IQ BackOffice Transforms AP Process for Industrial Equipment Supplier

IQ BackOffice Transforms AP Process for Industrial Equipment Supplier

IQ BackOffice (IQ) stepped in to take over Company X's orphaned invoice processing, ensuring uninterrupted service delivery and business continuity during unprecedented times.
Manager checking industrial equipment

Introduction

Company X, a major supplier of industrial equipment and supplies, offers comprehensive solutions to enhance customer performance across multiple sectors. With a vast product catalog, advanced inventory management systems, and decades of industry knowledge, they provide expert support to businesses in maintaining efficient operations and optimizing for future growth. Their large team of associates collaborates closely with customers to drive results.

Challenge

The global pandemic created unprecedented challenges for Company X when its invoice processing provider was unable to provide services remotely. This disruption exposed several critical operational challenges in Company X’s back-office operations that continued after the pandemic:

  • Addressing staffing issues
  • Managing outsourced work effectively
  • Achieving cost reductions
  • Improving information quality
  • Transitioning to standardized processes
  • Implementing automation
  • Ensuring real-time visibility
  • Reducing exception rates
  • Setting up tools to streamline exception resolution
  • Enhancing data gathering and collection efficiency
  • Refining supplier management
  • Fostering process improvements

Solution

IQ BackOffice (IQ) stepped in to take over Company X’s orphaned invoice processing, ensuring uninterrupted service delivery and business continuity during unprecedented times. IQ implemented a comprehensive solution in two phases: Phase 1: Transitioning to Digital Processes
  1. Reinstated Company X’s invoice processing as the critical first step.

  2. Encouraged suppliers to send computer-generated PDFs via email, eliminating the need for physical mail during the pandemic.

  3. Implemented IQ’s proprietary IQR solution to extract invoice data with 99.97% accuracy, enabling automated coding and invoice processing without human intervention.

  4. Processed over half of Company X’s invoices without human intervention within the first 5 months.

  5. Conducted a comprehensive assessment of invoice receipt methods, identifying areas for cost optimization and process improvement, including elimination of duplicate invoices.

The efficiency and accuracy achieved during Phase 1 led Company X to engage IQ BackOffice for Phase 2, expanding the scope of services. Phase 2: Leveraging Archimedes for Exception Handling
  1. Deployed IQ’s proprietary cloud-based workflow software, Archimedes, to enhance accuracy and efficiency through:
    • Automated workflows
    • Improved accuracy of invoice receiving
    • Customized business rules

  2. Provided comprehensive Accounts Payable (AP) services, including:
    • Invoice processing
    • Matching
    • Exception handling
    • Electronic coding and routing of non-PO invoices for approval in Archimedes

  3. Implemented a swift routing system for invoices with differences outside of Company X tolerances, directing them to appropriate buyers for rapid resolution.

  4. Improved reporting capabilities with tailored reports for specific groups and analytics to drive reductions in supplier exceptions and continuous improvement in AP efficiency.

  5. Provided extensive supplier and client support, working collaboratively to resolve issues.

  6. Optimized staffing, enabling Company X’s employees to focus on high-value tasks.

  7. Performed additional financial analysis functions, including margin analysis and ensuring profitability of drop ship transactions, which were not part of a regular AP process.

  8. Allocated freight expenses, reallocating from invoices to inventory for accurate inventory costing, including landed costs with freight.

  9. Pinpointed true root causes of exceptions, enabling quick resolution and generating data on exception volume and nature by supplier. In Company X’s previous system, a single exception code had 17 different interpretations.

  10. Improved exception processing for drop ship merchandise invoices with flexible routing options and multiple decision paths.

Results

The transformation of AP processes led to significant improvements and substantial cost savings:
  1. Cost Reductions
    • 34% reduction in cost per invoice (from $1.12 to $0.86)
    • Up to 50% overall cost savings
    • Note on cost savings: The extent of cost reduction may vary depending on factors such as existing infrastructure, process maturity, and the scope of services implemented. We tailor our solutions to meet each client’s unique needs, ensuring maximum value and efficiency.

  2. Improved Accuracy and Efficiency
    • 99.97% per-transaction accuracy rate
    • One-day turnaround on all invoices

  3. Enhanced Integration and Accessibility
    • Seamless integration with current processes and infrastructure
    • Digital archive of historical invoices
    • Ability to review and approve invoices via web and mobile devices

  4. Operational Improvements
    • Retained staff reassigned to high-value tasks
    • Implementation of previously neglected statement reconciliations
    • Significantly enhanced visibility and control
    • Increased process automation
    • Standardized and documented AP best practices, reducing reliance on “tribal knowledge”
    • Improved exception processing and resolution
    • Enhanced supplier management and communication

  5. Value-Added Services
    • Supplier discrepancy and exception review and resolution
    • Procurement support
    • Profit margin analysis
    • Automated error code system for order markups
    • Improved inventory costing
    • Inventory system maintenance
    • Enhanced receiving support
These improvements collectively enhanced operational efficiency, reduced errors, optimized profitability, and supported informed decision-making for Company X.  IQ BackOffice’s tailored approach not only resolved Company X’s immediate challenges but also positioned them for long-term operational excellence in their accounts payable processes, demonstrating IQ’s ability to adapt its services to meet specific client needs across various industries.

About Us

This case study is brought to you by IQ BackOffice, a leading provider of end-to-end finance and accounting outsourcing solutions. As part of our comprehensive service offerings, we’re proud to introduce Offsite Office, our specialized division for offshore accounting and staff augmentation solutions.

Looking for cost-effective F&A staffing options? Offsite Office provides:

  • Skilled Offshore Talent: Access to qualified finance and accounting professionals.
  • Flexible Staffing: Scale your team up or down based on your changing business needs.
  • Cost Savings: Reduce your F&A operational costs while maintaining quality.

To learn more:

Ready to transform your AP operations? Contact us at ken@iqbackoffice.com or 310-322-2481 for a personalized consultation.