E-invoicing: from process automation to operational cost-control

by Case Studies on 2010-08-18 01:27:51

THE CLIENT:

Our client is a logistics management solution provider based in Pittsburg, USA. The client has arrangements/contracts with many carriers and also maintains contracts with customers across the US.
 

ISSUES AT HAND:

1. Hassles of maintaining and processing of physical invoices.
2. Limited scope of QuickBooks.       
3. Average AR time (in days) > Average AP time. Hence, negative cash flow cycle. Ageing of invoices had led to shortage of ‘Working Capital’.
4. No ‘Audit System’ in place to verify the charges levied and charges accrued.
5. No proper ‘Indexing and Archiving’ of invoices and freight bills.                   
6. ‘Cost’ of hiring, training and maintaining staff was enormous.
7. No ‘Financial Visibility’ in real time to control cash flow.
8. No scalability- the client was unable to handle the excessive business load and faltered on commitments.
9. Misplacing/loss of invoices and freight bills was a common phenomenon.
10. A lot of time, energy and money being deployed in ‘Non-revenue’ generating activities of- Freight bill and Invoice management as against ‘Sales/Business’ development activities.

 

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DIAGNOSIS:

Working Capital Management (WCM) is of vital importance in any industry. WCM becomes mission critical in a thin margin industry like - Logistics & Supply Chain. It was realized that following steps have to be taken in order to free up the working capital tied up in ageing freight bills/invoices:

 

1. Efficient, user friendly and cost effective Freight billing and Invoice Management system to be adopted.
2. Direct costs (Employee/staff remuneration and bonuses) and Indirect costs (Training, hiring, administrative expenses) to be slashed to the maximum.
3. Business focus to shift from non-revenue generating activities to revenue generating activities.
4. Reengineering AP and AR processes to convert them into a lean processes with-

a)       Shorter TAT for AR, while AP is set at 30 days credit term
b)       Real time financial visibility
c)       Ease of indexing and archiving invoices/freight bills, and
d)       Ease of retrieving past data.

SOLUTION (supported by process flow diagram) & BENEFITS:
 


1.       Provided with Electronic Bill Presentment & Payment (EBP&P) service with following advantages:

a)       Capture invoice/freight bills information through EDI, FTP or as Scanned copies.
b)       Shorter TAT for AR and AP processing.
c)       Invoices are now being processed and audited within 24 hours of being received from the client.
d)       In- depth financial visibility in real time.
e)       On line indexing and archiving of data for future referrals, and
f)        Financial  reporting, weekly/monthly/customer-wise/vendor-wise, at regular intervals.

2.       Provided with dedicated staff at Propeotech’s premises to manage the EBP&P service with the benefit of:

• Shift from fixed costs (employee and administrative expenses) to variable costs (per invoice pricing).

3.       More time and energy being spent of Business Development activities.
4.       Elimination of hassles of administrating non-revenue generating activities.
5.       Correct and timely payments to carriers/vendors.
6.       No more duplication of freight bills or invoices.
7.       Online-dispute Resolution.


Write to us at: contact@propeotech.com
Visit us at: www.propeotech.com

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