Collier County, Florida, defined the need to automate the processing of accounts payable (AP) invoices. The county had implemented SAP ERP more than a decade before and used the software for many of its financial processes; however, the AP department still relied on a paper-based invoicing process. Vendors mailed invoices to the county’s various offices and departments, and these invoices were then routed for manual approval. For an organization that manages massive projects like constructing roads and buildings, accurate financial planning is crucial. Also, Florida Statute requires the Collier County Clerk of Courts to audit these documents to ensure legality of payment, which can increase the timeline for processing invoices.
"We had manual processes in place for receiving and processing invoices," says Jane McDonald, Senior Project Manager for Collier County Clerk of Courts. "Workers used email and interoffice mail and didn’t always send the invoices to the AP department right away. We didn’t have visibility into an invoice’s status until it was approved and entered into SAP ERP at the very end of the process. Because our projects sometimes continue for months, workers often had to search through file cabinets (files are kept on site for two years) or warehouse archives to locate older invoices."
Time for Change
The Clerk of Courts management information system (MIS) and AP organizations knew it was time to research new technology that would leverage the SAP workflow. A cross-functional team was assembled and began to evaluate how much work would be required to build and maintain a custom solution from scratch. At the same time, they also considered third-party vendors that might be able to provide an appropriate solution.
"We attended vendor webinars and completed questionnaires for analysis to determine what the return on investment would be for a solution that digitized our invoice processing," says McDonald. "Based on this analysis, we were able to receive budget approval for a new solution and then wrote a request for proposals (RFP)."
One of the most important priorities that emerged from talking to vendors was the ability to integrate the chosen technology with the SAP system into the organization’s current structured query language (SQL) environment, which was a difficult factor to evaluate on paper. There were additional items factored in the RFP, such as adding a content server for invoices.
"We wanted to make sure we could get images out of the SAP system and onto the content server so we could send the invoice information to our external auditors," says McDonald. "We wanted to make sure the solutions we were reviewing would help us do that."
After reviewing the responses to its RFP, the county’s vendor selection team chose Dolphin’s Process Tracking System for Accounts Payable (PTS-AP), which went live in August 2012. (For more information about the Dolphin solution, refer to the sidebar at the left of the article.)
Managing the New AP Workflow
The project involved more than simply implementing a new solution. It required instituting a new workflow aimed at centralizing the AP process countywide. Today, when an invoice comes into the AP department, it is scanned and entered into the process tracking system so there is an immediate record of the invoice’s receipt. From there, the AP clerk can either process the invoice for payment or route it to the appropriate department that, in turn, can route it for additional approval(s). If an invoice is rejected during that process, it can be easily returned to the vendor with a rejection code along, with any backup documentation to explain why it could not be paid.
Naples, Florida, in Collier County is home to about 20,000 people
"All of these steps in the invoice approval process have a predefined status within the system’s workflow," explains Frank Bodino, Senior Systems Analyst at Collier County Clerk of Courts. "In this new process, all of the steps are visible. We know where each invoice is at all times, we know who looked at it, what notes they put down, and when it was approved. If the invoice was rejected, we know why."
After the invoice is approved, the goods receipt is matched, and the AP audit is performed, then the invoice can be posted to SAP ERP. "All the information we need to post the invoice is there, so there’s no dual-keying or duplication of data," McDonald says. "We just hit the button, and the invoice information posts."
Improving the AP business process required changes across the entire organization. For example, since invoices now come into the AP department as the first step of the new process, the various departments within county government had to adapt to a new workflow where AP clerks scan the invoices.
While the new workflow for invoice processing is much more streamlined and intuitive, it did require training users on the new system and getting their buy-in on the updated processes. "Just like with any training, some people caught on very quickly and others struggled with the new processes," says McDonald. "The project team created training documents to help explain the process in a way users could understand."
Fruits of the Labor
According to McDonald, the new solution has delivered all of the benefits advertised and more. The act of digitizing the invoices has made storage and accessibility much easier and less costly, along with improved visibility both internally and externally. Today, the AP department can quickly pull up the record, find out where the invoice is in the process, and provide vendors with an accurate estimate of payments.
"Now, we can provide our external auditors with invoice information, purchase order (PO) information, and backup documentation more easily than we could with the paper-based system," says McDonald. "In the past, we had to go back to the paper files and dig out the invoice which was time consuming. A significant time and cost savings benefit was our ability to search by check number or the clearing document and instantaneously receive the information associated with the invoice."
The approval process has been simplified and has expedited the numerous approvals required for certain invoices. The ability to track how many invoices are processed in a given period is helping the organization measure its own performance.
"Now, we can provide our
external auditors with invoice
information, purchase order
information, and backup
documentation more easily
than we could with the paper-based system."
— Jane McDonald, Senior Project Manager, Collier County Clerk of Court
The improved metrics have also pinpointed any delays in the AP process. For example, the new process showed that many invoices are rejected because vendors don’t provide PO numbers on their invoices. Without the PO number, AP clerks were forced to try and find out which department and what purchase generated the invoice. By requesting that vendors provide the PO number on their invoices, the AP process has been streamlined even further.
According to Bodino, the county has become more efficient thanks to the new solution. "We have been able to fix and change processes that, while they worked, were cumbersome at best," he says.