Optimizing Accounts Payable Processes
Efficient management of accounts payable is crucial for preserving working capital and maintaining good supplier relationships. In this case study, we delve into how we facilitated a Fortune 500 Consumer Packaged Goods (CPG) company in gaining transparency into their accounts payable processes, resulting in significant cost savings and enhanced working capital management.
Celonis Process Mining
Unclear Accounts Payable Processes
The client, a renowned Fortune 500 CPG company, was facing challenges in their accounts payable department. They were grappling with the lack of visibility into their financial and accounting processes, specifically concerning accounts payable payment terms. The leadership suspected that due to non-adherence to these payment terms, they were experiencing inefficiencies that were draining their working capital. However, the absence of a clear overview made it difficult for them to identify and rectify these issues.
Task Mining and Corrective Actions in Accounts Payable
To resolve the client's challenges, we implemented Celonis, a state-of-the-art task mining tool, to gain comprehensive insights into their accounts payable processes. Through this tool, we validated data and key performance indicators (KPIs) with process owners, ensuring accuracy and a clear understanding of the current processes.
Following this, we implemented corrective actions in the accounts payable department. These actions included auditing any outgoing payments for adherence to the correct payment terms and alerting the procurement teams when discrepancies were identified. This proactive approach allowed the company to rectify issues swiftly and avoid unnecessary capital outflow.
Significant Cost Savings and Improved Working Capital Management
Our intervention resulted in the identification and rectification of mismatches between vendor master payment terms and invoice payment terms. The automated reporting system we set up proactively flagged mismatches when invoices were sent with incorrect terms.
As a result, the client was able to promptly address these issues, preventing unnecessary capital drain. This comprehensive approach to improving their accounts payable processes led to an impressive annual saving of over $7 million, significantly impacting their working capital management positively.
This case study highlights our commitment to optimizing financial processes and delivering substantial cost savings for our clients in the CPG industry, demonstrating the profound impact of process visibility and efficient management in accounts payable.
Process Visibility: Implementing a task mining tool like Celonis provided our client with much-needed visibility into their accounts payable processes. This clear overview was instrumental in identifying inefficiencies and areas for improvement.
Corrective Actions: By auditing outgoing payments for adherence to the correct payment terms and alerting procurement teams about discrepancies, we helped establish a proactive approach to managing accounts payable, significantly reducing errors and inefficiencies.
Cost Savings: The streamlined accounts payable process, aided by automated reporting, resulted in over $7 million in annual savings for the client, demonstrating the substantial impact of efficient process management on a company's bottom line.
Improved Working Capital Management: The optimization of the accounts payable process led to improved working capital management, highlighting the vital role of process optimization in preserving and enhancing a company's financial health.