International Parts Distributor Relies on Automation to Improve A/P Process

The Challenge
As a distributor for many of the largest and most recognized equipment manufacturers in the world, distributing parts is second nature to this 65 year old company. Trading partners are located in the U.S. and throughout the world. Even though business was booming, the nature of the distribution process posed a tough accounts payable challenge. Some of the problems included:

Inefficient Process for Non-Purchase Orders

  • For non-purchase order invoices, a three-level hierarchy of approvers was established, but no dollar limit controls were in place.
  • Inefficient multiple review processes took up to seven days for accounting department to make final review. This delay prohibited the company from taking advantage of vendor discounts.

Ineffective Routing Methods

  • Paper invoices were routed manually for approval first, and scanned afterwards for offline storage.
  • Invoices were received by multiple branches and routed throughout the organization for approval.

Lack of Controls for Purchase Order Approval

  • Each branch or department handled their own purchase orders. Purchase order approval was on an honor system with no centralized control process in place.
  • Invoices were approved without match to delivery receipt or packing slip contrary to company policy.

Offline Storage

  • Invoices were stored offline which made research difficult, since employees had to search through over 250 CDs for a two-year archive period.

All of these problems were wasting personnel time and costing the company money.

The distributor knew that there had to be a better way to address these issues. Once they saw the demonstration of API's Payable Solution, they were sold.

API's Payable Solution provided more capabilities than originally anticipated by the distributor. All invoices are electronically imaged and archived for routing, approval and online storage. The payable process includes a 2-way match of purchase order to invoice. The solution also includes built-in controls for approval limits for non-purchase order invoices. In addition, a client-branded vendor portal is included for the distributor's vendors to view invoices and check their payment status. The system includes robust reporting so that the distributor can evaluate purchasing trends and vendor issues.

The accounts payable process has been tremendously improved. Now, invoices are received directly at API's facility and available online within 24-hours. This has allowed the company to take advantage of early pay discounts, which wasn't possible in the past. The technology efficiencies have also reduced costs and headcount. One of the most important advances for the distributor has been improved financial controls. The company now has an easily accessible audit trail that let's them know who approved the payments. They are assured that their purchase orders match their invoices. Now with A/P automation, the distributor's accounts payable process is as easy to manage as their delivery process.

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  • Paper-based routing of invoices received from dispersed locations
  • No approval controls if purchase order and invoice don't match
  • Slow approval process prohibited early pay discounts
  • Lack of built-in controls to ensure approval limits
  • Images stored offline making retrieval cumbersome
  • API's Payable Solution
  • Invoices available for online viewing within 24 hours
  • Automated online routing of invoices
  • Invoice line items matched to purchase order
  • Standard and ad-hoc reporting
  • Vendor portal to view invoices and payment status
  • Built-in financial controls
  • Online audit trail
  • Reduced costs and headcount
  • Early pay discounts obtained
  • Improved financial controls
  • Ease in routing and approval by multiple locations
  • Robust purchasing analytics
  • Improved vendor relationships