Transactional costs: lean efficiencies for Invoice approval and payment process Optimise- GB
What are Transactional Costs <ul><li>Transactional costs when buying a banana </li></ul><ul><li>The Banana itself  </li></...
What is the process of authorising and  paying supplier invoices Optimise- GB
Optimise- GB
What is Lean? <ul><li>Lean is a practice that considers: </li></ul><ul><li>Expenditure of resources that is not for the cr...
Printing invoices before doing  anything with them Stock Piling invoices and not inputting them onto the system  System do...
Lean Thinking Any efficiency creating initiative requires a structured approach... We will be using invoice approval and p...
1. Customer Requirements Paying supplier Invoices - All Invoices to be electronically communicated - Speed up payment proc...
2. Current State:  Risks & Issues of current process Risks with process Impact of risk Managers forgetting that they have ...
2. Current State: Paying supplier Invoices Supplier sends  Invoice by post Accounts departments send the  cheque payment b...
2. Current State: Paying supplier Invoices Optimise- GB Process Process Time Waiting Time Labour Cost Postage Costs Bank C...
3. Future State: Identify solutions Supplier sends  Invoice by post Accounts departments send the  cheque payment by post ...
3. Future State: Paying supplier Invoices Supplier sends Invoice  by email BACS Payment 15 Mins process time 1 Day process...
3. Future State: Paying supplier Invoices Optimise- GB Process Process Time Waiting Time Labour Cost Postage Costs Bank Ch...
Optimise- GB
4. Project Plan (simplified) Ensure: - People understand their responsibilities - People have the appropriate skills to co...
 
<ul><ul><li>For other solutions </li></ul></ul><ul><ul><li>Contact  </li></ul></ul><ul><ul><li>Simon Misiewicz through  </...
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Transactional Costs Supplier Invoices Using Lean

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Transactional Costs Supplier Invoices Using Lean

  1. 1. Transactional costs: lean efficiencies for Invoice approval and payment process Optimise- GB
  2. 2. What are Transactional Costs <ul><li>Transactional costs when buying a banana </li></ul><ul><li>The Banana itself </li></ul><ul><li>The energy and effort it requires to choose between the varieties of bananas </li></ul><ul><li>The cost of travelling from your house to the store and back </li></ul><ul><li>The time waiting in line, and the effort of paying. </li></ul>Optimise- GB
  3. 3. What is the process of authorising and paying supplier invoices Optimise- GB
  4. 4. Optimise- GB
  5. 5. What is Lean? <ul><li>Lean is a practice that considers: </li></ul><ul><li>Expenditure of resources that is not for the creation of value for customers </li></ul><ul><li>Wasteful use of resources and is a target for elimination. </li></ul><ul><li>Creating more value with less work. </li></ul>Optimise- GB
  6. 6. Printing invoices before doing anything with them Stock Piling invoices and not inputting them onto the system System downtime, approvals from management Re-entering data, photocopying invoices for management approval Errors in coding of invoices Walking to/from copier, central filing, fax machine Posting invoices to managers and supplier Managers having to go through levels of approval before an invoice is paid Optimise- GB
  7. 7. Lean Thinking Any efficiency creating initiative requires a structured approach... We will be using invoice approval and payment as an example Optimise- GB
  8. 8. 1. Customer Requirements Paying supplier Invoices - All Invoices to be electronically communicated - Speed up payment process to suppliers - Reduce bank charges for paying suppliers - Reduce postage costs - Reduce Transactional costs of paying suppliers Optimise- GB
  9. 9. 2. Current State: Risks & Issues of current process Risks with process Impact of risk Managers forgetting that they have already authorised an invoice Invoices paid twice Invoices are lost Invoices Paid out of agreed payment terms Other issues Impact of issue Using many suppliers No economies of scale, lack of control Invoices being posted back and forth Postage costs eating into profits Optimise- GB
  10. 10. 2. Current State: Paying supplier Invoices Supplier sends Invoice by post Accounts departments send the cheque payment by post Takes 3 Days to receive an invoice 10 Mins process 15 mins process It takes 3 Days for the invoice to be received It takes 3 Days for the supplier to receive the cheque 10 Mins Accounts send the invoice by post to the manager Takes 3 Days to receive an invoice Start Here Optimise- GB 1. Supplier Accounts 2. Input Invoice Manager 3. Approve Invoice Accounts 4. Pay supplier on system Supplier
  11. 11. 2. Current State: Paying supplier Invoices Optimise- GB Process Process Time Waiting Time Labour Cost Postage Costs Bank Charges Total Costs Awaiting invoice from suppliers 0 Mins 3 Days £0.00 £0.00 £0.00 £0.00 Input Invoice 10 Mins 0 Days £2.00 £0.00 £0.00 £2.00 Post to manager 0 Mins 3 Days £0.00 £0.30 £0.00 £0.30 Approve Invoice 15 Mins O Days £3.50 £0.00 £0.00 £3.50 Send back to Accounts 0 Mins 3 Days £0.00 £0.30 £0.00 £0.30 Pay supplier on system 10 Mins 0 Days £2.00 £0.00 £0.00 £2.00 Send cheque in post 0 Mins 3 Days £0.00 £0.30 £0.40 £0.70 35 Mins 9 Days £7.50 £0.90 £0.40 £8.80
  12. 12. 3. Future State: Identify solutions Supplier sends Invoice by post Accounts departments send the cheque payment by post Takes 3 Days to receive an invoice 10 Mins process 15 mins process It takes 3 Days for the invoice to be received It takes 3 Days for the supplier to receive the cheque 10 Mins Accounts send the invoice by post to the manager Takes 3 Days to receive an invoice Start Here Optimise- GB 1. Supplier Accounts 2. Input Invoice Manager 3. Approve Invoice Accounts 4. Pay supplier on system Supplier Create PO system so managers do not need to see invoices Pay suppliers by BACS Send Invoice by email
  13. 13. 3. Future State: Paying supplier Invoices Supplier sends Invoice by email BACS Payment 15 Mins process time 1 Day process time Start Here Instant, no waiting time There are now only 2 process steps to pay an invoice instead of 4, and done in 10% of the time Optimise- GB 1. Supplier Accounts 2. Input Invoice & Match Invoice against PO number & Pay Supplier Supplier
  14. 14. 3. Future State: Paying supplier Invoices Optimise- GB Process Process Time Waiting Time Labour Cost Postage Costs Bank Charges Total Costs Awaiting invoice from suppliers 0 Mins 0 Days £0.00 £0.00 £0.00 £0.00 Input Invoice, match against PO number and pay invoice by BACS 20 Mins 1 Days £4.00 £0.00 £0.04 £2.00 20 Mins 1 Days £4.00 £0.00 £0.04 £4.04
  15. 15. Optimise- GB
  16. 16. 4. Project Plan (simplified) Ensure: - People understand their responsibilities - People have the appropriate skills to complete the activity - Review the project plans / activities on a regular basis - Communicate, communicate, communicate Optimise- GB What When by Who Date Complete Set payment system to issue BACS instead of cheques 30 th June Accounts Payable Change business processes per 3: Future state process 31 st July Internal Audit Create a Purchase order process that requests manager to send a PO form for all supplier orders 30 th August IT / Accounts Payable Request all suppliers to issue invoices by email 30 th August Accounts Payable
  17. 18. <ul><ul><li>For other solutions </li></ul></ul><ul><ul><li>Contact </li></ul></ul><ul><ul><li>Simon Misiewicz through </li></ul></ul><ul><ul><li>Web: www.optimise-gb.com </li></ul></ul><ul><ul><li>Email: [email_address] or </li></ul></ul>Optimise- GB

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