The benefits of category based procurement strategies are well recognised and generally well established.
In simple terms, the procurement specialist: (i) tenders for the supply of a particular commodity, (ii)awards a contract and then (iii) puts in place policies that ensure contract compliance by operations buyers so that the benefits of the contract are fully realised.
This process is relatively routine for well organised businesses and typically cover commodities that exhibit very large numbers of relatively small value transactions.
However one important part of the cost saving equation that is often overlooked is the task of paying the supplier.
This can be a simple process, however, for high volume, variable supplies, routine business activity can generate thousands of invoices. Typcial examples of this include stationery, couriers, legal expenses and utility accounts.
The Department for Transport, Energy and Infrastructure (DTEI) recognised the opportunity to improve their processes and approached Inlogik for a solution.
After careful research and analysis, Inlogik worked with DTEI to implement an automated process for high-volume, repetitive invoicing from targeted suppliers. Inlogik call this process PMe-Invoicing.
While ProMaster is best known for facilitating Corporate Credit Card transactions and Out of Pocket expense claims, ProMaster is also a very successful Transaction Processing Solution (TPS). It can process any type of financial transaction, add value to the information being processed, interface to the General Ledger, while consuming minimal administrative overhead.
DTEI plans to use PMe-Invoicing module to manage the transactions of several of these high-volume, low-value providers, where the cost of processing often outstrips the value of the purchase.
PMe-Invoicing will provide a standardised function for managing high-volume suppliers who are not settled using Corporate Credit Cards.
The module has several features that show the similarities to processing credit card transactions:
- The supplier provides a file of their invoices in a common ProMaster format. This common format allows the PMe-Invoicing module to process different suppliers' files).
- Importing the file processes the invoices as transactions which are linked to the supplier.
- Every 'buyer' has an account similar to a credit card account. The account has default costing details which are coded to each invoice (transaction).
- Each invoice is presented as a transaction. They are pre-coded, and include line item detail (where relevant) using expense types.
- Each transaction has actual GST information.
- A Category Manager role 'owns' the supplier relationship. They can see all invoices and buyers. They can administer accounts and buyers. They cannot see other accounts or transactions.
- Users will have the ability to modify the coding, or split/share the costs to multiple areas, as they would any other transaction.
- The Auto-Approve activity can process all the transactions ready to post to accounts payable, thereby forcing the invoices into accounts payable by a due date.
- The workflow is completely flexible and the options range from 'no touch' by staff up to 'high scrutiny' whereby every invoice is reviewed by a staff member.
- The whole account for the period can be settled within accounts payable in full.
With an electronic feed delivered by each supplier and the ability to process the entire statement automatically if required, DTEI can control the settlement of their invoices, including timing of payment. A guaranteed reduction in settlement times creates opportunities to seek improved prices from suppliers.
The reduction of invoices from DTEI's Accounts Payable (AP) environment will reduce processing time, reduce the number of discreet invoices entered into AP, improve accuracy and provide full reconciliation for each period. Eventually, this will eliminate the noise created through conducting day to day business.