WR Grace and Company Optmizes AP Processes to Reduce Costs and Achieve Best In Class Status

Bogged down by paper and manual processes, W.R. Grace and Company replaced a home grown system with Kofax data capture and workflow solutions to achieve greater integration with SAP and support the consolidation and optimization of AP processes worldwide. Since implementation, the chemicals giant has reduced cost per invoice from more than $7 to $1.50 in Asia and Europe, and from $5 to $2.25 in the U.S

Early on, W.R. Grace’s North American division supported 13 AP clerks who processed 20,000 invoices per month. They were overwhelmed by the paper associated with manual processing, and struggled to maintain accountability while 60 percent of invoices were lost during processing. Decision makers recognized the undeniable need to get rid of the paper and in turn, deployed advanced optical character recognition (OCR) technology. The solution captured the data directly from the invoices so the clerks no longer needed to type in the data a second time. It not only helped to dramatically reduce the number of lost invoices, but it also helped the clerks become more organized and allowed for email correspondence, rather than faxing, as a faster option to resolve problem invoices.

W.R. Grace still utilized its highly-customized, highmaintenance legacy solution for invoice routing. It’s limited integration with SAP was holding the company back. Clerks continued to input data into SAP manually until implementing the next phase of the Kofax solution. Working as a control center for incoming invoices, Kofax ReadSoft Invoices™ was deployed. The solution automatically matches invoice line item data against purchase orders and master data in SAP and then posts it in SAP. This important step eliminated manual entry and further drove AP efficiencies and visibility to the firm.

Prior to consolidating the company’s AP operations in Asia and Europe, the organization replaced their home grown solution with automated workflow to achieve tighter integration with SAP and lower cost per invoice. This enabled a tighter integration with SAP ArchiveLink for invoice images and an end-to-end streamlined process that delivers bottom line results.

“The process is simple,” declares Global AP Manager, Michele Blessing. “Once we get the invoice, we push it through [the] solution into verification. It gets verified in Kofax ReadSoft Invoices and then auto-posts if possible. If not, then we start workflows that go out for approvals, coding or any kind of PO update or fixes, freight approval—things like that. Then when it comes back, we will post it then process it for payment within terms.”

Combined with automated data capture, the workflow deployment reduced the company’s cost per invoice from more than $7 to $1.50 in Asia and Europe, and from $5 to $2.25 in the U.S. Invoice cycle time also significantly decreased, as 83 percent of payments were made electronically. The company’s discount capture rate climbed from 40 percent before automation to 85 percent, and for the first time, all stakeholders had complete visibility into the invoice process—whether an SAP user or not.

With Kofax ReadSoft Invoices solutions in place, W.R. Grace further consolidated its two primary AP centers in North America and the Philippines, which together process approximately 440,000 invoices per year. The consolidation saves the company $500,000 per year. Today, the company’s invoice processing performance has reached best-in-class status, and have seen tremendous benefits including

• Invoice cycle time of 2-2 ½ days
• Cost per invoice at 95 cents
• Annual savings of $500,000
• Complete visibility to monitor SOX compliance
• Easy management of audits
• Control to push global simple standards
• Improved vendor relationships and negotiations
• One accountable source for all payables

Even with these achievements, AP continues to improve efficiencies under Blessing’s direction. W.R. Grace works closely with vendors to submit invoices straight to AP rather than local sites. “That’s what we’re working on now. In North America, we have 65 percent of our vendors sending invoices directly to AP. In other regions, we still have invoices going to local sites to validate, so we have room to improve process efficiencies even further.”