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SmartData Collective > Big Data > Data Quality > Using Procurement Analytics to Simplify Your Supplier Reconciliation
AnalyticsBusiness IntelligenceData ManagementData QualityData VisualizationData WarehousingDecision ManagementKnowledge ManagementPredictive AnalyticsRisk ManagementSoftware

Using Procurement Analytics to Simplify Your Supplier Reconciliation

Keith Peterson
Keith Peterson
4 Min Read
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Ask finance managers to name a necessary evil of their responsibilities and many will cite reconciling goods received against invoices not received (“GR-NI”). The GR-NI issue is time-consuming to manage but not exactly mission critical to finding new business. 

Because of that it often gets demoted to the lowest of priorities.  Not dealing with GR-NI, however, creates financial liabilities and can introduce significant risk to your business operations. 

The primary GR-NI concern is that a supplier delivers goods to the business – but the invoices for those goods never arrive in the Accounts Payable department.  The AP team must pull lists of goods received and compare that to invoices in the AP database to find these gaps.  These provisions may add up over time.  And, without an automated way to monitor and resolve discrepancies, the piles of paper just keep adding up.  These piles have risk – liabilities are incorrectly stated, provisions in the GR-NI account tie-up capital, supplier relationships may suffer, and credits may be missed. 

However, with a simple software-based supplier reconciliation process in place, an organization can automate this cumbersome process to save hundreds to thousands of man hours every year. And with the same system, it can improve its audit processes and even automate the process of supplier communication to resolve issues as they arise. 

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For example, one of our clients, a vegetable processor, works with over 2,000 suppliers and receives nearly 300,000 invoices every year. Using a manual approach to invoice reconciliation, they tied up four AP staff members for a week every month to reconcile dozens of statements from across 2,000 vendor accounts.  Inadequate audit controls, misstated liabilities, and frustration of dealing with vendors chasing invoice status all took their toll. 

Implementing a new GR-NI process needs some focus and targets to be successful. For example, our client focused on critical preferred supplier relationships with high volume to start.  This limited the initial number of suppliers to the 200 most critical ones. 

A simple overview of their process:

  • Creation of a database to integrate financial and orders data;
  • Routine upload of AP ledger(s) to the system;
  • Cross-reference orders with invoices received;
  • Build chart visuals to highlight discrepancies by amount and supplier type;
  • Output supplier lists prioritized for review and contact; and
  • Track results in system to improve overall supplier processes. 

Key elements of solution are:

  • A method to get statements into the system regardless of format and source;
  • Cross-link matching of companies and multi-level parent-child relationships resolved;
  • Automatic generation of statements in PDF and spreadsheet formats; and
  • Electronic report distribution to suppliers. 

To maximize value, look for the operational areas in your company that can benefit from better processes. Tedious tasks like resolving goods received-not invoiced issues may not fall on your radar.  But automating and improving these processes can deliver serious positive impact.  Halo’s platform is an ideal solution for supplier reconciliation processes. 

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