How FedEx Went from Decentralized Paper to Centralized E-Invoicing
This guest blog was written by Kevin Lander. Kevin Lander is a former accountant, accounts receivable manager, and accounts payable manager with RPS/FedEx invoicing. Kevin Lander has over 34 years of transportation industry experience.
During my tenure at FedEx, I witnessed many different software programs over the years. We had a paper decentralized approach to invoice processing in one of our retail operating companies, and wanted to improve our processes in order to become a world class accounts payable group. Since we already had a company payment processing system in place, we were seeking a bolt-on to our current check writing system.
With primarily paper processes, you could imagine the number of problems this caused in our department. Time lags were caused by the mail time from supplier to the approving location, as well as the time that an invoice might sit in an approver’s inbox. For the remainder of the processing timeline, invoices were sent to a centralized data entry shop for manual data entry, causing yet another bottleneck in our processes.
To solve our problem and become a world class accounts payable group, our department decided to implement an AP automation software by establishing parameters around our current check writing system.
On The Supplier’s Side
With this new software, suppliers were able submit invoices to AP for approval through an online portal, either by file upload or online entry. Additionally, suppliers would not be able to backdate any invoices to speed up payment. Our discount period began on the date of invoice submission, which resulted in us improving our discounts gained, and reduced any unrealized discounts. All orders were tied to a 3-way matching system, where suppliers’ invoices had to match the purchase order. If the information didn’t match, a hard stop on any payment was created. During setup we also encouraged our suppliers to sign up for ACH payments rather than check processing. This also helped reduce the costs associated with generating checks and reduced the number of records that could end up in the escheatment process.
On The Approver’s Side
There were many helpful business rules that our team was able to set up for approvers. For example, approvers could set up vacation or out-of-office dates to allow the system to route to the next level in the approval process in their absence. Additionally, leadership gave their full support in establishing automatic escalations to avoid delays in approvals. If someone would miss the predetermined deadline to approve (such as 5 days) a notification would be sent to their supervisor—which was effective, as no one wanted their manager to contact them due to missing a deadline.
Once all approvals were obtained in iPayables, the data was transferred to our PeopleSoft platform for 3-way matching and payment processing.
As a result of this change, our staff became more of an exception processing agent than a data entry agent. The mundane data entry portion was removed, and their skill set increased by investigating exceptions such as price changes or any differences in the PO set ups or data analysis.
Removing paper was one of the top components of our transformation. Through iPayables’ e-invoicing solution, we were able to become a leading accounts payable department, with over a 99% electronic invoice submission to processing rate.