Industrial gas seller BOC Australia is using a lesser-known IBM Watson service to reduce e-invoice rejection rates with a long-time multinational customer.
E-Business Manager Daniel Whittle told IBM Think 2019 in Sydney that the IBM Watson Supply Chain service was brought in to cut high invoice error rates, which resulted in a lot of manual credit and debit notes flying back and forth on the account.
“We had trading partner integration for 10 years with the customer, but that was yielding invoice rejection rates of over 80 percent,” Whittle said.
Whittle said that three separate internal projects had previously been run to arrest the invoice rejection rates, without much success.
Meanwhile, invoice errors and rejections created a lot of manual work on the large account.
“We looked at how we could reduce that friction from invoice error rates, because it was - to be quite frank - a nightmare for us,” Whittle explained.
“It's not just the rejections, but what it results in - the time and effort to try to chase those up, the extra credits and debits created - all the manual work that happens as a result.”
He put the rejection rate down to system and process complexity on both ends.
“It wasn't necessarily just a system thing - there was also the supply chain process of us sending an invoice at the right time with the right information at the time that the customer is willing or can accept that invoice, which formed part of the issues,” Whittle said.
“The 80 percent [invoice rejection rate] was a result of the complexity of our business, and also the complexity of the customer as well.
“It was probably a bit of a perfect storm, but it certainly was an opportunity to improve.”
The actual opportunity for improvement came when the customer decided to move off its existing trading partner integration to a new integration powered by SAP Ariba.
BOC Australia saw an opportunity to “not only transfer to a new platform but also to look at ways in which how it could improve” e-invoicing processes between the two companies.
It engaged IBM Australia to provide integration from BOC’s end into the customer’s procurement and supply chain systems, a function BOC had previously performed in-house.
“We moved it from an in-house capability to an outsourced capability,” Whittle said.
“IBM effectively sit in the middle [as] a trading partner platform, sending information back and forth in the right way, with the right information in [those communications]."
The customer still places product orders in its own enterprise resource planning system (ERP). The order is then passed to BOC’s systems via IBM where it is fulfilled and invoiced.
To ensure problems don’t arise once the order is placed, the IBM Watson-powered system tracks evidence that the orders were delivered and matches that to e-invoices issued by BOC.
“It’s [the process of] receiving the purchase orders, sending out an advanced shipping notification to say that it will be delivered and then sending the invoice - all those have to match,” Whittle said.
Whittle noted IBM’s presence in that chain was invisible to the customer - “the customer doesn't see IBM at all”.
The project worked where previous attempts at solving the invoice error and rejection problems hadn’t.
Whittle said invoice rejection rates fell “from over 80 percent to less than five percent”.
BOC Australia now issues 62 percent less manual credits and receives 68 percent less manual debits.
“It was a very successful trading partner integration, because we reduced friction, and we ultimately just made it easier to do business with us,” Whittle said.
Small business invoicing
BOC Australia previously also ran a project that similarly aimed to streamline the ability for smaller customers to place orders and be electronically invoiced for them.
The company used Australian software by Link4, an IBM business partner, for this purpose.
Link4 allows BOC to issue an e-invoice and send it directly into the cloud accounting system of its smaller customers.
“BOC interacts with a lot of small businesses in Australia, from a small factory/manufacturing facility to a pub or club, a healthcare provider or a tradie,” Whittle said.
The project reduced the potential for friction in the relationship and also led to changes in customer behaviour.
“Prior to the trial [of Link4], 60 percent of customers paid after the due date. When they signed up for digital invoicing, 60 percent paid on the due date or before the due date,” Whittle said.
“It was a significant shift in behaviour purely by reducing friction and making it easier to do business with BOC.”
Ry Crozier attended IBM Think 2019 in Sydney as a guest of IBM Australia.