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Transactions at Ramsville-1

We take turns and have one ap person work on this all

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software. We take turns and have one AP person work on this all day.” Sarah: “So all of the invoices end up going through payment processing, although some go straight there if they are ready for payment, but some wait for a while until they are due, is that right?” Sam: “Yes, they all have to go through the full payment processing, eventually. After they have been entered into the payment processing system, they have to go through a batch process, which runs 4 times per day so an average invoice waits 1 hour for processing. We want to be sure that nothing is getting paid incorrectly, so we actually spend another 2 minutes per invoice doing a final inspection of
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the payment before the batch is released. We take turns doing this with one person working on it per day.” “At this point the payment should be on the way to the supplier. However, we still have to file the paper invoice along with proof of payment. It takes about 4 minutes per invoice to file the paper documents. But we usually do all the filing at the end of the day, so an average invoice waits for about ½ day until it is filed. It would take the equivalent of 3 full time people to do all the filing, but each analyst is supposed to do their own before they leave for the day.” Sarah: “Okay Sam, let me make sure that I have the process straight. You get the paper invoices from the mailroom. Then an analyst does a PFR check. If the invoice is PFR, it is thrown away; if not, it moves through the system for payment processing. You have to determine if it is ready to pay now, or should be set aside to be paid later. When an invoice is ready to pay, you input it into the system, process the batch and then file the paper documents. Does that about cover it?” Sam: “Yes, that’s about what we do.” Sarah and Colleen met later in the day to review the data they had collected and to begin drawing their current state VSM. Sarah: “It looks like we’ve gotten a lot of good data on the current process, and it seems that there are several opportunities for improvement. Let’s finish up with the current VSM and then run it by Bill and Sam to make sure that we’ve captured everything correctly. Then we can call a meeting to begin working on our future state map.” Colleen: “That sounds good. One other thing that didn’t come up when we were talking with Sam, but that I think is a problem that we should also look into, is the number of invoices that are paid incorrectly. The AP analysts are actually spending a lot of time trying to troubleshoot and fix invoices that suppliers have called to complain about. We’ve begun keeping track of the reasons that suppliers are calling about incorrect invoices, and it would sure be nice to use that data to try to find some root causes that could fix the problems we are having. Not only would fixing the problems free up a lot of time for our analysts, but suppliers would also be a lot happier. It’s hard to encourage them to be more accurate in the invoicing process when we aren’t accurate in the payment process.
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