming are not going to match. So it’s all tied together. It’s all linked together. So we believe in fixing the problem at the source, which is where that purchase order is originated.


Colby: And even if you…you know, there’s the one thing of getting the information back into the ERP, as Clint said, but if you also don’t let your suppliers know, “Hey, these updates have been accepted. And here’s your new PO,” there’s another disconnect there.

So we talk in the NetSuite world a lot about how the ERP is kind of like a house, and each department has a room in the house. And everyone is able to have the visibility and have the comfort of, “Hey, I’m inside the system. I’m inside the crystal ball.” But your suppliers are out, across the street, and they have no visibility they don’t have a room in the house. And that is a big gap, right? That across-the-street view allows for misses in POs, misses in invoicing, misses in the mismatch process. Giving suppliers an actual view into what is in your ERP, so they can trust exactly what they’re seeing is exactly what the client is seeing is a massive benefit.

And add to that supplier relationship piece, is, “Hey, I know what’s going on with my customer because I have a view in SourceDay of exactly what they’re seeing in the ERP.” And having that data is very powerful for the suppliers to be more real time, to be a better supplier to the client, and ultimately, get paid quicker, which everyone wants.


Clint: You know, and just to piggyback on that, Colby, that’s exactly what we’re doing with Napoleon. You know, with Napoleon, we started off with them with…they are both a PO customer of ours and also an AP customer of ours. But what’s given them the velocity on the back end is that they’ve really solved their supply chain, they collaborate really well, real effectively with their suppliers on all that.

I mean, the 52% change is always going to happen, that’s never going to go away. And we’ve looked at that data going back years, and years, and years. So that’s always going to be there, it’s how you manage that change is what’s going to be real important. And so that’s what Napoleon did, they got on top of the change, they got on top of the collaboration with their suppliers. And now they’re seeing some crazy high rates with their invoicing. We’re processing, I think, over 90% of their invoices through the system automatically. So that’s exactly their story.


Colby: Yeah, and to the customer success story, we hear a lot about just closing books at the end of the financial period, whether it’s the month, or the quarter, specifically the year. And it’s total chaos. People are working long, long hours into the night, trying to get everything shored up. And, specifically, Napoleon told us it went from two and a half weeks to, two to three days to close their books because they had the information that they needed, they could trust the data. And if you think about the auditing side of it, most organizations get audited from time to time, and being able to have all that information digitized and at your fingertips to fulfill auditing is a relief to massive headaches.


Clint: Hey, Phillip, I’m going to ask you a question. I’m going to flip the script here. So we believe a little bit differently in how we process a three-way match than what some of the other competitors do. And I know you’ve fielded a lot of questions about this from customers. So, talk about, like, why we look at a receipt transaction versus looking at, like, a packing slip, for example.


Phillip: Yeah, it’s funny, I get this a lot when we’re talking to customers, especially as a solutions consultant on our side, they always ask, “Hey, we usually will look at the invoice, our PO, and then the packing slip for validation.” And my first question to them is, “Why? Why would you do that? Why are you using two forms of your customers’ data and only one form of your own?” So, again, that’s one…


Clint: Suppliers’ data. You meant suppliers’ data.


Phillip: Oh, yeah, yeah, yeah, your suppliers’ data. Yes, sorry. Yeah. So two forms of your suppliers data and one of your own. Which, again, the first thing it tells me is you obviously don’t trust the system. We can talk about that later. But yeah, and if the supplier is giving you the invoice and the packing slip, what’s the luck that those would be different right? I mean, they’re building each off of each other, like, they’re making a shipment, which is creating their packing slip. And that shipment is kicking off an automated invoice.

Well, we believe and what I push as best practice is you need to be able to, one, trust your system, which is why starting at the source is always best. But if your PO receipt and the invoice are matching, who cares what the packing slip says. It really doesn’t have any need within your organization. It’s truly a document telling you what should be in a box, it has nothing to do with payments, because the bill and your receipt transaction are the only things your ERP is going to care about as far as making that payment.

