Lebhar-Friedman, Inc., is the leading information company for the retail, foodservice and healthcare industries with over 350 employees located in the United States, Europe & Asia. Lebhar-Friedman is a media company, made up of business units all dedicated to providing clients with the best B2B information online and in print.
While Lebhar-Friedman is headquartered in New York City, New York, the company’s accounts payable department is located in Tampa, Florida. The AP department is supported by three full time equivalents (FTE), who are responsible for processing 28,000 invoices and expense reports annually. Most of the invoices do not have a purchase order (PO) associated with them and have to be reviewed and approved; only the IT department uses POs, so PO-based invoices are a small component of the total invoice volume.
Struggling with People and Paper
Prior to 2007, when Lebhar-Friedman was not using any automation for invoice processing, suppliers sent invoices directly to the approvers. “Invoices would be sent to field approvers in varied locations, such as New York, Chicago and Los Angeles,” said Chris Bartley, Manager of Corporate Disbursements. Approvers would review the invoices, put the required general ledger (GL) codes and then forward the invoices to the AP department in Tampa. Ms. Bartley mentioned that it was usually a week or two weeks from the time the approver received the invoice to the time the invoice made its way into AP. Not surprisingly, Lebhar-Friedman was facing a number of challenges with invoice processing:
- The average invoice receipt-to-approval cycle was long and AP had to deal with missing invoices and calls from vendors inquiring about invoice status.
- Manual data entry from the paper invoice into the ERP system added more time to the process.
- Check runs were performed once a month and direct deposits were made weekly. If this did not coincide with when invoices were approved, the company had to deal with late payments.
- AP also had to deal with a lot of exceptions. Sometimes approvers would request short payments without properly providing a reason. AP had to deal with vendors who questioned this.
Looking for a Solution
Ms. Bartley has been a regular attendee at the International Accounts Payable Professionals (IAPP) annual conferences and at these events, she got introduced to the world of imaging and workflow automation (IWA) and its associated benefits. She has been pushing the concept of invoice imaging at her organization since 1996, but budget constraints and other initiatives led to this taking a back-seat.
In 2002, she considered at least using imaging on the back-end to streamline the archival and retrieval process and started gathering internal information as well as more details on the potential vendor pool. Ms. Bartley’s persistence and her efforts at gathering information and cost justifications to present to senior management finally paid off in 2004, when the company actively explored the idea of automation and solicited requests for proposals (RFPs) from vendors.
Lebhar-Friedman had specific criteria for vendor selection. The first condition was that the solution had to integrate seamlessly with the company’s back-end Lawson and AS400 applications. Other important factors were the cost of the solution, client references and the vendor team that would be working with Lebhar-Friedman. In July 2004, the company invited five vendors to demo their solutions, narrowed it down to two by August and finally chose Perceptive Software’s ImageNow solution. The fact that Perceptive Software is a Lawson partner and tightly integrates with Lawson was a major factor in Perceptive’s favor.
Though Perceptive Software was selected in 2004, the contract was not signed until 2006 when all the stars were aligned – the CFO finally blessed the project and stated that there was availability in the budget. The project was kicked off in July 2006, with a go live date of January 2007. Ms. Bartley mentioned, “we were very impressed with the Perceptive team that worked on our implementation. The entire group was very professional and made sure our requirements were met. Our IT Director mentioned that this was the most professional team he had ever worked with”
New and Improved Process
The first step that Lebhar-Friedman took along the automation route was centralizing invoice receipt. In October 2006, prior to implementation, the company sent letters to all vendors informing that invoices should no longer be sent to the field directly, but must be received at the AP department in Tampa.
Today, the company receives about 70 percent of its invoices via email. These are sent automatically to the ImageNow printer, without having to be printed and scanned. Paper invoices are scanned into the ImageNow system. The company does not use any data extraction technologies like optical character recognition (OCR), but keys the header information into ImageNow. Invoices that have entered into the system are automatically routed to the approvers, who review the invoice, add the appropriate GL coding information and approve the invoice. Approved invoices are then uploaded and posted into the Lawson accounting application.
Reaping the Benefits of Automation
Centralization of invoice receipt, front-end imaging and automated workflow have delivered tangible benefits to Lebhar-Friedman. “A big benefit is that we now have fewer lost and missing invoices. We also have a lot less paper; while we had nine filing cabinets prior to automation, we have none now. All our invoices are stored electronically and are easily accessible. The efficiency of having all the information available at our fingertips, without having to search through multiple file cabinets is a pleasure. Finally we have been able to save a lot on storage and postage costs. Originally, we had large packages that were exchanged between the various field locations and the Tampa office frequently, we don’t have any of that anymore,” stated Ms. Bartley.
Looking Ahead…
Lebhar-Friedman is definitely interested in expanding its relationship with Perceptive Software. The company recently upgraded its Lawson financial system and also upgraded the ImageNow solution. Going forward the company is considering expanding the use of ImageNow into its human resources and payroll department. Lebhar-Friedman is also exploring the idea of leveraging Perceptive Software’s data capture solution to extract data from invoice images automatically without having to go through the manual data entry process.
Overall, the Lebhar-Friedman team is extremely satisfied with its choice and is looking forward to a more satisfying relationship.
