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ARIES has been designed to significantly reduce the cost of the invoice settlement process by producing a 100% accurate invoice.
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The Client: |
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The Problem: |
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| The Solution: The ARIES service which delivers 100% guaranteed invoice matching via upstream resolution |
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| The Result: 100% matching on all orders without a single error, query or discrepancy delivering: Cash Savings: Ability to enforce zero tolerance and effect faster payment to suppliers offering potential discounts of up to 3% across the board Indirect Savings: 84% reduction in invoice handling costs Benefits to Suppliers too: efficient and expedited payment via streamlined invoicing |
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County Durham and Darlington NHS Foundation Trust processes some 200,000 invoices per year on behalf of a consortium of local Healthcare organisations across County Durham and Teesside. Total throughput exceeds £160 million of expenditure and the Trust has a policy to enforce “zero tolerance” on invoice discrepancies. This is part of a strategy to ensure good financial governance and best value for money as part of the Gershon savings target . Every percentage improvement in expenditure translates into more available resources for its core activities.
The Trust commenced its eProcurement strategy in 2000, adopting an ePurchasing system which resulted in significant process savings as well as enabling resources to be redirected from processing to buying. It was clear however that eProcurement as currently understood did not address all of the major problems associated with supply chain management - it simply moved problems between organisations more quickly than traditional paper-based processes. As the Trust’s Procurement and Finance departments agreed, it is all well and good having electronic catalogues and the ability to send e-orders and receive e-invoices but catalogues are out of date as soon as they are loaded and electronic orders and invoices are as likely to have the same errors as their paper equivalents.
The Trust wanted to reduce significantly, if not eliminate, the problem of invoice reconciliation. Some 50% of all invoices had a query relating to them. The Trust was keen to reduce its own inhouse costs, ensure proper and transparent control across the entire purchasing cycle, and take advantage of any improved commercial terms it could negotiate with its suppliers.
THE SOLUTION
The Trust decided to implement the ARIES (automated reconciliation & invoicing efficiency savings) service from Belmin Group. Accessible by buying organisations and their suppliers, ARIES replaces existing manual methods of invoice processing to significantly reduce costs and increase efficiency.
ARIES is suitable for all sizes of organisation and works alongside any existing eProcurement and finance systems. It uses simple browser technology and can integrate with buyers’ and suppliers’ systems.
The Trust believed that ARIES is unique in that it enables reconciliation of order queries before the order is accepted and despatched by the supplier, meaning any problems are resolved upstream by the people most suited to resolve them (the Procurement department) and not downstream. Issues such as price or quantity changes, item substitution, carriage or miscellaneous charges, partial deliveries etc. are all resolved upfront. Despatches are therefore matched automatically against purchase orders and any problems are resolved online without any re-keying of data. The whole process of delivery to invoice to payment is significantly speeded up. In addition, this process facilitates the Trust paying only those invoices with 100% price match, dispensing with making payments within tolerances.
The Trust had identified that there were a plethora of eInvoicing solutions available on the market but that the production and transmission of an electronic invoice per se was relatively trivial and offered limited benefit. An xml or scanned image of an invoice may be quicker and easier to transmit but the crucial element is the reconciliation and resolution process – a process handled upstream by ARIES prior to invoice generation. The key to ARIES is that it produces a 100% accurate invoice automatically based upon agreed, correct information.
THE SUPPLIERS
The Trust has some 3,000 active suppliers and buys everything from high technology equipment to paper tissues. It identified 300 - 400 “key” suppliers from whom it received regular and large quantities of invoices and from this group selected five suppliers to carry out a trial of ARIES in late 2006. These suppliers represent a cross section of industries and organisation size (ranging from local SMEs to large multinationals) providing a range of products from bespoke printed materials to the whole spectrum of medical items.
Within 12 weeks some 1,200 orders had been processed with zero errors and a 100% match. Suppliers were all paid within their contract terms and one was paid within a single day.
The enforcement of a “zero tolerance” policy has in itself generated a £3,000 per month saving by concentrating on just 10% of the supplier base. The adoption of ARIES has provided the ability to now enforce zero tolerance across the entire supplier base. As well as realising significant cash savings the Trust has been able to identify process savings allowing them to move staff on to more strategic work. A key benefit enabling them to achieve direct cash savings has been “knowing what you are paying for” – management information in real time.
The Trust is now expanding the use of ARIES to all 400 key suppliers. It expects this to be completed within 2007.
THE CLIENT PERSPECTIVE
THE SUPPLIER PERSPECTIVE
Scorpio Computer Supplies Ltd, a provider of a whole range of computer consumables to the County Durham & Tees Consortium, was one of the initial suppliers to participate in the implementation of ARIES, going live in December 2006. In the first three months of operation, Scorpio has received in excess of 500 orders via ARIES, with an associated 100% invoice match. Scorpio has reported benefits to itself as well as those enjoyed by the Trust:
For further information on Belmin Group and its products, please telephone 01278 450611, email info@belmin.com or click here.
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