So we do come across packing slips. Again, it’s more of a…I always give it an in-the-mirror situation of, like, if you were to look in the mirror and ask yourself, like, “Why are we using that packing slip?” I think, for the most part, it’s just kind of, “That’s the way we do things.” And we get caught in that traditional sense at times. And it’s like just that’s what feels good because that’s how I’ve always done it. But when you sit down and think about, you know, why we ever started doing that or why organizations started using that, you know, it’s nice seeing the lightbulb go off and then kind of look back, and sit back, and go, “Oh, my gosh,” like, “yeah, why would we use two pieces of a supplier’s feedback and one of our own?”


Clint: Yeah, I mean really, if you think about it, when you do a three-way match using two documents from your supplier, the invoice and the packing slip, I argue that’s a two-way match. So, when we get a three way match, we need to have a third source to be able to match it to.

So I think it’s a natural thing to want to match to what we received in. I mean, that’s actually what’s impacting inventory. That’s what’s going to drive your MRP. I mean, everything is going to be based off what you received in. I think it’s critical that we match off that receiving transaction along with the supplier’s invoice and along with our PO. That’s really the three things that we’re trying to match to.


Phillip: I mean, I think…for some reason, I think it all started when, for some reason, the world quit trusting their receiving departments, I think, is what kind of happened. But as time has moved on and technology and ERPs have gotten better, receiving has a lot of ways for automation. So, getting out of that trust of your internal data tends to put you in a spot to overpay or underpay just because the supplier’s two forms happen to match up. But go ahead, Colby.


Colby: I was saying, yeah, I mean, to Clint’s point, that receiving transaction is what is impacting the financials, and that is what’s going to impact what’s on hand to build or resell. The packing slip is not going to be impacting the CFO’s world. So, matching off of the accounting transaction is certainly the more strategic way and the more audit-proof way than off of a packing slip that’s in the box from the supplier.


Phillip: Yeah, and that’s a good point. I mean, at the end of the day, let’s say you use the packing slip, and you used your invoice and your PO, and you go create that voucher inside of the ERP. As Colby and Clint mentioned, it’s going to come back as a failure. It’s going to be a mismatch because the receiving transaction is still wrong, you know, assuming it’s wrong.

So, at the end of the day, if you don’t call out the transactions, that’s going to stop the process, then it’s not going to assist or do any good for the internal organization. The two things that you have to own and have to be correct for accurate vouching is going to be the PO and the receipt. And the only thing that we need to trust from a contractual side from a supplier is their invoice. There’s no contractual agreements to a packing slip, it’s just a piece of paper telling you what they thought they put in a box. The only thing that, you know, is, again, contractual you have to pay against is that invoice that they send over.


Clint: And that’s not saying you can’t keep track of those packing slips. You know, we have a lot of customers that still scan the packing slips in and put them in a folder or something, but they’re not really needed for a three-way match.


Phillip: Yeah. And I think the last thing to talk to, since we’re talking about all this paper flying around, and what I’ve…you know, when we started with AP and we were having conversations with customers, getting customers on, I don’t think it hit me up front what a residual effect would be from automating this AP solution. And I know, you know, me and Clint’s history at Cypress, we cleaned out a couple closets full of filing cabinets when we were trying to go digital with our invoices. I mean, it was pretty difficult. We had some people in accounting pretty tied to those physical pieces of paper. But at the end of the day, how much space is going to be taken up?

But one of the things, you know, again, to me, that I was kind of surprised didn’t hit me up front was this really is pushing the paperless concept that every organization is trying to go to. And it’s surprising…I say surprising. I mean, we did it ourselves. So I can’t really say I’m too surprised, but, you know, how many organizations still are physically storing all of these invoices and what it would mean to, one, give a company back the space, but just to help you get into that digital transformation as far as going paperless. I just wonder if you guys have kind of seen the same with the conversations that y’all have had.


