There's So Much Information Here

When Loette King came to Emory University in 2000, accounts payable had a stated cycle time of five days. In reality, however, it was taking somewhere in the vicinity of 20 to 25 days to turn an invoice into a disbursement—the precise number is uncertain because there were no metrics in place to measure it. King and her team rather quickly reduced the actual time to five days by putting in measurements and giving the staff goals and objectives, and further still by beginning to leverage the Internet to facilitate communication and processing. Today the officially-stated cycle time is still five days though the actual turn time—measured from when a document is received to when the request is scheduled for payment—is better than half that.

Emory University, founded in 1836, is one of the leading research universities in the United States. It is perhaps best known for its prominent medical school, its Candler School of Theology, the Goizueta Business School, and its outstanding undergraduate college of arts and sciences. A centralized accounts payable department serves nearly 400 different departments within an organization comprising education, research, and health care, in addition to such entities as the Carter Center and the Michael C. Carlos Museum, which houses the largest collection of ancient art in the southeast United Sates.

King, with more than 10 years of accounts payable experience, leads a team of eighteen supported by two dedicated IT business analysts. She reports to David Thurston, assistant vice president of finance, who reports to the CEO. The department’s scope is broad (see sidebar), including responsibility for some areas that in a corporate setting might be handled by other groups.

Emory’s accounts payable department processes a lot of paper (see sidebar) but has greatly increased its efficiency since King came to Emory. Under Thurston, King and her team continue to shepherd hundreds of departments toward improved processes, despite a general culture resistant to mandates. King is sly. She knows that changes to Emory’s accounts payable processes will win over her customers once they try them. So she introduces a new procedure gently, making it optional but encouraging people to try it. By the time she’s ready to mandate it, nearly everyone has adopted it.

King came to Emory from Allegiance Healthcare in Albuquerque, New Mexico, where she held various accounts payable-related management positions. She was interested in exploring new opportunities, however, and says “I came and visited [Atlanta] several years ago and just really fell in love with the place. … I just decided this was where I wanted to be.”

Besides reducing cycle time, the challenges facing King included reducing paper flow, increasing communication, providing timely information to customers, and providing first-class customer service. The Internet would be the key in meeting all of these challenges.

Emory’s accounts payable system is off-the-shelf but internally-enhanced software from E-Plus, a shared purchasing-AP system which was also used for T&E and other expense reimbursements. Emory processes close to 15,000 paper invoices per month, which are manually keyed; they use a scanning system (image-only, not OCR – though that’s planned in the near future). Emory’s accounts payable also receives electronic invoices via diskette or FTP from a handful of its largest vendors.

The university has a purchasing card program with GE-MasterCard. The p-card has been very popular, and transaction volumes continue to increase. “Last month we hit 8,000 transactions, which I love because that means 8,000 less invoices in my shop,” King notes. The pcard is administered through the purchasing office, with which King has a close working relationship.

Utilizing the Internet

Emory moved T&E and other expense reimbursements out of the E-Plus system into a home-grown, Web-based system as the first step in a program designed to make use of the Internet that has improved processing, provided visibility and increased customer satisfaction.

“My director, David Thurston, is a very forward-thinking, technology-driven individual, and when I arrived at Emory, he had these visions of things that he thought should or could be done. We looked at the way Emory had been doing business and what we could do to make it easier and more efficient.”

They started simply, first by putting forms online, then adding automation.

“It was really just sitting down and brainstorming,” King recalls. “This is how the paper form works. Let’s see if we can duplicate that on a Web-based form.” Once that was accomplished, they would look at what features they could add. “For example, our travel and expense report: When we first put it out there, it was really just a mirror image of the paper form, but it would do all the adding for you.”

The next version was more sophisticated. If employees used their GE travel card and listed items in particular columns, AP would split the reimbursement out and pay GE charges directly while paying the personal expenses to the employee. Next came management reports, showing managers what is being spent on travel. “Each step we go through gives us a little bit more,” King says.

Out of the black hole

“You always hear in any AP shop pretty much, that folks feel like once they send something to AP, it’s lost in this black hole and they don’t know what’s going on with it,” King says. “One of the things that we wanted to do was to be able to communicate back to our customers the status of their documents.”

With Emory’s online processing, once someone submits an expense reimbursement request, they receive a “thank you” e-mail that confirms the request and tells them what to do with their receipts. When those receipts reach AP and are scanned, the filer gets another e-mail confirming that AP received the paperwork. Then when the reimbursement is paid, they are notified by e-mail.

“That adds a level of communication, and in turn, it dropped our phone calls significantly,” King notes. “They also don’t have to keep a paper copy in their offices because they can retrieve that online.”

