JohnsonDiversey had the following process in place for handling invoices: the mail was received and opened; invoices were prepped and separated (inventory items, non-inventory items, PO, non-PO, and discounts), and then sorted by invoice date. At any point in time, if a vendor called about an invoice, someone had to sift through piles of paper to find it.

“Our turnaround time for our vendors was unsatisfactory, and all of this manual processing was keeping our personnel from verifying and approving invoices for payment,” recalls Anna Gilewski, JohnsonDiversey’s AP supervisor of process improvement and IT management. “We knew we needed to improve our performance.”

The Solution: Brainware Distiller
JohnsonDiversey decided something had to be done. Recently, the group had successfully launched an expense reporting solution. This solution gave them greater visibility into same-time reporting, how people were reporting, and insight into the approval workflow process. The company decided to do the same thing with invoice processing.

JohnsonDiversey considered a number of vendors before selecting Brainware Distiller as their end-to-end AP automation solution.

The challenge with the other vendors’ solutions was that they either required a specific template be created for each vendor invoice, or they relied on a dictionary of keywords to identify target data fields. For JohnsonDiversey, a global company with thousands of vendors, that meant a lot of IT support hours and lost productivity,

“We did look at several competitors of Brainware and found that Brainware’s solution best fit our needs,” explains Jackson. “We wanted something that wasn’t template-driven. We didn’t want to make our vendors conform to any kind of standardization. We wanted to keep our practice pretty much in place as it related to our vendors.”

Integration with their ERP systems was another concern. JohnsonDiversey had two systems in place: a legacy AS 400 system and an Oracle/JD Edwards solution. “We discovered that integrating Brainware with the existing ERP systems was very easy,” says Jackson. “There was very little IT work on our part.”

“Touchless Pass” Becomes a Reality
Jackson’s department was told that they would be able to process invoices without human intervention. But they did not believe the hype. “When we were first looking at the solution, we simply could not conceive of the results that we’re experiencing today. I wanted to believe that a touchless pass could become a reality, but I was skeptical,” Jackson states.
“As we work in the solution day in and day out, we are able to do things that I don’t think the AP industry even believes is possible.”

JohnsonDiversey defines the “touchless pass” process differently for Inventory and Non-Inventory items. For Inventory items, any time an invoice moves from OCR and extraction through a successful 3-way match (invoice, PO, goods received) directly into the ERP system it is considered a touchless pass.

For non-inventory items, a touchless pass occurs when the invoice moves from OCR and extraction through a successful 3-way match and automated GL coding into the proper AP review queue.

Today, JohnsonDiversey reports a 66% overall touchless pass rate – 89% of all Inventory invoices and 43% of all Non-Inventory invoices currently meet this criteria.

Tale of the Tape
On average, JohnsonDiversey processes 98,500 invoices from 7,824 vendors (95% are PO-compliant) with 2.2% Electronic Data Interchange (EDI) invoice production. The amount of time the AP staff spent on processing decreased from 64 hours/day (8 staff X 8 hours) to 15 hours/day (4.25 staff X 3.5 hours), even though the invoice volume increased.

Automation has allowed JohnsonDiversey to significantly reduce invoice processing cycles. “Pre-Brainware, we were happy if our invoices were being processed in 3 weeks, and 4 weeks was the norm,” says Jackson. “Right now we’re averaging 2 days.”

That, in turn, made it possible to increase the number of early payment discounts from 13% to 23%.

Immediately following the Brainware deployment, JohnsonDiversey reduced their invoice processing headcount by 5 people when they had originally estimated that number would be 2. They are currently processing more invoices, more accurately and in less time with 11 people than with the original staff of 16.

“We have recognized a 60% decrease in the overall cost from start to finish of processing an invoice in the AP department, but that’s just the tip of the iceberg,” says Jackson. “We were able to utilize staff in other areas and reduce duplicate audits, for example. All those savings factor in and would reduce that cost more significantly.”

JohnsonDiversey believes that improved visibility into the process has been a huge benefit. “Prior to Brainware, we had no visibility,” says Jackson. “The only visibility we had was that all the invoices were in some bin sitting on a shelf somewhere, 5 to 6 feet deep. And if someone needed access to one, it was a matter of running and scrambling and looking for that invoice. Often, we gave up and called the vendor to ask for another copy. With the audit trail available in Distiller, we can now see the invoice at every step in the process from start to finish.”

“We were never able to give our treasury department any kind of forecast of what needed to be paid,” says Jackson. “With the Brainware solution, we can extract reporting that helps us identify right down to the penny what will be paid, and, based on the terms, when it’s going to be paid.”

This also leads to a much smoother month and year-end close. “No one was ever able to take off that last week of the month. Every invoice had to get into the system. Today, people are generally gone by 4 or 4:30 on the last week of the month and we have the General Ledger closed in 4 days or less.” Jackson adds, “Instead of worrying about who is going to call in sick after working overtime for month-end close, I now have to tell sick employees to go home. This is such a dynamic place to work now, they think they are going to miss something new and cool if they stay home.”

Accruals used to be a nightmare. “When we were manually accruing, we had to set a $5,000 limit just to have some kind of a cutoff because we couldn’t possibly accrue for everything. With the Brainware solution we are now able to run a report and extract all invoices, regardless of dollar amount, and accrue for every single item that AP has ownership of at month end.”

Duplicate invoice audits are a thing of the past. Last year, JohnsonDiversey paid 10 duplicate invoices out of 98,404 (that’s .01%). In years past, the lowest audit score they had been able to achieve was 30 points. “Using Brainware, we are able to perform internal audits and recovery throughout the year. And when we do a check for duplicates at year end, it takes less than an hour to ID them and check their status of recovery. There is now no need for us to call in a third party auditor every year. I’m probably going to have one every 3 years and that’s just to get the warm and fuzzies that we really are as good as we think we are,” states Jackson.

Bonus Benefits
In addition to cost savings, productivity gains and better visibility, the implementation has had very positive effects on the department staff. Morale is up and absenteeism is down because repetitive, mind-numbing tasks have been replaced by more value-adding analytical work.

“Our employees are now engaged in SOX compliance, auditing issues, and guest auditing for our European office. We’ve been able to have them do coverage in general ledger or accounts receivable so that they get cross-training in other areas.” Jackson continues, “We are able to better audit our P-cards and our expense reporting solutions because we now have more time to do it. We are also finally getting a chance to do a cleanup on our Vendor Master File, something we could never attempt in-house before Distiller. The staff has been empowered and feels appreciated because they’re able to do more than just enter invoices every single day.”

“We actually have other departments looking to us to help them use technology to gain efficiencies in their departments because AP has done so well,” Jackson says.

Not Just For Invoices
The AP team identified another manually-intensive area within the department for Distiller to tackle – W-9 forms. JohnsonDiversey had eight file drawers full of the W-9 forms required for each vendor. At the close of each year, the W-9 forms needed to be accessible to do 1099 reporting. The 1099 reporting process would take at least one month from start to finish.

“Using Distiller, the 1099 process now takes 3 days. We have imaged all of our W-9s and can look them up on one of 3 parameters - Federal ID number, the vendor number, or the vendor name. We can immediately put our hands on that W-9 for reference and check it to make sure that we’re reporting accurately. In addition, we have improved vendor relations because we’re not constantly calling them and asking if they could please just send it one more time,” reports Jackson.