Improvement - P2P process
UK Business Services and Facilities Management company struggling to contain a supplier payments backlog require improvements in their procure to payment performance.
Context
Our client, a business services company, provided customers with a range of FM, contact centre, corporate services while managing customer's facilities suppliers, was experiencing a squeeze on budgets that had resulted in a return to contracted resource numbers. A major customer's procure to pay service was finding it particularly difficult to keep up with demand, resulting in a worsening backlog in payments to their customer's suppliers.
The ask
To review the customer's procure-to-pay function to deliver improvements opportunities to halt the increasing payments backlog, to not exceed budgets and maintain payment transaction quality. We were also asked to devise and execute a plan to eliminate the existing backlog within budget.
What we did
We engaged suppliers to inform them of the initiative, its intended outcomes, its duration, requesting their cooperation in supporting the solutions.
Developing a value chain we lean assessment the P2P processes to identify wastes, eliminating redundant steps, multiple duplications, and balancing transaction lines.
To reduce the payments backlog, we applied an innovative statistical control technique that identified invoice handling errors and maintained audit quality while increasing payments throughput, reducing the backlog in step changes.
As capacity returned to the overstretched payables team we developed their application of higher-commitment management to enable them to perform to a fuller cost-saving payables role.
Outcome
5000 invoice transactions and £4 million were processed to eliminate the backlog. Invoice payments delays were reduced by 5 weeks and all was achieved by the existing payables team, who continued to use the statistical technique to control backlogs.
The payables team utilised their new capacity to perform more contract compliance audits on invoices, increasing savings by c£300,000, while their well-being improved as workloads normalised.
Finally, the client’s supplier relations improved as on-time payments returned.
