Client Profile
The client is a 2.5B+ leading global beauty and cosmetics company with a diversified portfolio of 15+ brands sold in more than 150 countries. Publicly traded in the New York Stock Exchange, their products are sold through a variety of channels including Big Box Retailers, High-End Department Stores, Convenience Stores, Beauty Salons, and E-commerce.
Business Challenge
The vicious cycle of AP manual processing, errors & delayed payments
The company had successfully consolidated its Americas’ Finance & Accounting functions from several business units and locations into a hybrid shared services model by outsourcing its accounts payable function and other accounting processes to Auxis BPO Center in Costa Rica.
Concurrent with the BPO migration, the client migrated 2 of 3 business units to a new ERP (SAP) while leaving the third business unit in its legacy ERP. Throughout the implementation, several poorly executed technology enhancements and process changes within the Procure to Pay process were impacting the client’s ability to effectively manage the Accounts Payable functions.
Key AP challenges included:
- Disrupted EDI processes significantly increased the number of manually processed invoices leading to significant use of temps and overtime to keep up with volume and an unacceptable rate of processing errors.
- Upstream and downstream process changes created 3-way match exceptions. Exceptions were cured through manual processes and prevented the invoices from being entered into the ERP.
- The client did not have a consolidated and accurate picture of AP aging and total outstanding liabilities leading several vendors to put the client on hold due to payment issues.
- Payment delays spiked vendor inquiries and hold which creates even more manual work and delays.
Finally, at a point of desperation, the client turned to Auxis as its BPO partner to help stabilize and fix the broken Procure to Pay function.
Solution & Approach
Transforming AP through Process Redesign, Automation & Analytics
Auxis quickly mobilized a team of experts in accounts payable process improvement and BPO operations practice to perform a rapid review and triage of current issues. The review included:
- Walkthroughs and strategic interviews with key stakeholders to understand pain points.
- Issue identification & prioritization to support deeper actions based on root cause analysis.
Upon completion of the review, Auxis constructed an action plan with a two-pronged focus:
Short-term triage activities to quickly improve visibility, quality, oversight, and responsiveness to stabilize the AP function so that the team could work towards longer-term process improvement initiatives:
- Consolidated 10 separate mailboxes for invoices and inquiries into a newly implemented Sysaid service management tool to track and manage invoices and exceptions.
- Utilized RPA UiPath to pull data from various systems into a data warehouse and created real-time PowerBI dashboards to provide one version of the truth for Key AP metrics including:
- Size of liability
- Accurate aging
- Time to process
- Accuracy by processor
- Exception backlog statistics
- Implemented daily cross-functional standup meetings in order to review manage and cure the exceptions backlog until backlog returned to normal levels.
- Long-term process improvements to achieve higher levels of sustained efficiencies and automation:
- Implemented robust Quality Assurance and Performance Management processes where the processing team would perform a QA audit on significant samples of invoices processed by their team members in order to provide quality and efficiency stats. Individual and team performance was reviewed daily with the processors in order to drive performance.
- Identified and tracked exception types in order to prioritize root cause analysis of most common exceptions and streamline the process to cure exceptions.
- Restored EDI processes that broke during the various system conversions greatly reducing the number of invoices processed manually.
- Reconfigured 3-way match automation tool in SAP in order to allow further automation of the 3-way match process and to utilize workflow to close match exceptions.
- Launched Continuous Improvement program along with a cross-functional client team to address other long-term fixes to the End-to-End Procure to Pay Process.
Whitepaper/Guides
Finance Benchmarks: Prophecy or Pretense?
Results
As their BPO partner, Auxis was able to completely transform the client’s AP function by bringing best-in-class practices and automation while allowing the client to shift from processing transactions and fighting fires to focusing on P2P continuous improvement.
Key tangible results have included: