Case Study: Alltel Wireless Gets Accounts Payable Process Back on Track With Brainware

Alltel Wireless, a Fortune 500 company with more than 12 million customers and more than $8 billion in revenue, faced a unique set of challenges.

The fifth-largest U.S. telecommunications provider completed a spinoff of its landline business that split its accounts payable team of 45 employees in half. At the same time, Alltel received an unanticipated inheritance – a procurement division that was receiving an additional 5,000 invoices per month.

“On Friday July 14, 2006, we were one company, and on Monday the 17th – we were two,” said Lynn Smith, staff manager-finance with Alltel Wireless. “At the same time, the wireline company decided they were not going to process any network invoices, so we inherited 5,000 invoices per month we were not prepared for.”

What made the situation even more difficult was that Alltel received its invoices two ways: through the mail and via an electronic mailbox that was “electronic” only to vendors. “We had to print, prep and stamp all the invoices that came to us electronically so that we could scan and route them for approvals,” said Smith. “We experienced issues of not all pages being printed, mixing pages of one invoice with another document, or just not printing any invoices, in which case they were not entered into our system.”

Smith’s group hired seven temporary employees to help with the invoice processing, but immediately ran into staffing issues.

“It took two to three weeks to update the new hires on what to do, and then another two to three weeks to realize they were not working out, in which case we had to start all over again,” explained Smith. “Meanwhile, our invoice backlog kept stacking up. We were missing 60 percent of our early payment discounts due to the fact that we could not process our invoices within the allocated time. Furthermore, we couldn’t tell whether new invoices were for $5 or $5 million until they were entered into the system. We were always guessing about the potential impact on cash flow and working capital.”

The fundamental issue was that data entry is a monotonous and, at times, mind-numbing job. Few of the people hired were ready or motivated to handle it.

“They were not reliable, did not show up for work every day, and had no vested interest in getting it right,” explained Smith. “Our invoice backlog on any given day was up to 2,000 invoices. It was extremely frustrating for our data entry clerks to work all day and still go home with more work in the pipeline than they had when they started their day.”

In addition, the A/P division was experiencing multiple keying errors. “Even if we had standard rules for indexing invoices, we could not get the temporary employees to consistently follow them,” she said. This led to a host of problems.

Alltel has thousands of different vendors, and in some cases, there were multiple vendor numbers for the same vendor as a result of Alltel’s many acquisitions. The temporary data entry clerks could not always figure out which vendor number related to which vendor and ended up creating duplicate payments. Unfortunately, the ERP system could not determine if it was paying the same invoice twice.

Invoice Processing – The Solution

In October of 2006, Alltel’s vice president of procurement had had enough. He created a team to look at the accounts payable department to figure out how to put the A/P process back on track. Alltel’s management realized it needed to deploy a solution that would automate the process and reduce the company’s dependency on temporary workers.

After a rigorous selection process, Alltel decided to adopt Brainware’s A/P-Distiller solution that allowed for high-volume, template-free document processing.

“We decided to go with the template-free, fuzzy logic capabilities that Brainware was offering, since we processed many different formats of invoices,” said Smith. “We felt this solution would give us the most flexibility. At the same time, we decided to keep our current workflow system and integrate it with Brainware.”

Alltel provided Brainware with a set of 100 invoices and using these samples, Brainware’s implementation team created a unique one-to-many learn set to get the system up and running. This sample set would be used to automatically process 160,000 invoices from 5,500 different vendors annually. The initial results were so encouraging that Alltel decided to go straight into production with the system rather than deploying it gradually.

The Brainware implementation changed Alltel’s entire front-end process. There was no further need to print and prep the electronic invoices. A/P-Distiller retrieves and classifies them along with the scanned paper documents every ten minutes, seven days per week. Instead of keying 13,000 invoices per month from 5,500 unique vendors, Alltel’s 1.5 data entry FTEs deal only with exceptions (like incorrect totals, missing vendor or shipping information, etc.).

Invoice Processing – The Results

Before the implementation, Alltel was missing 60 percent of available early payment discounts because it just took too long to process the invoices. In 2007, following the implementation of A/P-Distiller, the company was able to take 17 times the number of discounts it did in 2006.

“We exceeded our 2007 discount goal by 45 percent,” said Smith. “Once we went live with A/P-distiller, we were able to release all of our temporary employees. We currently utilize the equivalent of 1.5 employees to process all of our invoices. We have little-to-no backlog at the end of the day and our processing time for invoices went from several days or weeks to hours.”

Also, the deployment brought welcome psychological relief.

“In 2006, the entire month of December was an endless stream of e-mails, phone calls and conference calls to see how we were going to get the backlog of invoices processed for year-end,” explained Smith. “We had employees working six days a week, 10-hour days. We were able to process most of the invoices, but it took a heavy toll on my group. This year, the only calls or e-mails I received were to say that invoices were processed on time and what a better year-end it was! My group was able to enjoy the holidays and spend time with their families rather than processing invoices.”