Quality and Productivity Database

Descriptive Title of Proposal: Facilities & Services (F&S) Invoice Workflow Project
Year Submitted 2016
Awarded Honourable Mention (Themed Category)
Person(s) Responsible for the Idea
Name Title
Darrel Fernandopulle Director, Finance – Facilities & Services
Name of Institution University of Toronto
Office Address 255 McCaul St, 4th floor
Toronto, Ontario M5T 1W7
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Telephone: 416-978-6858
Email Address: Email hidden; Javascript is required.
Name (Senior Administrative Office of the Institution) Ron Swail
Title (Senior Administrative Office of the Institution) Chief Operations Officer, Property Services & Sustainability
Office Address 255 McCaul St, 4th floor
Toronto, Ontario M5T 1W7
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Telephone: 416-978-5098
Email Address: Email hidden; Javascript is required.
Abstract

The Facilities and Services Invoice Workflow initiative is transformative in many respects. The workflow software automates the department’s invoice payment process (25,000 invoices per year) and significantly increases productivity for over one hundred staff members located across the university. The system actively manages the invoice approval and processing cycle and reduces risk to the department and the institution by: eliminating the potential for duplicate payments, ensuring timely approval of the department’s payables, enabling opportunities to garner early payment discounts and generating a number of customized management reports for high level management oversight. Budgetary controls are enhanced with this system due to real time data on their budget expenditures and accrual valuations.

Beyond the built-in internal controls and accounts payable functions, the software enables data mining that extracts key data from scanned invoices including consumption data and meter reading dates from utility invoices such as Toronto Hydro and Enbridge Gas, and automatically stores this data in an energy database - providing key metrics and up-to-date consumption data without staff time being utilized. The system goes far beyond the vanilla "invoice scanning software" by utilizing state-of–the art optical scanning technology.

Moreover, it significantly reduces paper and moves the department’s accounting and management group from a paper and pen approval system to a completely transparent electronic solution embedded with internal controls and full accountability. The department receives over 25,000 invoices annually and approximately 60% of these invoices are now received via email. The automated extraction and processing of digitized invoices received via email eliminates the printing of over 15,000 invoices annually.

The electronic invoice workflow system gives users the ability to view and approve invoices using SAP or a web interface which reduces the accounts payable cycle, promotes greater accountability and transparency. Beyond the dashboards and complex reports, it provides a robust search tool that any user can extract key information with a couple of clicks. Furthermore, the reporting capabilities provide new opportunities for management oversight on spend analysis which reduces risk significantly.

University of Toronto is one of the first universities in Canada to implement this technology in a SAP environment.

Criteria Please submit one paragraph describing how the proposal fulfills each of the evaluation criteria.
Transferability

Based on the success of the Invoice Workflow system, Facilities & Services sees the transferability potential of the system and has already initiated discussions and demonstrated the solution to key faculties within the St. George campus and UTM (UofT Mississauga Campus). In December 2014, the Invoice Workflow system was demonstrated by Facilities & Services and its benefits highlighted at a webinar to an international audience. Plans are underway to work collaboratively with other institutions such as Federated Colleges and UTSC (UofT Scarborough Campus) to showcase this innovative solution and discuss the transferability potential. This will certainly transform their accounts payable operations to a much higher level of efficiency and productivity. The system was pro-actively designed to permit sufficient flexibility and logic to facilitate transferability to other departments/faculties with relatively minimum customization.

In fact, other institutions that are SAP users will definitely see the value and transferability features of this project. SAP is considered one of the most powerful tools in the business and is a market leader in enterprise application (ERP) software. SAP Canada serves more than 10,400 customers in 25 industries including Higher Education. Worldwide, SAP customers account for 87% of the Forbes Global 2000 Companies. Furthermore, 74% of the world’s transaction revenue touches an SAP system. This project provides a proven solution for the SAP customer looking to enhance efficiency and leverage it with cutting –edge technology. This end-to-end invoice process optimization solution utilizes OCR (optical character recognition) technology for accurate capture, automated routing and workflow for faster processing and real-time reporting and analytics.

