© 2012 financial operations networks llc improving workflow, streamlining approvals and p2p...
TRANSCRIPT
© 2012 Financial Operations Networks LLC
Improving Workflow, Streamlining Approvals and P2P Initiatives at the
PNC Financial Services Group
About Your Presenter
Dennis R. Cooper, MBAVice President, Operations Director, Accounts PayableThe PNC Financial Service Group
Dennis is responsible for providing management, leadership, strategic direction and tactical oversight for PNC’s Accounts Payable function, reporting to the Supply Chain Management Executive. Additionally, he is tasked with developing and executing best-in-class Procure-to-Pay and Expense Management strategies for the enterprise in partnership with PNC Finance and PNC Supply Chain Management. Dennis’s 25 years’ experience includes positions with Ringling Bros. & Barnum and Bailey Circus as the Director of Financial Shared Services and the CFO for the Magic Johnson Foundation, Inc. He also represented Accounts Payable with implementation of various software systems. (J.D. Edwards, Lawson, Concur T&E, Gauss Imaging/Workflow) He holds a BS in Financial Management from Husson University and an Executive MBA from the University of Hartford.
Case Study
BackgroundPNC is one of the 5 largest banks in America, where the staff of 50 inthe Accounts Payable department handles a monthly volume of more than 60,000 invoices, and 7,500 expense reports at an estimated $3-$6 billion in annual spend.
PNC recently purchased National City Bank, so PNC had two businesses using two different workflow environments in PeopleSoft and Ariba. The companies were similar in size, and our processing demands had increased as a result of the acquisition.
The Challenge Accounts Payable was tasked with developing a Centralized Invoice Receipt Strategy with the goal to transition PNC from a decentralized to centralized processing model.
Accounts Payable had the opportunity to also evaluate our current organizational structure in preparation to successfully support the addition of the new business entity while becoming efficient within our workflow process and streamlining invoice approvals.
Integration Milestones
• Cross trained National City’s Accounts Payable staff on PNC’s new terminology and policies and procedures
• Trained all National City employees on PeopleSoft’s ERP (Enterprise Resource Planning) and Human Resources systems in addition to Ariba Travel & Expense and Invoice Approval workflow
• Developed new Accounts Payable organizational structure & defined new leadership roles & responsibilities
• Defined interim invoice payment processing approach for the Pittsburgh and Cleveland Accounts Payable sites
Organizational StructureModel
AP Organizational Model
Re-designed Structure Milestones• Transition from a dual site management structure to a functional entity
structure
• Establish a leadership structure that serves as the direct point of contact for each function
• Each functional leader will be responsible for managing and directing staff resources at both sites (Cleveland, Pittsburgh)
Benefits• Positioned Accounts Payable Leadership Team to effectively manage
our resources along with implementing Industry Best Practices
• Better aligned to implement change management and improve overall communication with staff
Leadership Structure
Dennis CooperVice President, Operations
Director
TBDVice President, Operations
Senior Manager
TBDVice President, Operations
Senior Manager
TBDVice President, Operations
Manager II
-Invoice Processing(PeopleSoft, Ariba)-Expense Reports-PNC T & E-Credit Card Program-SLA Compliance-Expense Policy Compliance-P-Card & Affiliate Card Programs-Invoice Centralized Receipt-Customer Support - Processing Review-Wire Transfer-Special Project Assignments-Site Management
-Compliance-Sox Controls-HR Relations-Budgeting-Performance MeasurementReporting/Statistics-AP Communications-End User Training-New Employee AP Orientation-AP Policies & Procedures-Internet Information-Updates-Audit Recovery-Work with Audit & Quality Services-Site Management
- ERP System Testing-PeopleSoft/Ariba-System Enhancements-Review of System Audit Controls-E-Invoicing-Validate AP Functionality Prior to being live in Production -System Project Team Participate-Handle System/Screen Modification Request -Serve as an AP System Subject Matter Expert-Special Project Assignments
All Payment DisbursementProcessing Compliance, Reporting &
Sox Controls
Technology & System Enhancements
AP Centralized Receipt Strategy
Build Consensus
Finance, Accounts Payable, and Supply Chain Management developed an overall strategy that served as the framework to define our respective requirements in support of Accounts Payable Centralized Receipt initiative.
Joining efforts with the three groups positioned Accounts Payable to better set the expectations along with the overall benefits.
