Accounts Payable Department Clears $1.1M of Aged Payables and Realizes a 40% Reduction in Invoice Processing Time
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Context
Our client staffed a disproportionately large Accounts Payable department to overcome significant processing inefficiencies. We discovered that invoice processing was completely manual, and the team was struggling to maintain 3 separate ERP systems. The department was often failing to pay invoices in a timely manner and regularly experiencing critical data errors all leading to poor morale and high staff turnover.
What We Discovered
Results and Impact
Our client realized significant performance improvements within 3 months of our engagement:
- Aged Payables over 90 days were reduced from $1.2M to $0., leading to an in-year profit pickup of $1.1M and
- Invoice Processing Time was reduced by 40%, from an average of 12.6 days to less than 8 days, enabling early payment discounts
- $200K in annual cost savings were realized through early payment discounts
What We Did
Partnering with the department manager and staff, we completed a comprehensive current state assessment to determine the root cause of these issues. Our analysis uncovered several improvement opportunities that we employed to:
- Standardize, document, and retrain the process to minimize variation in acceptable standards for processing and accuracy.
- Establish performance visibility and management to measure success and hold staff and other stakeholders accountable. Using data from ERP systems, we created a Key Performance Indicator Dashboard to visualize performance data in real-time.
- Review Aging Reports and validate accuracy of aged payables to clear erroneous or duplicate transactions.
To capitalize on these opportunities, we tested, piloted, and implemented these solutions with over 30 employees across the Shared Services organization
