Global Manufacturer Speeds Invoice Processing 75%

Global Manufacturing Company Automates A/P Process with JobRouter

Accounting office eliminates paper-based bottlenecks, automates exceptions handling, and more than doubles the number of supplier invoices processed each month - with no change to staff and seamless integration with SAP.

The Challenge

BACKGROUND: Taming Operational Complexity

Accounts Payable Workflow Automation Case StudyOne of the world’s leading manufacturers of engines and propulsion systems for distributed power generation systems wanted to replace an existing paper-based vendor invoice management process that had insufficient controls and was highly labor-intensive.

In addition to the accounts payable staff , more than 600 employees were involved in supplier invoice approvals. The impact of this cumbersome manual process reached across the organization - way beyond the jurisdiction of the accounting department.

To complicate matters further, the company had undergone a number of acquisitions, mergers, and divestitures over the past 10 years, which had increased operational complexity. Plus, the company's international manufacturing, distribution and service model means that suppliers are located all over the world and deal in multiple currencies.

TECHNICAL CHALLENGE: SAP Validation Restrictions

The company utilizes SAP as its enterprise software solution; however, SAP’s stringent invoice input validation requirements prevented the company from posting a significant number of invoices.

Invoices were rejected for having incomplete, inconsistent, or incorrect information when reconciled with purchase orders.

As a result, there was no way to track the company’s invoice liability within SAP. Customizing SAP to meet those needs would have been very expensive and time consuming.

BUSINESS CHALLENGE: Productivity Bottlenecks and Increased Risk

The company was receiving approximately 200 invoices per day; these were all manually processed, resulting in accounting staff spending time tracking down errant invoices and performing non-core tasks, rather than accounting functions. Accounts payable staff would manually route invoices to approvers using a variety of methods.

Once the invoice left accounting, there was no standard, consistent process to manage the approval procedure. Accounting staff spent a significant amount of time checking on the progress and status of approvals, and were unable to provide vendors with the status of invoices in a timely manner.

A large, but undefined, number of paper invoices were constantly in transit between departments and approvers, with no audit trail. The process also introduced risk with regards to incorrect or duplicate payments to vendors, late fees, inability to take advantage of early payment discounts, and potential liability issues.

The Solution

JobRouter Chosen As BPM and Workflow Platform

Business process consultants from managed service provider Secure-24 conducted a multi-day workshop with Tognum to define the best practices for their invoice management process. The output of these workshops was to clearly define the workflows needed and to re-engineer and optimize the process.

Because of the large number of invoice disputes, particular emphasis was placed on sub-processes for exception handling. After consensus was reached on the new workflow design and its integration with SAP, the JobRouter Suite was selected as the Business Process Management and workflow platform to develop a custom application for their A/P process.

Using JobRouter allowed rapid application development, providing a quickly deployed solution. The project was implemented within weeks, rather than the months it would have taken to customize SAP or integrate a third-party product.

The newly implemented Accounts Payable workflow is completely automated and fully compliant with applicable legal and security requirements.

Cost Effective And Secure Private Cloud Deployment

The company did not want to run the new A/P system on-premise. By choosing a cloud implementation, they placed their system in Secure-24’s state-of-the-art data center, managed and operated with the highest standards of security, compliance, and application availability.

Additional Document Support Services

JobRouter Partner, Secure-24 further supports the company with added document conversion and management services. Invoices are physically picked up at the customer site, then scanned, indexed, and stored in a document management and workflow system on a daily basis.

New Workflow Speeds Processing And Provides Control And Visibility

Once invoices are input into the new A/P system, the workflow automatically checks for duplicate invoices and correct purchase order assignment. It routes the invoice to accounting for reconciliation with open purchase orders and goods receipts, then on to the appropriate individual and department for approval. Automatic workflow escalation and alarming ensures that invoices are processed expeditiously, and all invoices waiting for an approver also appear in the appropriate reports that are available for supervisors.

The new A/P workflow solution has significantly decreased the amount of time required to process an invoice and has immediately provided significant cost savings. Accounting staff can quickly access all invoices electronically, and view and track the status. They can also track invoices by supplier and generate monthly and ad hoc reports.

This solution enables the company to be fully compliant, have a thorough audit trail and reduces the liabilities associated with invoice management.

RESULTS:
  • 100% liability tracking and process transparency.
  • 75% increase in employee productivity. Fewer errors.
  • Integration and extension of SAP ERP system.
  • Automated exception handling for incomplete or incorrect invoices.
  • Very rapid implementation.
  • Improved cash management and improved bottom line.
  • Early payment discounts. Fewer late payment penalties.
  • Regulatory compliance. Reduced fraud risk.
  • Secure access to all invoices and related supporting documents.