Transcript Document

© 2012 Financial Operations Networks LLC
Improving Workflow, Streamlining
Approvals and P2P Initiatives at the
PNC Financial Services Group
About Your Presenter
Dennis R. Cooper, MBA
Vice President, Operations Director, Accounts Payable
The PNC Financial Service Group
Dennis is responsible for providing management, leadership,
strategic direction and tactical oversight for PNC’s Accounts
Payable function, reporting to the Supply Chain Management
Executive. Additionally, he is tasked with developing and
executing best-in-class Procure-to-Pay and Expense
Management strategies for the enterprise in partnership with PNC
Finance and PNC Supply Chain Management.
Dennis’s 25 years’ experience includes positions with Ringling
Bros. & Barnum and Bailey Circus as the Director of Financial
Shared Services and the CFO for the Magic Johnson Foundation,
Inc. He also represented Accounts Payable with implementation
of various software systems. (J.D. Edwards, Lawson, Concur
T&E, Gauss Imaging/Workflow)
He holds a BS in Financial Management from Husson University
and an Executive MBA from the University of Hartford.
Case Study
Background
PNC is one of the 5 largest banks in America, where the staff of 50 in
the Accounts Payable department handles a monthly volume of more than 60,000
invoices, and 7,500 expense reports at an estimated $3-$6 billion in annual spend.
PNC recently purchased National City Bank, so PNC had two businesses using two
different workflow environments in PeopleSoft and Ariba. The companies were
similar in size, and our processing demands had increased as a result of the
acquisition.
The Challenge
Accounts Payable was tasked with developing a Centralized Invoice
Receipt Strategy with the goal to transition PNC from a decentralized
to centralized processing model.
Accounts Payable had the opportunity to also evaluate our current organizational
structure in preparation to successfully support the addition of the new business
entity while becoming efficient within our workflow process and streamlining invoice
approvals.
Integration Milestones
• Cross trained National City’s Accounts Payable staff on PNC’s new
terminology and policies and procedures
• Trained all National City employees on PeopleSoft’s ERP (Enterprise
Resource Planning) and Human Resources systems in addition to
Ariba Travel & Expense and Invoice Approval workflow
• Developed new Accounts Payable organizational structure & defined
new leadership roles & responsibilities
• Defined interim invoice payment processing approach for the
Pittsburgh and Cleveland Accounts Payable sites
Organizational Structure
Model
AP Organizational Model
Re-designed Structure Milestones
• Transition from a dual site management structure to a functional entity
structure
• Establish a leadership structure that serves as the direct point of contact
for each function
• Each functional leader will be responsible for managing and directing
staff resources at both sites (Cleveland, Pittsburgh)
Benefits
• Positioned Accounts Payable Leadership Team to effectively manage
our resources along with implementing Industry Best Practices
• Better aligned to implement change management and improve overall
communication with staff
Leadership Structure
Dennis Cooper
Vice President, Operations
Director
TBD
Vice President, Operations
Senior Manager
TBD
Vice President, Operations
Senior Manager
-Invoice Processing
(PeopleSoft, Ariba)
-Expense Reports-PNC T & E
-Credit Card Program
-SLA Compliance
-Expense Policy Compliance
-P-Card & Affiliate Card
Programs
-Invoice Centralized Receipt
-Customer Support - Processing
Review
-Wire Transfer
-Special Project Assignments
-Site Management
All Payment Disbursement
Processing
-Compliance
-Sox Controls
-HR Relations
-Budgeting
-Performance Measurement
Reporting/Statistics
-AP Communications
-End User Training
-New Employee AP Orientation
-AP Policies & Procedures
-Internet Information-Updates
-Audit Recovery
-Work with Audit & Quality
Services
-Site Management
Compliance, Reporting &
Sox Controls
TBD
Vice President, Operations
Manager II
- ERP System Testing
-PeopleSoft/Ariba
-System Enhancements
-Review of System Audit Controls
-E-Invoicing
-Validate AP Functionality Prior
to being live in Production
-System Project Team Participate
-Handle System/Screen
Modification Request
-Serve as an AP System Subject
Matter Expert
-Special Project Assignments
Technology & System
Enhancements
AP Centralized Receipt Strategy
Build Consensus
Finance, Accounts Payable, and Supply Chain Management
developed an overall strategy that served as the framework to
define our respective requirements in support of Accounts
Payable Centralized Receipt initiative.
Joining efforts with the three groups positioned Accounts
Payable to better set the expectations along with the overall
benefits.
