Transactions at Ramsville-1

Bill we do get a lot of invoices coming in but not

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payment process that was supposed to reduce incoming invoices.” Bill: “We do get a lot of invoices coming in, but not all of those actually get sent on to AP. Other processes screen out many of the invoices. First, we have to check mail that is sorted to be AP mail to see if it has a Purchase Order (PO) listed on the document. We have about two days of backlog from the time the mail is opened until the PO check happens. It takes an average of 2 minutes to confirm the PO number since all of the invoices have different formatting and we have to enter the PO in our system, and 8 mail room data entry clerks work this process for 75% of their work day and the rest of their time on other types of data entry. Fortunately, we don’t really get any invoices without valid PO numbers on them.” “As you know, the PFR invoices don’t go through the standard AP system, since they are paid automatically when the material is received. I sure wish we could get all our suppliers on to the PFR system; and I don’t understand why suppliers already set up on the PFR system still send us paper invoices – it’s really frustrating! So after we are done checking the PO number, we have to check to see if the invoice is part of the automatic Pay From Receipt (PFR) process.” Colleen: “You’re right Bill, but the problem is that some of the suppliers are running on accounting software that forces them to generate and send an invoice. We’ve talked to them about this, but it’s just too expensive for some of them, especially our smaller suppliers, to change their systems to meet the needs of only one customer. Still, it would be nice for both us and the suppliers if we could come up with a solution.” Bill: “There is an inbox for the PFR check that has about 1 of a day’s invoices in it. When we find that the invoice is part of the PFR process, we throw the invoice into the paper recycling bin, since the paper invoice isn’t needed and it is just a duplicate of the automatic PFR. We use the extra money we earn from all the paper we recycle to pay for refreshments at our softball games. At this point, we throw away about 200,000 invoices per year that are really PFR. We keep exact track of what we throw away, since we want to be sure that we don’t throw away something that we shouldn’t. Since we are really careful, it takes us about 6 minutes to do this, and we have 25 full time mail room people working only on this. The remaining invoices are sent to the AP department. The invoices are divided alphabetically by supplier name while we are doing the PFR check and sent to the assigned AP person, so that each person gets approximately the same number of invoices each year. Once we send the paper invoices on to AP, the mailroom is done with its part of the process.” Sarah: “Let me make sure I have this right. First you receive and sort all the mail, with about 265,000 identified as AP mail. Then you have to check for a PO. After confirming the PO, you then check to see if it is on the PFR system. If it is, you recycle the paper; if it isn’t, you send the invoice to the assigned AP person. Does that sum it up?” Bill: “Yep, that’s about it.” Sarah: “Thanks Bill, we appreciate your time and information.
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