Colby: Yeah, absolutely. I mean, people talk about just, you know, mountains and mountains of paper that they’re printing, and matching, and, to your point, that four-stack method, and then filing it away, right? For auditing, or, you know, X number of years that they have to keep. And, one, it takes up warehouse space. I mean, if you think about the cost per square foot of filing drawers, there’s expense there. And then moving towards paperless, moving towards green, every organization is doing their best to support that movement. And digitizing your AP is a quick, easy way to get there. Removing that paper, giving your space back to the warehouse, and being in line with green initiatives for sure.

I would say majority of all companies I speak with in the NetSuite space certainly are thinking that way. And I know Napoleon, the customer that we’ve been referencing, they talked a lot about that, how many filing cabinets they were able to get rid of by digitizing their AP process.


Clint: Yeah, you know, it’s like as soon as you create a PDF, or you print a document, or you, print a spreadsheet, it’s almost virtually guaranteed it’s already out, it’s going to be outdated. And so that’s one of the great things about having this experience, whether you’re dealing with purchase orders or dealing with AP, you have a platform. Instead of it being in siloed spread-out emails and things like that, having it in a system where when these changes are happening, it’s all happening in real time, and you’re seeing the most updated current version. That’s the beauty of digitizing something and getting it out of the paper. Because once it becomes static like that, it’s probably inaccurate.


Phillip: That is a good point. And I think we’ve hit a great spot to…you know, we’ve kind of had conversations, everything from AP to PO, and then, obviously, to going green. So, I think this is a good time that we could pause, maybe throw it open for some Q&A, and then we can answer questions from everyone that’s joined.


Clint: Hopefully, we’ll get some good questions that come in. I mean, I know we did a good job of answering a lot of things, but probably not good enough.


Sheyna: All right, everyone. So, we definitely got a few questions throughout the webinar, so I will kick it off. We have a question here that is, how are surcharges handled with automation? Is this considered a mismatch?


Clint: That’s a great question. You know, it’s a unique thing. So if just taken on the surface, if you have an invoice that comes in that has surcharges that were not reflected on the PO, it’s naturally going to be a mismatch. So, there’s a couple things you can do if the supplier since you are collaborating on the PO through SourceDay, if you’re a PO customer, and you’re going to add the surcharges as a line.

A PO line can be added to the PO itself. And you can add the surcharges, the supplier can suggest that be added. And then if you approve that, then that would actually be reflected then on the PO. So then when the invoice shows up, it can be matched. But on the surface, though, if it’s not something that is on the PO that comes in and it’s on the invoice, it will be kicked out as a mismatch.

Now we’re not really showing the SourceDay platform today. But when that scenario happens, we do give you a very quick and easy way to address that inside the platform to be able to add those surcharges and then continue on or process the invoice. That’s a great question.


Sheyna: Awesome. Thanks, Clint. The next question is, how exactly does SourceDay increase match rates?


Colby: Yeah, I can take that, Clint. It really goes back to the discussion we’ve been having about how important the data piece is, starting with the PO side. When you look at match rates, we talk to a lot of folks where they’re starting at sometimes as low as 50% match rate, sometimes up to 80% match rate. And it’s all about making sure that the match rates are as high as possible, so you have true touchless invoice processing. And that starts with the root cause, the source, which is the purchase order integrity of the data.

It’s really making sure that buyers and suppliers are collaborating efficiently and effectively on purchase orders. And then our direct integration to the ERP to ensure that reflects back into the system. Our recommendation for best practice is typically implementing our PO collaboration and supplier performance module. And then 60 to 90 days later, implementing AP. And that’s how we’re seeing 95%, 96% true touchless invoice processing.


Sheyna: Awesome. Thank you, Colby. The next question is, so how do buyers collaborate with their suppliers without using email?


Clint: I’ll grab that question, Colby. Terrific question. You know, today, if you’re not a SourceDay customer and you’re issuing…you know, you’re going into your ERP, and you’re issuing purchase orders directly from a workbench or something that MRP sort of generated, and for most, you’re sending those purchase orders out through an email, now the system might self-generate an email and send it out. Or you might catch it in your inbox and then forward on to the supplier for them to do it.