Facilitating the transferability of this project is not complicated – Facilities and Services worked with a third party vendor who also has a strong company presence working with 1/3 of the Fortune 100 companies that are SAP users. Working collaboratively, a customizable solution was found for F&S’ unique business requirements and the same can be done for future transferability opportunities. The most important aspect of the process would be to start with a clear understanding of business requirements to ensure that this flexible solution is mapped accurately to meet these requirements at the project blueprinting stage. Having a strong understanding of business needs and requirements will also better prepare the project team to understand where customization (if any) is required to facilitate transferability of the solution.

Quality Impact

Workflow System eliminates key punch errors resulting from manual data entry thereby creating a much higher accuracy level. The system also identifies and gives detailed warnings for possible duplicate invoices and payments beyond what is currently provided by SAP enhancing the department’s internal controls. Overall, the system creates a shorter accounts payable (AP) cycle – vendors get paid on time and F&S customers in turn get billed for work done on a timelier manner. Timeliness of billing is of paramount importance to the higher education sector since academic division budgets may either get exhausted or get rolled back at the end of fiscal years. Consequently, AP and AR (Accounts Receivable) staff receive a much lesser number of vendor and customer queries on why they have not been paid or billed yet, etc. Staff can now dedicate their focus to more qualitative, value-added tasks. Automatic email reminders from the system with programmed escalations also spur faster approval of invoices resulting in a shorter AP cycle and improving the quality of service the department provides to its customers – the academic units. The quality of information at month end and year end has improved tremendously since one could ascertain the value of accruals at any given time with the click of a button. The detailed audit trail and the reporting functionality of the system offering several customized and standard reports provide key management information identifying purchasing trends and user-behaviour trends thereby safeguarding the reputation of the department and of the University.

Since the F&S Invoice Workflow System provides greater accountability and transparency, it demonstrates our dedication to advancement in making our operations more efficient and reduces our exposure and vulnerability and shows that U of T employs its best practice efforts to be the best not only in the areas of academia and research, but also in making its operations and processes one of the best not just in Canada but also compared to its peer institutions in North America.

F&S is a large department - consisting of 30 different sub-business units identified for the purposes of the invoice workflow system and over 100 users/approvers. So this project definitely has a broad impact, not only within F&S but also throughout the university. The system though sophisticated, is user-friendly, and a similar system has not been implemented at the University. It involved a lot of planning and collaboration from identifying business requirements, software/system planning and development stage, testing phase, training document development and end-user training, to the actual live implementation of the system. From its launch in August 2014, the project has demonstrated and delivered in terms of expected qualitative outcomes – it’s encouraging to note that staff and users alike proved to be very adaptable in learning and utilizing the new system and speak highly of its features and benefits. This ambitious project began with a vision for an efficient application that will streamline and improve AP processes, and after eighteen months, we can confidently state that the solution and performance has even exceeded our lofty expectations.

Productivity Impact

The Invoice Workflow System boosted the productivity of the department through automating a lot of the processes in the AP cycle that used to be done manually, such as manually date stamping invoices (done twice – first when it was received from the vendor and a second time when it was returned after approval), printing and manually scanning invoices that were received via email, manually entering data to SAP, sorting and filing invoices, etc. For accruals, staff would have to manually log invoice data in spreadsheets when sending invoices out for approval and reconcile them when they are returned after approval. This tedious, labour-intensive exercise is no longer required as the value of accruals at any given time could be ascertained within seconds now. The system’s advanced search query capability reduces the time and effort that AP staff and approvers have to make in order to answer questions from vendors and customers since they no longer have to manually search and retrieve copies from filing cabinets – they can simply pull up an electronic copy from the system and the system will tell them exactly where the invoice is since the system gives AP staff/approvers the ability to identify the location and stage of any invoice at any given time. The power of information has been decentralized! The automatic capture of the utility meter, consumption, usage periods, etc. and the capability to download the data to spreadsheets eliminates the need to manually maintain this information saving staff time and cutting down on data entry errors. The Invoice Workflow System enhances productivity not only of the Accounts Payable department but the productivity of the F&S users/approvers as well. It eliminates a lot of the manual processes involved such as keying data, making multiple copies, tracking where the paper copies are, requesting for invoice copies from the vendor thereby increasing the propensity to make duplicate payments, etc. – this eliminates unnecessary and tedious amounts of manual work and enables staff to better employ their time to more qualitative and productive tasks. The system also enables non-SAP users/approvers to use the web to look up information with regards to invoices eliminating the need to go to the Accounts Payable staff in order to source this information. Management now has access to better spend analysis reporting and can review approver behavioural patterns, which leads to greater internal controls as well as more timely and informed decisions.

