05.22.15 |
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P2P Trends 5 of 5: Keep the Contract Simple

ComplexThis final blog post based on PayStream Advisors’ recent webinar, “Top P2P Trends for 2015,” focuses on contract negotiation. The previous posts in this five-part series shared insights on features and functionality, buyer-supplier collaboration and pricing for the P2P process. The last trend of contract negotiation between the buyer organization and the solution provider can be more challenging than many business leaders realize.

Today, there is growing popularity of transaction-based pricing for buyers. Essentially, this is when an organization pays an annual subscription for using an electronic invoicing application that’s calculated based on the number of transactions the company processes within the application.

That may appear to be fairly straightforward, but those are not all of the costs that a company could incur by using an automated solution. There are a number of variables that can drive up the total cost of ownership. Below are factors for businesses to consider:

  • Does the pricing vary depending on whether you use the workflow provided by the solution provider or if you merely receive electronic invoices through the network to review and approve within your ERP? Or do you use a different workflow solution?
  • Will the vendor supplement the electronic invoicing functionality with outsourced scanning and indexing services? Is there any additional charge for scan and capture?
  • Is supplier-enablement part of the electronic invoicing functionality? Or will the vendor charge separately for onboarding your vendors to their platform and submitting invoices electronically?
  • If there is a charge, does it change depending on whether the supplier is logging into the portal or transacting in an integrated fashion?
  • Will the suppliers be charged any fees that they could pass back to you by way of increase in the cost of goods and services?
  • Is there an additional charge for support if your users or supplier-side users call/email the vendor for assistance or for any issues with the system?

For the buying organization it is important to be aware of all these potential charges and understand which ones apply to their contract. From a vendor perspective, the simpler the contract and fewer the number of variable charges, the easier it can be to make a sale.

So what does PayStream say about contract negotiations? Keep it simple and easy to understand.

 

Learn More About Electronic Invoicing Solutions from ADP

 

The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice.  The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available.

 

 

 



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