Case Studies, White Papers, Testimonials & Presentations

IPS Revolutionizes Accounts Payable For a Global Advertising Agency

Apr 25, 2013 10:53:14 AM

In most businesses, an incoming invoice from a vendor is a liability. It represents money you have to pay for a product or service you purchased.

For a successful advertising agency, however, a vendor invoice is both a liability and an asset. The agency charges its clients for all the outside services and expenses that go into producing advertisements. The timeliness and accuracy of supporting documentation for each invoice is critical. That means the stakes are high when it comes to processing accounts payable efficiently.

But “timely” and “accurate” are hard to achieve. Invoices have to go to multiple approvers for validation. A single invoice may reflect work on multiple jobs, which means multiple approvers passing paper from person to person in multiple cities around the country or around the world. At any given time, billable charges are stacked up on desks, email inboxes and desktops throughout the organization.

Or they were, until our client adopted an automated AP processing and approval workflow solution powered by IPS.

Making the Rules

Girls using computerAP managers knew they wanted to lower costs and improve performance. The question was how to get the greatest value for their invest-ment of time and money.

IPS offered a proven approach to turning manual processes into digital ones. Instead of people pushing paper, IPS digitizes all documents with its Digital Mailroom and Intelligent Capture services, and provides a workflow solution that ensures the right invoice goes to the right approver instantly. The all-digital workflow slashes turnaround time, reduces workload, decreases errors and increases the accuracy of billable charges.

Making it work, however, is not really about software and systems – it is about hard-won knowledge and expertise.

“It comes down to business rules,” says Brad Walsh, Business Analyst for IPS. “The routing of an invoice depends on the client, the product being advertised, the particular job, and the dollar amount – even on security requirements. The biggest challenge – and the part that provides the greatest value to the agency – is defining the business rules so that IPS Digital Workflow™ can enforce them.”

Six Sigma Process

For our client, the process starts when invoices arrive in the mailroom as paper or by email or Web download. Whatever the source, the IPS Digital Mailroom™ converts the invoices to standard digital format. IPS inspects 100% of the digital images to ensure their completeness and legibility.

IPS Intelligent Capture Services™ extract required data from the invoices and validates it against vendor master files and purchase orders. This builds a complete digital record of the invoice for loading to IPS Digital Workflow™ and ultimately to MediaOcean, the agency’s financial system. Once the invoice and supporting documents are complete, IPS loads the documents into ImageServ™, IPS’ secure digital repository.

That’s how it works when invoices meet requirements. When they don’t, IPS’s experience with exception processing comes into play.

“Eighty percent of incoming vendor invoices are usually complete and accurate,” said IPS CEO Greg Bartels. “It is the remaining exceptions that create most of the work for the AP department. When you automate, the same thing is true. IPS automates and streamlines 80% of the ‘straight-through’ invoices, as we call them. But when there is a processing error, we don’t just pitch it to the client. Instead, we turn to our Subject Matter Experts to fix problems ranging from missing PO numbers to mismatched remittance addresses – anything that a skilled IPS operator can resolve using their years of invoice processing expertise.”

As a result, the only exceptions reaching AP managers are true exceptions. “Let’s say an incoming invoice is for an amount that is higher than the remaining balance on the purchase order,” said Brad Walsh. “That’s a meaningful exception, not a processing error, and it deserves the client’s attention. We load the document and metadata to the exceptions queue in the workflow for action, and the agency’s financial specialists go to work.”

The Workflow at Work

For the agency, IPS Digital Workflow gives authorized users throughout the organization secure digital access to an automated approval system for accounts payable. Each day, IPS uploads newly received invoices as PDFs linked to electronic invoice data. The system automatically alerts approvers of invoices waiting their approval and starts the clock running on each invoice. Approvers link through to the workflow system and sign off on invoices awaiting their attention. Accounts payable staff monitors progress and receives alerts to invoices that have been in an approver’s queue for too long. Meanwhile, the agency’s financial specialists monitor the exceptions queue and take the actions necessary to clear problems. As invoices are approved, the workflow software posts the payable and GL data directly to the agency’s MediaOcean financial system. The digital documents remain available on IPS’s ImageServ repository for records retention, review and audit purposes.

Man watching tabletWorking with electronic documents eliminates paper-pushing and makes approving vendor invoices more manageable. With multiple vendors working on multiple projects, a single vendor invoice may contain charges relating to different clients, products and jobs. In the days of paper, the original invoice had to be copied and make the rounds among approvers, waiting on each desk for action. With IPS Digital Workflow, each approver sees the electronic invoices with the coding just for that approver. The time required for signing off on that invoice drops from weeks to days, and more billable expenses are accurately charged back to the appropriate jobs and clients.

Bottom-Line Benefits

IPS has been working with this global agency for many years. Recently, we have added the agency’s specialty healthcare unit, which provides marketing and advertising services to the healthcare industry. The level of complexity in healthcare marketing is much greater and the business rules are far more complex. But the same methodology and all-digital process is delivering the same results:

  • Savings of 50% per year over manual processing
  • Increased data accuracy to Six-Sigma 99.997%, virtually eliminating defects
  • Increased accuracy in charging billable expenses back to jobs and clients
  • Improved agency cash flow with faster invoicing of billable expenses to clients
  • Improved processing of vendor invoices from an average of 18 days to 6 days
  • Improve working relationships with vendors through more timely payment

“We are very proud to have one of the world’s top advertising agencies as our client,” said IPS CEO Greg Bartels. “It is a partnership that has delivered great results – their passion for performance, our systems and expertise, and a shared commitment to getting it right.”