Due to the automation of accounts payable processes and the system’s ability to extract key performance metrics and benchmarks, it has paved the way for the department to introduce a "work from home" program. The advantages of this working option, is bound to improve staff morale and result in further productivity gains. The automated extraction and processing of digitized invoices received via email eliminated printing over 15,000 invoices in the initial year. This equates to more than 80,000 pages and is expected to increase as vendors are opting to deliver invoices electronically due to its obvious

benefits. This project has not only a tremendous productivity impact but also an impressive sustainability impact!

Since launching it in August 2014, the new Invoice Workflow system generated savings of $200,000 this is a very conservative estimate of savings considering all the productivity impact stated above. The system also identifies potential duplicate invoices at a more granular level, reduces key punch errors due to the advanced OCR features and facilitates the garnering of early payment discounts. With Facilities & Services processing over 25,000 invoices annually coupled with the increasing demand for useful information, it was essential that efficiency and accuracy had to be raised to a significantly higher level. The F&S Invoice Workflow system implemented in August 2014 has definitely achieved this objective.

Innovation

The Facilities and Services Invoice Workflow program is innovative and transformative in many respects. The use of optical scanning technology significantly reduces the manual data entry function (thereby minimizing key punch errors) and provides new opportunities for data mining providing key metrics for the department. For example, the automated data capture and extraction of up-to-date consumption of electricity and gas for each meter without staff time being utilized to manually enter this information in spreadsheets. Several key utility invoice data that are auto-populated by the OCR technology (such as consumption, meter number, meter reading dates – from/to, demand KVA, etc.) would normally not be available in SAP. The solution is advanced to the point where this information is electronically transferred to a data base at the scanning stage and customized reports facilitate the comparison of key metrics with prior period data and highlights outliers to the customized tolerance

limits. The system auto-routes certain categories of invoices direct to the approvers without requiring any "touches" from accounts payable staff. If "no-touch" posting is required, the system will permit that feature too. The solution is completely integrated with the ERP system since it resides within SAP and therefore, the user does not have to toggle between systems or modules to view purchasing records or for account validation checks or to check funds availability. The electronic invoice workflow system gives users the ability to view and approve invoices using SAP or through a web interface which reduces the accounts payable cycle while promoting greater accountability and transparency. It provides a robust search tool that is definitely more efficient than trying to go through a manual filing system. The solution integrates with our accounts receivable Customer Statement report thereby allowing the academic divisions (our customers) to view actual invoices relating to their charges - promoting greater accountability and transparency. The technology and system design enhances the scalability of the workflow solution to other non-financial functions within the university, potentially such as human resources and admissions. The workflow software automates the department’s invoice payment processes for over 25,000 invoices annually, of which, approximately 60% of these invoices are now received via email. The automated extraction and processing of digitized invoices received via email eliminates the printing of over 15,000 invoices annually. From a sustainability perspective, this equates to not printing at least 80,000 sheets of paper annually! The percentage of invoices sent via email is rapidly growing due to it resulting in an even faster invoice processing cycle. The automation of the accounts payable process along with the technological solution implemented (Kofax for scanning, OCR and data capture and SAP for workflow) and the ability to extract key performance metrics and benchmarks, paves the way for the department to introduce a "work from home" program. The system actively manages the invoice approval process enhancing the department’s internal controls and reduces risk not only to the department but also to the institution - specifically, it eliminates the potential for duplicate payments, ensures timely approval of the department’s payables which will foster opportunities to not lose on early payment discounts.

This project effectively illustrates how innovation can elevate administration and operational processes. The Invoice Workflow System was identified by the Education Advisory Board (EAB) as best practice and we are one of the first universities in Canada to implement this system in a SAP environment. It replaced the inefficient manual paper approval process and elevates the administration, approval and processing of invoices to a much higher efficiency level.