The online processing of expense reports eliminated re-keying by AP, saving time and cutting data entry errors.

“Our customers enter this information,” says King. “We just verify the documentation, put in our voucher number and hit a button, and it goes straight to check writing.”

Success leads to success

The introduction of the program quickly won customers over, and the Internet-based system has continued to grow from there. The Web site (www.finance.emory.edu) is broader than accounts payable, including the entire Emory finance division. In addition to accounts payable, sections include bursar’s office, cash operations, controller’s office, grants & contracts, payroll, and student financial services. The presentation of information and services is customer-oriented.

“You go there,” King explains, “and you can do pretty much anything you need to get done in the finance world. AP took the lead on that and now the other departments are starting to come up to speed with it because we’ve had a lot of success with it.”

Success with reimbursements and information exchange has led to further development of, and increasing reliance on, the Web site. “We’ve got reports that are generated every month at month-end for people to review their budgets. We have now brought that online as well … people can reconcile online,” King reports.

Emory encumbers funds to their purchase orders, which resulted in a problem. If an order was cancelled or changed, AP got calls asking them to remove the encumbrance in order to free the funds. King had one employee working virtually full time removing encumbrances during year-end close. The process has now been moved online where managers can take care of it themselves.

“That is how we develop our content on our Web site,” King says. “It’s looking at where we get the most phone calls. What are people doing? How can we make it easier?”

Visibility

“A lot of our content and the tools that we develop are a direct result of feedback from our customers,” King says. “And every time we launch something we’ll have a test group—‘go out there and use this, let me know what you think, what should we change? What would you like to see?’ And we take those suggestions and build on them.

“One of our other items on the site is that if you know an invoice number or vendor, you can go and see if an invoice has been paid. It will bring up a … mock check, show you the check date, where it went, the account number, the amount—our customers just love that!”

King says, “My next step is for them to be able to type in an invoice number and if it has not been paid we have a mock invoice that will come up that will say ‘yes we have this, but there’s a problem with it.’ A lot of times if it has not been paid, we get the phone call ‘Well, where is it?’ It’s in the system, but we’re waiting on an account number or approval or something. Once we get that in place, that’s going to be a real hit.”

Invoices

The front end of Emory’s payables also has changed and is changing. When King arrived, she found that accounts payable was copying every single invoice and shipping it out to the myriad departments with a notice “If we do not hear back from you in five days, this invoice will be paid.” Of course, nine times out of ten the departments did not respond. AP would scan the invoices on the back end.

King had accounts payable move scanning (a system called “Optics”) to the front end, then made the images available to the departments via the Web. King says, “As soon as the invoice comes in, it’s voucher-stamped, scanned, and keyed. Once it shows up on anyone’s report in a department, they’ve got a voucher number and can go straight to the Web. There’s the image right at their desktop.”

AP has two individuals to work the exception invoices. They e-mail the images to the appropriate department to get a missing account number or approval, then complete processing the invoice. So instead of faxes and interoffice mail, the majority of work passes electronically.

Initially there was resistance, but three years later it’s a hit. “People are getting rid of filing cabinets now,” King says. “They know that it’s on the Web, it’s stored, and if they ever need to see it again, they can get it.”

The whole process has proven much more efficient. “And the turnaround time and response rate are a lot higher,” King says.

King purchased split screens and AP staff can do heads up data entry. But she is anxious for the next developmental step—moving to optical character recognition (OCR) scanning to eliminate most of the manual data entry.

Tech support

King is very fortunate to have two IT business analysts dedicated to accounts payable. The ability to walk a few doors to ask “Mark, James, can we do this?” and hear, “Yeah, we can do it,” is a tremendous advantage over having to jockey for position on the project list of an IT department.

“I don’t think we’d be as far along as we are now if we didn’t have those dedicated resources,” King agrees. “Some of the things we have presented to the campus have been so favorably received that now these two guys are being asked to attend planning sessions for other areas and getting involved in a lot of other things.”

Future focus

King sees moving 1099 processes onto the Web, including instructing customers in IRS requirements. Business continuity planning is on her to-do list, as is increasing ACH disbursements. OCR scanning is a next step toward less data entry. Training is big both in finance as a whole and in accounts payable.

“Our focus is to continue our service,” King notes, “yet my objective for this coming year for my staff is education … as well as educating our customers more. So we’re spending time on those things—seminars, AP certification—things like that.”

“There is always room for improvement but over the last three years we’ve made significant strides. You can always get better. One of my aims too is to get away from data entry and find more value-added tasks that we can do, because there is so much information here—getting that out to the people that need it to make decisions, that’s what we’re trying to do now, instead of being a data entry shop. That’s what we’re focusing on.”