Overall Strategy
Strategy
Paper invoices are received centrally/e-Invoicing Preferred
Invoices are received and are converted to P.O.(2-Way & 3-Way Match)or Non-P.O.Invoices are routed using the normal or the exception workflow process
Measures are pursued for the optimal balance of service, control and efficiency
Leverage existing operational investments and proven industry providers for success.
Benefit
Improves visibility to invoice processing
Sets up improved efficiency and controls
Unified user experience for approvals
Improved compliance capability
Responsive and adaptable to needs of PNC
Rapid adoption and on-going cost efficiency
Multi Currency
Consolidated comprehensive payment solution
Fully Integrated Solution
AP Centralized Receipt Strategy P2P
`
e-mail and fax
eInvoice or ePO “flip”
Invoice ConversionScan using OCR, converted to
electronic format, and electronically archived for
research and audits
Workflow EngineElectronic Approval
Invoices are routed for approval electronically based on a
defined rule set
PaymentA payment file is sent for P-
Card, Credit Card , ACH, wire transfer or check
disbursement and GL is updated
Supplier Employee Accounts Payable Fully Electronic Invoices
Legend
Exceptions Only
Invoice ReceiptInvoices are sent to a
centralized location for prepping and sorting
Purchase OrderP.O. Requisitions are submitted by business group for approval to create a purchase order .
Vendor generate invoice andMail or eInvoice
`
-2-Way Match-3-Way Match
Paper Invoices
Workflow Decision
Current Workflow Engines
PNC currently leverages the PeopleSoft and Ariba workflow environments to electronically route and approve vouchers for payment
PeopleSoft ERP (Enterprise Resource Planning) Module is not a fully integrated system. Based on this we leveraged Ariba Buys to process P.O. requisitions and capture approved purchase orders.
In our current decentralized invoice receipt environment, PNC business groups enter purchase order invoices into Ariba and Non-P.O. invoice transactions are entered into PeopleSoft.
The “hybrid” NCC processing model would require the business group to provide the accounting code and the AP staff would enter the invoice into PeopleSoft.
Recommended Workflow Approach
• Process P.O. (Purchase Order) and Non-PO invoice transactions in one workflow environment.
• Continue to leverage PeopleSoft AP as the standard, centralized Accounts Payable system.
Workflow Timeline
RFP to PeopleSoft and Ariba
Clarify requirements
and expectations
Conduct Ariba and PeopleSoft
on-site demonstrations
Workflow Decision
1/20/2011 4/10/2011 5/05/2011 9/08/2011
Solution Offered
Ariba Oracle
Pros •Already have all modules•No software investment required•Same system is used today for requisitions and expense reports (user acceptance)•Huge supplier network – e-invoicing•Highly customizable solution
•Same “brand” as PNC’s Human Resources, General Ledger, and Accounts Payable’s systems
Cons •Development would be needed for control groups
•Solution being offered is not what PNC has installed in PeopleSoft AP and would be considered an add on
•No supplier network – any e-invoicing would have to be done on an individual set-up basis
Solution Evaluation
System Recommendation • The recommendation was to utilize Ariba as the workflow solution for
electronically routing PO and Non-PO invoice transactions.
• This workflow decision will serve to support our Accounts Payable Processing Strategy for centralized invoice receipt recommendation.
Determining Factors
• The determining factors in the decision were predicated on the following:
– Lower investment cost– Faster value achievement– Close alignment with AP Centralization Strategy
PeopleSoft – System Evaluation
Evaluate System Controls
• Accounts Payable contracted the services of Drivestream with the purpose of performing a system evaluation and assessment of the PeopleSoft AP Module.
• The results of the evaluation revealed the following:System– Low Module Utilization – Key control modules were not activated– No systematic control fee validation to AP Module– Delivered reports not activated– Payment Terms not activated
Process– No password controls built around Spreadsheet Upload– E-mail vendor remittance notification not activated– AP reviews and approve all invoice transactions
PeopleSoft Re-Engineering
• The Accounts Payable Department developed and implemented a total of 7 Process Improvement projects.
• Four (4) projects resulted in a staff reductions of 0.5 FTEs.
• Three (3) projects resulted in a 15% improvement of process controls.
PeopleSoft – Future Enhancements
• Systematic control fee interface reconciliation• Electronic e-mail vendor notification• Check printing at dual sites• Implement payment terms• Establish invoice approval threshold ($1 - $500 – No AP approval
required) – Recently approved for implementation• Develop reporting benchmarks – Measure performance vs.
