Tim Nissen | Automating Purchase-to-Pay Processing – a Case Study.
When this company’s founder launched this startup in 1963, he had no idea his three-person company would one day become a global behemoth. A leader in innovative product design for Agriculture, Transportation, Material Handling, OEM, Military and Government sectors, it’s a continuing success story.
Their half-century journey has had its challenges. A constant detriment to the company’s continued growth were the manual, paper-based processes that grew geometrically with the increase in business volume, severely hindering progress. “When I looked at the size and scope of business process that we had become entangled, I decided we had to develop a paperless business model,” explains the company’s Purchasing Manager. “The point to be made is this: buyers should be focusing on the buying process, developing quality vendors with the ability to deliver products on time at competitive prices, not shuffling paper between departments and staff.” This realization began the search for a solution, which culminated in choosing IntelliChief ECM for their automating Purchase-to-Pay processing initiative.
IntelliChief was implemented to handle the company’s Purchase-to-Pay process from the moment a Purchase Order is created, continued through receiving of the materials ordered, and the vendor Invoice is received and paid.
When a Purchase Order is created in the company’s ERP application, it is merged with an electronic form that is faxed or emailed automatically based on the vendor’s preference, and electronically archived in IntelliChief, reducing paper usage and time for filing and later retrieving the PO when needed.
A substantial benefit came in the form of IntelliChief’s Capture Enterprise, enabling key information contained in transaction documentation to be identified by IntelliChief’s AI abilities – providing straight-through processing. It extracts data from all paper, fax and email formats (including attachments), to populate processing fields in IntelliChief, verifying accuracy with ERP-stored contractual information. Document’s image files are created and organized per transaction for workflow and archival.
Order Acknowledgments are a good example of this process. Their Purchasing Manager illustrates, “if a buyer gets an email response from a supplier stating, ‘we have received your PO and we will ship as expected by the requested date,’ it is considerably more efficient to capture the Acknowledgment in IntelliChief with the purchase’s documentation collection, instead of filing it in a drawer with the PO. If a problem with the shipment occurs, the buyer can pull up the PO in IntelliChief and see all related documents and determine the source of the problem. When the vendor is contacted, all the purchase’s information is available to the buyer, allowing for a quick resolution. The same process is applied to vendors, quotes and pricing. Capturing it all in IntelliChief is a significant time saver.”
When materials are received, the receiver is also electronically captured, or scanned into IntelliChief, extracting and indexing pertinent information on-page and within barcodes or other data-containing images. The same processing occurs with Bill of Lading and related Packing Slips into IntelliChief; all are automatically indexed and archived. This easily associates these receiving documents with the original Purchase Order, creating a full transactional record that can be electronically retrieved at any time. This electronic document linking is a key benefit of IntelliChief.
A tremendous value realized with IntelliChief is in the ability to handle purchasing discrepancies. “For orders to have items that were back-ordered or shipped incorrectly, IntelliChief’s workflow can expedite resolution of these issues in an efficient manner,” The Purchasing Manager commented. “When there’s a discrepancy in the Packing Slip, it can be electronically routed to the specific buyer. It’s very easy and cost-effective when compared to our paper process days.”
“In the past, we used 15 filing cabinets (current vendor transaction documents) and a warehouse (archives) to store our purchasing documents in. With IntelliChief, we have no filing cabinets nor are we moving any files to the warehouse,” stated the Purchasing Manager. “The square footage previously occupied with filing cabinets in the AP Department is now being used for additional much-needed meeting space. Filing time of the past is now directed to more productive purposes.”
“Two full time employees were previously required to manage the filing, searching and retrieving of Purchase Orders, quotes and vendor related information. Those employees have been reassigned within the company and are making strategically productive contributions,” the Purchasing Manager informed.
Payment Scheduling Optimization
Prior to IntelliChief, Invoices that arrived via mail, fax or email would eventually end up being printed, sorted, marked up and distributed by their AP staff. This manual process was done daily, dealing with an average of 100 Invoices per day and requiring numerous AP hours.
If an Invoice was questionable, AP would send a paper copy of the Invoice to the appropriate buyer for resolution, thus holding-up processing until it was returned. An Excel spreadsheet was kept as a log to track the Invoices sent for resolution, and for those sent to managers for review and approval.
This approval process resulted in the Invoices being handled four to five times each (resulting in late payment penalties or missed early pay discounts offered by vendors). Once the Invoice was approved and a check was cut, it was then matched to a duplicate copy of the check with the Invoice and filed in the filing cabinets, ordered by vendor name.
Those were the old days. According to the company’s Accounts Payable Manager, “IntelliChief eliminated these cumbersome processes and lost revenue. Now Invoices that arrive via fax are electronically captured and are routed to the appropriate AP staffer’s electronic inbox. Mailed Invoices are processed and scanned by Administrators, who then indexes them with the appropriate vendor and PO number. IntelliChief’s workflow process routes the Invoice to the appropriate AP staff’s inbox. Emailed Invoices are captured with Capture Enterprise, with email and attachments sent to the imaging database. This entire electronic procedure for capturing and routing Invoices helps speed up the process, essential to receiving early payment discounts of critical importance, accounting for considerable capital annually.”
With IntelliChief, payment scheduling optimization is enabled with visibility provided through ERP-IntelliChief integration. Invoices are now sorted to determine which ones to pay first. Attempting this with the old paper system proved difficult and inefficient.
If there is a need to review past transactions or any documents associated with it, IntelliChief’s search engine retrieves the required information by the vendor number, PO number, Invoice number, etc., with the information instantly accessible.
Expanding with IntelliChief
With IntelliChief, the company was transformed, automating Purchase-to-Pay processing. The measurable results prompted expanding IntelliChief utilization, implemented the system to handle their Order-to-Cash operations, which has enabled everyone from Sales, Customer Service, Order Processing, Invoicing and Collections to go paperless.