Overall Strategy
Strategy
Paper invoices are received centrally/eInvoicing Preferred
Invoices are received and are converted to
P.O.(2-Way & 3-Way Match)or Non-P.O.
Invoices are routed using the normal or the
exception workflow process
Measures are pursued for the optimal balance
of service, control and efficiency
Benefit
Improves visibility to invoice processing
Sets up improved efficiency and controls
Unified user experience for approvals
Leverage existing operational investments and
proven industry providers for success.
Improved compliance capability
Multi Currency
Responsive and adaptable to needs of PNC
Consolidated comprehensive payment solution
Rapid adoption and on-going cost efficiency
Fully Integrated Solution
AP Centralized
Receipt Strategy P2P
Purchase Order
P.O. Requisitions are
submitted by business
group for approval to
create a purchase order .
`
Invoice Receipt
Invoices are sent to a
centralized location for
prepping and sorting
Invoice Conversion
Scan using OCR, converted to
electronic format, and
electronically archived for
research and audits
Workflow Engine
Electronic Approval
Invoices are routed for approval
electronically based on a defined
rule set
Payment
A payment file is sent for PCard, Credit Card , ACH,
wire transfer or check
disbursement and GL is
updated
mail
mail
-2-Way Match
-3-Way Match
Exceptions Only
e-mail and fax
`
Legend
Vendor generate invoice and
Mail or eInvoice
eInvoice or ePO “flip”
Supplier Paper Invoices
Employee
Accounts Payable
Fully Electronic Invoices
Workflow Decision
Current Workflow Engines
 PNC currently leverages the PeopleSoft and Ariba workflow
environments to electronically route and approve vouchers for
payment
 PeopleSoft ERP (Enterprise Resource Planning) Module is not a fully
integrated system. Based on this we leveraged Ariba Buys to process
P.O. requisitions and capture approved purchase orders.
 In our current decentralized invoice receipt environment, PNC
business groups enter purchase order invoices into Ariba and NonP.O. invoice transactions are entered into PeopleSoft.
 The “hybrid” NCC processing model would require the business group
to provide the accounting code and the AP staff would enter the
invoice into PeopleSoft.
Recommended
Workflow Approach
• Process P.O. (Purchase Order) and Non-PO invoice
transactions in one workflow environment.
• Continue to leverage PeopleSoft AP as the standard,
centralized Accounts Payable system.
Workflow Timeline
1/20/2011
RFP to PeopleSoft
and Ariba
4/10/2011
Clarify
requirements
and
expectations
5/05/2011
Conduct Ariba
and PeopleSoft
on-site
demonstrations
9/08/2011
Workflow
Decision
Solution Offered
Ariba
Oracle
Pros
•Already have all modules
•No software investment required
•Same system is used today for
requisitions and expense reports
(user acceptance)
•Huge supplier network – e-invoicing
•Highly customizable solution
•Same “brand” as PNC’s Human
Resources, General Ledger, and
Accounts Payable’s systems
Cons
•Development would be needed for
control groups
•Solution being offered is not what PNC
has installed in PeopleSoft AP and
would be considered an add on
•No supplier network – any e-invoicing
would have to be done on an individual
set-up basis
Solution Evaluation
System Recommendation
• The recommendation was to utilize Ariba as the workflow solution for
electronically routing PO and Non-PO invoice transactions.
• This workflow decision will serve to support our Accounts Payable
Processing Strategy for centralized invoice receipt recommendation.
Determining Factors
• The determining factors in the decision were predicated on the
following:
– Lower investment cost
– Faster value achievement
– Close alignment with AP Centralization Strategy
PeopleSoft – System Evaluation
Evaluate System Controls
• Accounts Payable contracted the services of Drivestream with the
purpose of performing a system evaluation and assessment of the
PeopleSoft AP Module.
• The results of the evaluation revealed the following:
System
–
–
–
–
–
Low Module Utilization
Key control modules were not activated
No systematic control fee validation to AP Module
Delivered reports not activated
Payment Terms not activated
Process
– No password controls built around Spreadsheet Upload
– E-mail vendor remittance notification not activated
– AP reviews and approve all invoice transactions
PeopleSoft Re-Engineering
• The Accounts Payable Department
developed and implemented a total
of 7 Process Improvement projects.
• Four (4) projects resulted in a staff
reductions of 0.5 FTEs.
• Three (3) projects resulted in a 15%
improvement of process controls.
PeopleSoft –
Future Enhancements
•
•
•
•
•
Systematic control fee interface reconciliation
Electronic e-mail vendor notification
Check printing at dual sites
Implement payment terms
Establish invoice approval threshold ($1 - $500 – No AP approval
required) – Recently approved for implementation
• Develop reporting benchmarks – Measure performance vs.
