Earlier this week, I gave a presentation at ADP P2P Solutions‘ Seminar “Game-Changing Advances in Finance and Payables” held in the conference area of Minute Maid Park in Houston, Texas before an Astros game. I discussed recent trends and performance in the AP market and may revisit that topic on CPO Rising at a later date. I was sandwiched between two P2P case studies delivered by two business leaders, one from Supply Chain, the other from Treasury. Yesterday, I shared a P2P Case Study from a Supply Chain Perspective. Today, I’ll share the highlights from my Treasury counterpart who works at a fast-charging high growth company.
This case begins with a company that has outsourced its AP operations since its earliest days to a provider that managed a dedicated post office box for the company and opened and scanned the invoices, entered header information, and performed some initial system coding. The provider would then route invoices to a light workflow system for approval.
Last year the company began to realize that its outsourced provider was ill-equipped to manage the increasing level of invoice volumes and the increasing level of company, invoice, and trading partner complexity. More specifically, although the provider had promised to increase staff headcount to keep up with the growth, the provider had been reducing staff as a way to reduce its costs. The provider’s performance was noticeably (i.e. negatively) impacted. Additionally, the company’s fast growth meant that its coding became more complex than the provider could manage.
Compounding the problems was the fact that the provider contract had been signed in a much earlier point in the company’s development and the SLAs that were included in the current contract, while fine a few years ago, were outdated and substandard. The contracted SLA for invoice cycle-time fell outside of the window for the company to receive early payment discounts from its suppliers. Unable to get the provider to speed its performance, the company determined that the only way it could earn what were very sizable discounts was to manually grab and approve invoices.
Enter Treasury, who as leaders of an internal initiative to improve finance operations quickly identified accounts payable as a bottleneck area that needed significant improvement. The Treasury team quickly determined that selecting an ePayables solution to replace the outsourcing service was the best approach and began an RFP process in parallel with an RFP for an ERP solution. The team selected the ADP P2P solution for a variety of factors including its supplier network, functionality including the ability to manage and make payments, and the flexibility (i.e. timing) and integration requirements for implementation.
Among the benefits for the program to date (it has been live less than six months), the company has gained efficiencies (cost and speed) in processing invoices and it is now capturing early payment discounts electronically. Finally, adoption has been strong with more than 40% (and increasing) of invoices received electronically after one full quarter in operation.