volume, capacity, efficiency the high cost of...
TRANSCRIPT
Accounts Payable Volume, Capacity, Efficiency
The High Cost of Expedites
Next-Day & Same-Day Processing
Accounts Payable Volume, Capacity, Efficiency
Volume is up in Accounts Payable.
Invoice Volume FY2015-FY2017
Accounts Payable Volume, Capacity, Efficiency
The Current Situation• Processing time typically
was 3-5 business days. • With the increased volume,
turn-around has often slipped to greater than 10 business days.
Accounts Payable Volume, Capacity, Efficiency
Sometimes the line is too slow...
Accounts Payable Volume, Capacity, Efficiency
The Current Situation• Departments are expediting
more.• AP has shifted staff, but the
increase in expedited payments is increasing costs and decreasing efficiency and effectiveness.
Accounts Payable Volume, Capacity, Efficiency
• Expedited requests present a higher fraud risk and as a result require more careful review.
• AP staff literally walk requests from department to department to obtain immediate review and approval.
• AP staff review the prior day’s requests to ensure nothing fell through the cracks.
Expedite Facts
Accounts Payable Volume, Capacity, Efficiency
• Expedited requests are often poorly prepared and require extra effort to obtain complete documentation and approvals.
• Expedited payments typically consume over 25% of the total AP expenditure review staff capacity.
• Expedite volume is up more than 12% over FY2016.• AP averages more than 15 expedited payments per
day and occasionally processes 40 or more.
Expedite Facts
Accounts Payable Volume, Capacity, Efficiency
A typical next-day payment costs AP $34 and this added time significantly slows all other processing.
Accounts Payable Volume, Capacity, Efficiency
Why This Is Significant• Subsidizing another processor position
from increased expedite fees could take average processing time from 10 days to fewer than 5.
Accounts Payable Volume, Capacity, Efficiency
Nobody likes to wait…
Accounts Payable Volume, Capacity, Efficiency
… but sometimes you have to pay to play.
• There are many legitimate situations that demand expedited processing. That’s OK… but the cost of processing should be borne by the requesting department.
Accounts Payable Volume, Capacity, Efficiency
Expedite Proposal:
• Raise the Next-Day fee for expedited payment from $12 to $32.• Raise the Same-Day fee for expedited payment from $24 to $48.• Make all expedited payments subject to expedite fees.• Use the proceeds from expedite fees to add processor capacity and reduce
overall processing time.
To account for the cost and to provide a disincentive for submitting expedited requests, the fees should be raised.
Accounts Payable Volume, Capacity, Efficiency
Proposed Timeline:
• Initial Announcement – November 10• Notifications for Expedite Submissions – Dec. 1 – Dec. 15• Final Announcement – January 2• New Fees in Effect – January 15
Accounts Payable Volume, Capacity, Efficiency
Thank you…