The challenge with that, though, is that once you send the email out or when the system sends the email out, you’ve lost complete visibility to the status of that PO, and what’s going on? Did the supplier receive it? Are they going to be able to meet my delivery dates? Is the price right? Do they have the quantities on hand? I mean, all these kinds of things are unknown until you actually have that acknowledgement from the supplier.

And so SourceDay actually has a platform purposely built to help our customers interact with their suppliers through a system. So now instead of sending emails out and sort of losing touch with those and visibility, that information is now processed through SourceDay’s interface. So there’s a direct integration to a customer’s ERP. When a PO is issued, it flows through our system. And then the suppliers actually interact with the POs inside of SourceDay.

What’s nice about it is any changes the suppliers want to make, or any conversation the supplier is having based off of a PO or PO line, that is all captured inside of SourceDay. Everyone in the organization has that visibility. The collaboration really takes it outside of email. I mean, we can all use less email in our lives. So it gets it out of the email world and gets it into a platform experience so you can have that 360 view back and forth.


Sheyna: Awesome. Thank you, Clint. Let’s see. How long does it typically take to adopt an AP automation solution?


Clint: I can go ahead and grab that one, too, Colby,

You can follow on. It really kind of depends on the complexity of your AP environment. You know, for our average customer, I would say, from the time that they sign with SourceDay, within 90 days, we’re starting to process invoices for them. And it really depends on how many suppliers you want to start with. Generally, this is a customer-driven metric, you know, they want to start with maybe some of the key bigger suppliers that have the most transactions or even the most spend with. But you can see something…you can see automation starting to happen within the first 90 days. And then you add suppliers on as you start to feel comfortable with the solution and get more and more scale there. I don’t know, Colby, if you want to add anything.


Colby: Yeah, I’ll speak from the NetSuite perspective. Being a built-for-NetSuite solution allows us to move a little bit quicker with NetSuite clients. Were re-verified every six months to make sure that our integration is locked tight with the various schematic changes or database changes that NetSuite might be updating every six months as they put out releases.

That allows us to move very quickly. Usually, we can have the implementation done in 30 to 45 days, and folks starting to realize the benefits within 60 days on the NetSuite side. So, from a time to value standpoint, you know, very quick and a low total cost of ownership when you think about project load and what everyone’s trying to get done in a year.


Sheyna: All right, let’s see what else is on here. Does SourceDay need an exact match, or can thresholds be set to auto voucher?


Colby: Good question. You know, we get that a lot, specifically, and I’ll speak from the NetSuite perspective, where we have very high quantity of invoices, and maybe you have a 10-cent mismatch or some small percentage, and you still want that to be touchless. We have worked with our clients to innovate back-in settings to allow for thresholds where we will take a 5-cent, 10-cent, whatever you set up in the settings, to automatically push that voucher bill inside to the ERP. We do allow for thresholds settings to make the automation hum even more.


Sheyna: Great. We have a specific question here. “We work in Canada and have unique taxes, like HST. Does SourceDay handle those?”


Colby: We do. Yeah, absolutely. So actually, one of my first clients at SourceDay was Napoleon products, based out of Canada. They help drive some of the specific Canadian requirements. We handle all the tax nuances of Canada and kind of how our solution works, right? We work with our clients to innovate on the product. When there are specific nuances of a country or specific tax codes, we’re going to be working to satisfy them. So that benefit is there for everybody.


Clint: Yeah, and just to piggyback on that, that can also be handled very similar to what we talked about earlier on the surcharge. To where if you have an invoice that comes in that has a different charge on it that’s not on the PO, it can be kicked out as a mismatch. But then you can go back in to that transaction and add the additional costs, the HST or the other surcharge, and then reprocess the invoice for a voucher.


Sheyna: Perfect. So can you guys talk just a little bit more about the difference between what SourceDay offers and what other more basic AP solutions offer that are on the market?


