Shared, Services, Accounts, Payable, Offices, Centre, Company

Optimising through shared services: a successful partnership

01 Sep 2003 | (Case Study)

In 1999, supply chain company MSAS Global Logistics, now merged with Exel, realised that it had a problem. Fifteen dispersed accounts payable offices were doing the same job. The resulting communication problems and overlap in invoicing tasks led to inefficiencies, delays and unnecessary expenses. We take a look at how they broke the deadlock by turning to Tranmit, the e-payables solutions provider.

Following a radical rethink of its operations, Exel opted to transform its accounts payable operation. Rather than operating dispersed offices, the company consolidated its accounts payable department under one roof by opening a shared services centre in Dublin. In order to further streamline the processing of invoices, Exel incorporated new technology that enabled employees to index and track paper invoices electronically. In addition to increasing the company’s overall efficiency, these moves saved the company £500,000 in one year.

Back in 1999: an office in every country

Imagine coordinating 15 accounts payable departments scattered across different countries and regions. For Exel, a pan-European supply chain firm, dispersed accounting offices meant dealing with currencies, mail, phones, different procedures for each department and a whole lot of other administrative headaches.

Needless to say, these headaches cost time and money. But back in 1999, that was just how things were done. Invoices and purchase orders were processed at local offices and few standard procedures were in place to track problem invoices or accounting errors.

Exel operates freight services on behalf of other companies, relying on a network of suppliers in 15 European countries. These activities generate more than one million invoices a year. With the evolution of e-mail and other digital technologies, Exel realised that it could make use of shared services to centralise and automate its accounts payable processes, thus cutting costs and improving efficiency.

Shared services and the right technology

To do this, Exel moved all accounts payable activities to one location, and implemented Tranmit’s Sprinter applications to manage and process the flow of electronic images. Rather than operating from 15 different accounting offices, Exel now routes all its accounts payable through one accounting centre in Dublin. By doing so, the company resolved innumerable problems and inconsistencies that reared their ugly heads when the accounts payable offices were scattered across Europe.

Tranmit’s Shane Hussain explains: “Before we came into the picture, Exel used to process invoices within the countries themselves. The suppliers would send the invoices to the accounts payable areas each country.”

“Exel’s old, distributed way of processing accounts was fraught with inherent inefficiencies."

The old system: fraught with inefficiencies

Exel’s old, distributed way of processing accounts was fraught with inherent inefficiencies. Over and above the mere logistics of communicating between international offices, the old system was subject to endless delays and frustration. Communication between regional offices was slow and expensive.

Multiple offices meant multiple discrepancies

When Exel delivered goods, employees had to match invoices received in the countries involved with the purchase order before Exel could pay suppliers. Employees often failed to follow order procedures. As a result, invoices frequently lacked information, making it difficult for employees to locate the corresponding purchase order.

Exel had no universal process in place for resolving queries or authorising payments. When accounting inaccuracies occurred, Exel staff had to manually identify, investigate and track discrepancies. Regional offices cost the companies time and money in simply communicating between one another in order to resolve invoicing inaccuracies.

The move to shared services

In 1999, Exel management resolved that the company should become more efficient in processing international invoices. It became apparent that, in order to remain competitive, the company needed to redesign its invoice approval process, automate delays, establish an audit trail – and centralise its accounts payable operations.

Exel began looking for a solution that would work with its present procurement system. The technology needed to increase productivity and improve the reliability and control of the company’s cash flow.

“Exel decided that they would collapse all of these localised accounts payable finance areas and actually set up a shared services centre in Dublin,” Hussain said. “The Tranmit Sprinter system was the appropriate tool to facilitate the invoice approval workflow of the shared services centre in Dublin.”

Compacting 15 offices into one

Exel centralised its operations and integrated Tranmit's Sprinter application with its existing procurement technology. The new technology incorporated all of Exel’s accounts payable procedures, thus ensuring that the process was transparent and auditable. By moving operations to one central shared services centre, Exel streamlined its accounts payable system, and by doing so increased efficiency. By providing fast, accurate accounting and payment, Exel also improved its relationships with its clients and suppliers.

"Exel wanted to make sure that the service levels they were providing to the customers and the suppliers were indeed significantly better than when the invoice processing was local,” added Hussain.

“By providing fast, accurate accounting and payment, Exel also improved its relationships with its clients and suppliers.”

Centralised, shared services at work

Now that the Dublin-based European services centre has replaced Exel’s network of accounts payable offices, forty employees process the company’s European invoices. When invoices arrive at the Dublin centre, they are scanned and indexed into a central system for processing.

Within 24 hours of an invoice arriving at the Dublin centre, employees have matched the invoice to its corresponding purchase order. Within another 24 hours, the Dublin employees have distributed unmatched invoices, to be investigated. When there is a discrepancy, the centre’s Sprinter application kicks in, and begins following traceable steps such as contacting the supplier and e-mailing the originator of the order in order to find the source of the problem.

Because all documents are processed electronically and reside on a central system, Exel can track the path of each transaction. When a problem arises, employees can follow a defined, documented path rather than engaging in a time-consuming paper chase.

“When a problem arises, employees can follow a defined, documented path rather than engaging in a time-consuming paper chase.”

Because all documents are processed electronically and reside on a central system, Exel can track the path of each transaction. When a problem arises, employees can follow a defined, documented path rather than engaging in a time-consuming paper chase.

Streamlining… and saving money

By moving dispersed regional offices into a centralised shared services facility, Exel estimates that it has saved £500,000 per year. The company has removed duplicate tasks from its accounts payable process, improved customer service, strengthened its relationships with vendors, and saved money on telecom bills.

Additionally, Exel’s more streamlined and centralised accounts payable process means that, although the work is being done by less staff, anomalies are decreasing, and all processes can be tracked and audited. In the long term, Exel estimates that by centralising its accounts payable department, the company will cut queries to 10 percent.

Well worth the effort

Exel realised that, despite the effort involved, shifting internationally dispersed accounts payable offices to one shared services centre was an essential step in the company’s growth and development. By processing invoices and purchase orders all under one roof, the company has been able to streamline tasks that were previously carried out in duplicate at the company’s regional offices.

“Setting up a shared services centre is complicated because you have to overcome the issue of local accounts payable areas and to an extent the finance area without losing elements of control.” Shane Hussain

“Setting up a shared services centre is complicated because you have to overcome the issue of local accounts payable areas and to an extent the finance area without losing elements of control,” Hussain concluded. “The key is to make sure that what you have as a part of an overall setting up of a shared services centre is also a mechanism that actually provides visibility of all the transactions.”

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Fact file: tangible gains
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How shared services optimised Exel’s accounts payable

- Shortened the time between receiving an invoice and paying the supplier
- Saved £500,000 per year
- Cut back on phone, mail and fax expenses
- Used less office space
- Improved customer service
- Saved money on labour
- Invoices are processed faster, with fewer inaccuracies
- Provides an audit trail of all processes
- All invoices and purchase orders are scanned and made available online

About Tranmit

Tranmit plc is a leading provider of e-procurement and e-payables solutions to the corporate marketplace and developer of the award-winning Sprinter suite of products.

The company’s mission is to provide purchase-to-pay solutions that are truly modular and scalable to enable organisations to adopt e-procurement and e-payables at a pace that fits their organisation's requirements.

Visit Tranmit at www.tranmit.com
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About Exel

Exel provides supply chain management to a wide range of manufacturing and retail industries. Exel's comprehensive scope of logistics solutions encompasses the supply chain - from design and consulting through freight forwarding, warehousing and distribution services to integrated information management and e-commerce support.

Visit Exel at www.exel.com

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