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Transactions at Ramsville-1

Colleen lets go find out what happens after the

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“Thanks Bill, we appreciate your time and information. Colleen, let’s go find out what happens after the mailroom passes the invoices along to AP. I’ve asked Sam Wolf to help us with the
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AP part of the process, since Sam has been working as an AP analyst for about 5 years and has done a variety of different jobs in the accounting department.” Colleen: “Hi Sam, Sarah and I are ready to have you walk us through the AP process on this side. We’ve just finished talking with Bill Hoskins, who explained the process through the point that the mailroom sends the invoices to you. Let’s start with how long it takes the invoices to get to you from the mailroom.” Sam: “Well, they make deliveries three times a day; at 9:30, at 1:30, and at the end of the day to clear out their area before the end of the shift. So I guess you could say that the average invoice takes 1.5 hours to get to us once the mailroom is done. The mailroom distributes the invoices to the inbox of the assigned AP analyst. Our inboxes usually have about 2 days worth of incoming material. We process the inbox on a FIFO system, and once an invoice comes up to be worked on, the first thing we do is make sure that they aren’t on the PFR system.” Sarah: “Wait a minute, didn’t the mailroom already check to see if the invoices were PFR and get rid of those that are? Why are you checking for the same thing again?” Sam: “Yes, they do check, but we still find about 1,250 per year that they missed. It really is a pain to check for PFR status, and it takes us 7 minutes to do it because we have to be extra careful to catch ones that were missed when the mail room people checked them. Each analyst has to spend about 25% of their time doing these checks. This is such a time consuming effort that we have been keeping track of how many we find each week, and I can get that data for you, if you want.” Colleen: “We’d like to have that data, thanks. Okay, you screen the incoming invoices for PFR and then you only work on the invoices that aren’t PFR, right?” Sam: “Yes, at this point, we have only actual invoices that need to be manually processed through the AP system. Now an analyst has to determine if the invoice is ready for payment. It could be that the pay-by-date is out in the future or we have a payment schedule agreement with the supplier. It takes about 5 minutes to sort each invoice to determine if it is ready for immediate payment or should be set aside to be paid later. Analysts spend about 20% of their time sorting for payment readiness. Invoices that aren’t ready for payment are set aside, which happens to about 20 invoices each day. On average, ‘pay later invoices’ aren’t processed for 15 working days. It takes about 1 minute (and the equivalent of ¼ of a full time person) to look at a ‘pay later invoice’ and move it over to payment processing when it is due. When a payment is ready to be paid, regardless of whether it is a ‘pay now’ or one of the ‘pay later’ invoices that is now due, it takes about 2 minutes to enter it into the payment processing software. We take turns and have one AP person work on this all day.”
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