Industry Standards
• Multi Currency
• Ariba – Establish as a Sox Controlled application
Future Vision
Accounts Payable will be recognized as the premier
payment disbursement and audit control entity by
ensuring that PNC’s financial obligations are fulfilled to
our vendors and BEST-IN-CLASS system technology is
provided to support our business partners while keeping
pace with our ever-changing processing and regulatory
demands.
3rd Party Vendor Selection
(Invoice Depository & Front End Imaging Solution)
Centralized Receipt –
Objectives
• Move to a scalable centralized Accounts Payable Model
• Outsource receipt, scanning, and OCR capture (back-office
operations) of paper invoices
• Interface with existing AP approval workflow engine
• Transition from paper to electronic invoicing
• Establish key business indicator to measure process/cycle time
versus industry standard
Centralized Receipt Model
(Recommended)
Centralized Invoice Receipt Model
(Operating Model Change)
Pittsburgh
Lockbox
-Receive vendor
invoices
(open, prep &
image capture)
-Electronic route
images to 3rd party
vendor
Sabrix
3rd Party
Vendor
(Post Index
Invoices)
- Post indexing review
-Capture vendor info
-Populate invoice fields
-Transmit electronic
invoice file to Airba
-Compliance reporting
Invoice Conversion
Ariba Workflow
(PO/Non PO
invoices)
PeopleSoft
AP
Module
System Tax
Calculations
General ledger
(posting)
AP Exception
Work Queue
Workflow Engine
Electronic Approval
Payment
Create
payment
file
3rd Party Vendor Selection –
Determining Factors
 The Determining Factors in the vendor section process were as follows:
• Experience – Proven experience within AP industry with organizations of
similar size to PNC preferably in the Financial Service Industry
• Infrastructure – Proposed service is “in production” with other organizations of
similar size (i.e. equipment, resources, staff, etc.)
• Technology – Propose solution use OCE Technology or applicable Image
Capture / Scanning Equipment
• Service – Can support turnaround time specified in the requirements of RFP
estimated transaction volume (24 -72 hours)
• Risk – Business resiliency, disaster recovery, financial solvency, etc.
• Cost – Proposed estimated pricing does not exceed current in-house cost for
back-office operation
Expected Benefits
 Improved risk mitigation for disbursements by providing better quality
controls and visibility into accruals and liabilities
 Better management of our cash flow and overall payment
disbursement process
 Position PNC to take full advantage of vendor payment terms to
enhance Treasury Management’s investment opportunities
 Indirect saving would result from the elimination of the business
user’s time currently devoted to receive/prep invoices
Best-In-Class Model
Define a best-in-class model.
• Successful invoice and payment management models have
employed the following approach to streamline their processes:
 Centralization of the receipt of invoice process ensures that the AP
Department has instant visibility into the company’s outstanding liability
 Front-end imaging – ensures that invoices entered into the system are
processed faster and improve faster research and retrieval
 Implementing OCR and intelligent document recognition with imaging to
reduce the amount of data entry required to extract info
 Electronic invoicing solution quickly expedites the submission of invoices,
reduces cost per transaction and restricts only clean invoices to be entered
into AP processing queues
 Leveraging an automated workflow solution ensures that invoices enter the
solution will be routed to the required approver systemically, based on predefined business rules
Automated Workflow Benefits
Benefits of
Automated
Workflow
PayStream
Advisors,
Inc. Survey
Benefits of
Electronic Invoicing
Fewer Lost or Missing Invoices
Benefits of
Electronic
Invoicing
PayStream
Advisors,
Inc. Survey
63%
Better Visibility Across the Transaction Lifecycle
47%
Reduction in Exceptions & Discrepancies
47%
Quicker Approval Cycles
46%
Reduction in FTE & Processing Cost
46%
Increased On-Time Payments
39%
Increased Ability to Capture Discounts
37%
Fewer Duplicate Invoices
31%
Improve Vendor Satisfaction
Fewer Supplier Inquiries
27%
20%
Transaction Cost &
Cycle Time
2011
Cost
Cycle Time
Best In Class
$2.05
4
Median
$5.41
10
Laggards
$10.26
25
PNC Results
$4.30
15
Barriers to
E-Invoicing Adoption
Barriers To
E-Invoicing
Adoption
PayStream
Advisors,
Inc. Survey
Questions
© 2012 Financial Operations Networks LLC
Thank You!
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The Accounts Payable Network
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Contact: [email protected]
866-827-6389
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