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BC Hydro Transforms Accounts Payable with SAP Ariba

Monday 18th December, 2017

Automating invoices is easy and there’s plenty of software that can do it. But creating an efficient process for managing accounts payable (AP) in a collaborative and coordinated way that delivers broad business value requires more. British Columbia (BC) Hydro and Power Authority, has figured this out. And the company is using the cloud-based applications and business network of SAP Ariba to drive a connected digital procure-to-pay process that is transforming its operations and earning it industry recognition.

Every day, more than four million people across British Columbia depend on BC Hydro to power their homes and businesses. To deliver for them, the company relies on a strong network of suppliers. So when the company discovered that many of its suppliers were not being paid on time and in response were building premiums into their contracts, it decided that an overhaul of its AP processes was in order.

“Invoice approval was taking weeks, there were few controls to match invoices to purchase order and contracts and our AP team was dealing with duplicate invoices, leading to duplicate payments,” recalls Hanif Dhrolia, Programs Lead, BC Hydro. “All of this was straining relationships and hindering our ability to effectively manage our business.” 

To remedy the situation, many companies might opt for point solutions that can automate invoices and payments. Knowing that such solutions would only provide temporary relief, BC Hydro took a different tack. The company created a plan to align sourcing, procurement and accounts payable. Then it looked for a solution that could drive it.

And it found one in SAP Ariba. Leveraging the Ariba® Network and the financial supply chain solutions delivered on it, BC Hydro created a connected, digital procure-to-pay process through which it could:

  • Move its more than 1,000 suppliers off paper to transact electronically
  • Increase straight-through processing by automatically validating invoices against open orders and ensuring availability of funds
  • Identify and lock-in opportunities for early-payment discounts 
  • Enable suppliers to track and manage invoice-payment status online in real time, freeing up AP to focus on strategic activities such as planning and forecasting.
  • Help suppliers reduce their days sales outstanding while improving their cash flow
And the process quickly delivered results. Since implementing SAP Ariba’s solutions, BC Hydro has:

  • Increased the number of invoices processed electronically from 58 percent to 83 percent
  • Reduced its invoice exception rate by 80 percent
  • Generated thousands per month in savings through early payments
  • Improved on-time payment performance from 70 percent to 95 percent
The company has been recognised by provincial government officials as a top-performer in its industry for its efforts. And Dhrolia was awarded the Institute of Finance & Management (IOFM), AP Manager of the Year Award. 

“Accounts payable isn’t a discreet process that can be performed in a vacuum,” said Drew Hofler, Senior Director, financial supply chain solutions marketing, SAP Ariba. “Innovative organizations like BC Hydro recognize that to deliver real value, it must be executed in an efficient digital way that is simple and connected. And in embracing integrated solutions that enable them to do this, they are truly changing the game.”