Lambeth Council highly commended for best AP/AR Solution [Case study]

highly commended 150x150 Lambeth Council highly commended for best AP/AR Solution [Case study]This year the Lambeth Council of London was highly commended by the Adam Smith Awards for the Best Working Capital Management/Financial Supply Chain/AP/AR Solution. With 214 entries spanning 25 countries and with every continent represented, this can be seen as a big honour.

In November 2011 Lambeth Council implemented RBS’s electronic invoicing (e-invoicing) hub technology to transition to a completely paperless purchase-to-pay (P2P) system of working with its suppliers, from local to national suppliers. The solution is already delivering benefits in a number of areas:

1

Cost savings

The project has enabled Lambeth Council to change its business transactions from a heavily manual scanning process, to one that includes fully automated scanning and electronic receipt of invoices. This alone achieved cost savings of approximately £25k in the first year with a further £100k (three FTEs) thanks to the removalof manual intervention, which is now performed by exception and which has reduced exceptions by over 65% due to the validation rules set-up in the system.

2

On-boarding

Over 2,000 suppliers have been migrated to a complete electronic process, from purchase order to invoice. This on-boarding was carried out by RBS to minimise efforts required by suppliers and aid the transition to the new process. The bank offered multiple options for support, from telephone, email and training material. A highly successful online training session, carried out by teleconference, resulted in 90% take-up by suppliers on completion.

3

Invoice performance

Lambeth Council aimed to improve its performance on invoice payments by 2% in the first year of implementation. It actually achieved 5% improvement, with 97% of payments now made on time. Performance for SME suppliers (ten-day payment terms) is also now high at 80%, against a target of 70%. The Council has a total number of 4,995 active suppliers, and 1,676 (or 33.5%) are SME. This has allowed increased automation of straight through processing (STP) to its ERP (Oracle) without the need for prior checking.

As Lambeth AP Manager, Giuliana Quadernucci, explains, “the [RBS, edt] solution totally transformed its supplier relationships”:

  • Improved reputation: suppliers now want to work with the Council because of its quick payment procedures.
  • Improved supply chain: the council can negotiate better prices in return for quick payment.
  • Reduced late payment charges: suppliers charging late payment fees now happen by exception as opposed to the rule.
  • Transparency and visibility: there is no expectation for the supplier to deliver goods without an official order.
  • On-time payments: the Council is now achieving 97%, compared to only 55% in 2004/5.

“No PO (purchase order) No Pay”

Lambeth Council was the first London borough to implement “No PO (purchase order) No Pay”, which enforces good practice on purchasing. It was also one of the first to implement centralised invoice receiving and invoice scanning in 2002. Having now moved to the RBS e-invoicing system, which manages scanned invoices as well as a complete e-invoicing process for its suppliers, it is demonstrating best practice through innovation.

Rigurous procement procedure

In obtaining this e-invoicing system, rigorous procurement regulations required it to advertise in the public domain to ensure a fair tendering process. Multiple departments were involved in the process and, at various stages, options and decisions were presented to procurement boards, with stakeholders across the Council assisting with the procurement process.  Continuous review and reporting to procurement boards continues after a contract had been awarded RBS, to monitor the success of the contract.

As Quadernucci concludes, “RBS has always responded well to our requests for changes to the system, which has enhanced the original requirements and resulted in an improved platform for both users and suppliers. We will continue to look at the market to implement further improvements to the system, as well as within our own finance system.”

Download the full case study here


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