Clint: Well, I’ll jump in here and just take the first part of that. I know Colby’s got a lot of experience with dealing with other AP solutions in the NetSuite space. But besides that space, we…I’m just going to talk a little about direct spend, because that’s really where we see the biggest differences, like I talked a little bit about earlier in the webinar.

The challenges of direct spend, the complexities of what happens on invoices and what happens on purchase orders and even in the receiving transaction is not really replicated in the indirect spend. Indirect spend is a much easier thing to process. But when you’re dealing with split lines, you’re dealing with different receiving transactions on the same line but different quantities, all these different scenarios make vouchering much more difficult on the direct side.

That’s probably the most significant thing that we have that separates us when you just look at our AP functionality. The other thing I’ll add to that that I think separates us, but it includes our PO solution, which is what I talked about earlier, is for you to really go fast to get the velocity, to get the the invoice processing that we’re all chasing and after, you’ve got to get the PO right.

We’re one of the few solutions that actually has the ability to help you interact with suppliers on the PO side when the transaction is originated. Therefore, when that’s correct and accurate, then the back end when the AP needs to process it, things will move much more closely. And I know, Colby, you’ve got…you’ve seen some things with the NetSuite practice.


Colby: You hit most of it on the head. And I think that’s…you know, what makes us unique is we started with PO, we started at the root source of why mismatches happen and solved that. And then built on top of it AP. We kind of flip the script in a lot of ways when you look at AP, to really start with the source and then grow into a procure-to-pay automation. And in the NetSuite world, there are a lot of folks that are tackling AP, again, more indirect focused.

One of the nuances I’ll call out, because we are a direct spend-focused solution is matching off different transactions in the ERP other than just receipts. Whether it’s an inbound shipment record on NetSuite, or a item fulfillment record from a sales order and a drop shipment, we’re working with our clients and partners to make sure we can handle all the different matching aspects needed. You do always truly have a three-way match, and there might not always be a receipt there. So that’s another kind of benefit and innovation that we’re working towards the market.


Sheyna: Great. And last but not least, how exactly does SourceDay help get suppliers on board with using a new paperless process for AP?


Clint: Go ahead, Colby.


Colby: Yeah, I would say our secret sauce is our full-blown managed service. We have an entire team that is dedicated to the onboarding of not just our clients but all of the suppliers as well. And that has been… I’ll tout, Clint here is one of our co-founders. That was one of the things from the very beginning that was crucial to our success as a company, was making this easy, lightweight for suppliers.

Supplier success is paramount to any solution, you know, the stakeholders actually using the platform. We have a massive investment in our organization of ensuring that suppliers adopt the solution. And if there’s any nuances that need to change, we are the support, we are the experts in change management to get those suppliers there.

So that’s from an AP perspective, if maybe there’s not a purchase order on their invoices to start, right, we’re going to be working with them to make that change. From the PO perspective, right, making sure that they’re utilizing the solution for acknowledgments and ASNs if that’s a requirement of the customer. It’s a full-blown managed service that comes along with the software that will actually guarantee supplier adoption success. And it’s absolutely…just as important as the software is the service that comes along with it.


Clint: Yeah, it’s so spot on. Nothing really left more to say there. Except for, you know, I’m sure the AP folks that we have on the call today have seen where a supplier sends an invoice and it doesn’t have your PO number on it. You know, that’s such a frustrating thing. Well, our AP team deals with that more than I even care to admit. But those are the kinds of things that we have to get right and help your suppliers get right so we can get that AP automation engine cranked up and being efficient for you.


Sheyna: Awesome. Well, unless you guys have anything else to add, that will conclude our webinar today. I really appreciate everyone joining us. Like I said, you’ll get a recording of this webinar in your email. Look for that coming up. Thank you guys so much for hanging out with us and talking about AP automation. I really appreciate your time.


Colby: All right. Thank you.


Clint: Yep. You bet.


Colby: Thanks for joining, everybody.


Clint: Thanks, everybody.