Industry Standards• Multi Currency• Ariba – Establish as a Sox Controlled application
Future Vision
Accounts Payable will be recognized as the premier payment disbursement and audit control entity by ensuring that PNC’s financial obligations are fulfilled to our vendors and BEST-IN-CLASS system technology is provided to support our business partners while keeping pace with our ever-changing processing and regulatory demands.
3rd Party Vendor Selection(Invoice Depository & Front End Imaging Solution)
Centralized Receipt – Objectives
• Move to a scalable centralized Accounts Payable Model
• Outsource receipt, scanning, and OCR capture (back-office operations) of paper invoices
• Interface with existing AP approval workflow engine
• Transition from paper to electronic invoicing
• Establish key business indicator to measure process/cycle time versus industry standard
Centralized Receipt Model(Recommended)
Sabrix
PeopleSoftAP
Module
System TaxCalculations
Centralized Invoice Receipt Model
(Operating Model Change)
PittsburghLockbox
-Receive vendorinvoices(open, prep &image capture)-Electronic routeimages to 3rd partyvendor
Invoice Conversion
- Post indexing review-Capture vendor info-Populate invoice fields-Transmit electronicinvoice file to Airba -Compliance reporting
3rd PartyVendor
(Post IndexInvoices)
Ariba Workflow(PO/Non PO
invoices)
AP Exception Work Queue
Workflow EngineElectronic Approval
Payment Create payment
file
General ledger(posting)
3rd Party Vendor Selection – Determining Factors
The Determining Factors in the vendor section process were as follows:
• Experience – Proven experience within AP industry with organizations of similar size to PNC preferably in the Financial Service Industry
• Infrastructure – Proposed service is “in production” with other organizations of similar size (i.e. equipment, resources, staff, etc.)
• Technology – Propose solution use OCE Technology or applicable Image Capture / Scanning Equipment
• Service – Can support turnaround time specified in the requirements of RFP estimated transaction volume (24 -72 hours)
• Risk – Business resiliency, disaster recovery, financial solvency, etc.
• Cost – Proposed estimated pricing does not exceed current in-house cost for back-office operation
Expected Benefits
Improved risk mitigation for disbursements by providing better quality controls and visibility into accruals and liabilities
Better management of our cash flow and overall payment disbursement process
Position PNC to take full advantage of vendor payment terms to enhance Treasury Management’s investment opportunities
Indirect saving would result from the elimination of the business user’s time currently devoted to receive/prep invoices
Best-In-Class Model
Define a best-in-class model. • Successful invoice and payment management models have
employed the following approach to streamline their processes:
Centralization of the receipt of invoice process ensures that the AP Department has instant visibility into the company’s outstanding liability
Front-end imaging – ensures that invoices entered into the system are processed faster and improve faster research and retrieval
Implementing OCR and intelligent document recognition with imaging to reduce the amount of data entry required to extract info
Electronic invoicing solution quickly expedites the submission of invoices, reduces cost per transaction and restricts only clean invoices to be entered into AP processing queues
Leveraging an automated workflow solution ensures that invoices enter the solution will be routed to the required approver systemically, based on pre-defined business rules
Automated Workflow Benefits
Benefits of Automated Workflow
PayStream Advisors, Inc. Survey
Benefits of Electronic Invoicing
Benefits of Electronic Invoicing
PayStream Advisors, Inc. Survey
Fewer Supplier Inquiries
Improve Vendor Satisfaction
Fewer Duplicate Invoices
Increased Ability to Capture Discounts
Increased On-Time Payments
Reduction in FTE & Processing Cost
Quicker Approval Cycles
Reduction in Exceptions & Discrepancies
Better Visibility Across the Transaction Lifecycle
Fewer Lost or Missing Invoices
20%
27%
31%
37%
39%
46%
46%
47%
47%
63%
Transaction Cost & Cycle Time
2011
Cost Cycle Time
Best In Class $2.05 4
Median $5.41 10
Laggards $10.26 25
PNC Results $4.30 15
Barriers to E-Invoicing Adoption
Barriers To E-Invoicing Adoption
PayStream Advisors, Inc. Survey
Questions
?
© 2012 Financial Operations Networks LLC
Thank You!
The Accounts Payable Network2100 RiverEdge Parkway, Suite 1010Atlanta, GA 30328Contact: [email protected] 770-984-1184www.TheAPNetwork.com
For further information on this topic, contact