Streamlining processes: looking at the details.

• Author: Ballou, Erin
• Position: Management & Careers

Lean and continuous improvement methodologies are powerful tools that can be applied to any finance process--even the most routine.

The popularity of Lean management has grown in recent years, yielding many benefits to both public and private organizations. In many instances, however, these initiatives tend to be focused on processes such as integrating the purchasing and accounts payable departments, producing timely and accurate financial statements, and making customer billing more efficient, while the smaller, more routine processes are often overlooked. In spring 2013, the City of Bowling Green, Kentucky, chose to take the road less traveled and began to examine the distribution of invoices, one of the most basic accounts payable processes. Subsequently in the spirit of continuous improvement, interrelated procedures were bundled with this project to complete a trio of improved financial processes.

IDENTIFYING AN OPPORTUNITY

Bowling Green, which has a population of approximately 60,000, employs an average of 730 full- and part-time employees and is made up of 10 departments. City purchasing and accounts payable processes are not centralized, but the finance department is responsible for payment processing and all financial processes. A simple review of one performance measure--days to payment--led to a rethinking of the invoice distribution process. Incoming paper invoices were processed in approximately 13 days, while invoices received via e-mail fared much better at eight days. Invoices received via e-mail were paid in just five days, alerting finance officials to an opportunity to shorten the payment cycle for paper invoices received through the mail.

The invoice delivery process the city used at this time involved sorting and sending paper invoices through an inner-office mail system. A departmental representative would physically transport the original invoice from one location to another, usually daily or even less often. This system was deficient in several ways. Original invoices could be misplaced or lost, and deliveries could be delayed because of the timing of pickups or slow responses. It did not take long for finance officials to conclude that the paper process should be reengineered.

THE COPY MACHINE SOLUTION

After identifying the need for an improved invoice distribution method, finance officials began to analyze potential solutions, particularly those that would make use of existing technology to maximize efficiency and...