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 A Picture is Worth a Thousand Words
Improving Approval Processes through Imaging, Workflow and Training
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Company: Orange County Public Schools
Implementation: PayStream's Payment Process AnalysisTM
Industry: Education
Company Size: 12th largest school district in the U.S.
The Problem:
Explosive growth in student population
Entirely manual document management system
Approval Process inconsistent with current leading practices
Limited visibility with current ERP deployment
Invoicing process inconsistent with current leading practices
"Exceptions like missing GR's are killing
our productivity" - AP Department
The Orange County Public School district, the 12th largest school district in the nation, is growing by leaps and bounds. The challenge was to accommodate the districts explosive growth while reengineering its existing, labor intensive, accounting processes. A PayStream Advisors team visited the Orange County Public School (OCPS) headquarters to gather information and assess OCPS's options. PayStream's Payment Process AnalysisTM revealed promising opportunities for significant process savings and improvement.
PayStream Advisors leveraged its research, library of best practices,
benchmarking data and proprietary assessment methodology before
making automation recommendations and developing an
implentation road map.
To their credit, OCPS managers and support staff did not hide or sugarcoat their problems; quite the contrary. They recognized that parts
of their process were broken, antiquated or missing, and were willing, even eager to "go to school" on PayStream's advice. The positive
elements OCPS had in place included a centralized receipt process and an efficient AP department with reasonable controls to prevent fraud.
OCPS wanted to address included poor communication between departments, a manual document management system, a lack of
workflow automation and an overly active, time consuming exceptions handling process.
While a centralized receipt process has its merits, in the OCPS's case, it also created the school districts biggest headache - lack of visibility throughout the AP invoice receipt, approval, and payment process. For example, approvers/end users could not see an invoice. End users reported frustration with the email reminder process in place as they frequently did not have all the information they needed to approve invoices. Lack of invoice visibility meant delays in posting of Goods Receipt (GR's) and slowed the exception management process.
The Solution
• Conduct an automation assessment of accounts payable process
• Document metrics with PayStream's methodology and benchmarking data
• Introduce document imaging technology to the system
• Exploit PayStream's library of best practices across industries
• Expand electronic payment options (P-Card, EFT & EDI)
• Apply workflow to enhance approval process and communication
• Specialize AP tasks and training
The Benefits
• Scalable AP department to accommodate explosive growth
• Imaged documents only mouse-clicks away from all departments
• Invoicing costs in line with industry average
• Reduce exception handling commitment by 50%
• Efficient approval process from workflow
• Productivity gains from AP training and specialization
• Improve financials from discounts and released working capital
"I spend almost half my day on emails and phone calls trying to reconcile differences in the invoice without having access to the original invoice."
- Maintenance Dept. Manager
PayStream Advisors recognized the lack of imaging and workflow as the salient deficiencies and recommended these AP automations to facilitate the sharing of invoice images across the district and to accelerate the invoice processing and approval cycle.
Surprisingly, OCPS's per invoice hard cost was actually $0.29 below the benchmark group average. However, this positive variance was due, at least in part, to below average labor costs and a work distribution that skewed the hard and soft cost.
| Invoice Processing Cost Element |
OCPS Costs |
Benchmark Costs* |
Difference |
| Hard Costs (AP Department) |
$2.64 |
$2.93 |
$0.29 |
| Soft Costs (End-User/Approvers) |
$5.16 |
$1.95 |
($3.21) |
| Total Cost Per Invoice |
$7.80 |
$4.88 |
($2.92) |
* Benchmark Data is from IAPP 2004 Benchmark Survey of AP managers of
medium sized AP organizations. www.iappnet.org
The total cost to process an invoice was $7.80 each. PayStream determined 34 percent of the invoice costs were generated by the AP department. The remaining 66 percent was attributable to the lack of visibility experienced by end users in the various other departments. PayStream estimated invoice processing costs at OCPS were about 60 percent higher than peer group medium-sized AP organizations and demonstrated how total costs could be reduced to $5.33 per invoice.
"Our suppliers are willing to take discounts, but the system
doesn't track terms." -- Warehouse Dept.
PayStream concluded that scanned documents that are indexed and archived will provide easy access to all parties concerned. A properly designed and implemented imaging and workflow system will facilitate quick access to invoices and comprehensive discount strategies. An AP automation implementation will also dramatically reduce processing costs and accelerate the exception approval process.
PayStream Advisors Payment Process AnalysisTM identified annual
savings of over $500 thousand for OCPS and a ROI
of 27 percent in two years.
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