Integratz routinely works with leading B2B distributors that face similar operational challenges around accounts payable inefficiency. In this case study, we'll break down how one distributor unraveled over $850K in missed savings - and outline the steps they took to recapture that lost cash flow.
The Context
"Floyd Inc." is a leading $500M industrial goods distributor serving over 10,000 customers across the Midwest. Like many distributors we partner with, Floyd struggled with manual workflows, disjointed systems, and lack of data visibility into their AP operations. This created the perfect storm for missed opportunities and financial leakage.
Despite the company's scale and industry prominence, Floyd's leadership team had limited line of sight into how much cash was slipping through the cracks due to slow invoice approvals, missed early payment discounts, and late payment penalties. Cash flow took silent hit after hit as savings evaporated and fees mounted.
After partnering with our firm to assess their situation, Floyd discovered staggering realities dragging down performance...
Benchmarking the Problem
Floyd knew they needed better visibility. They spearheaded an assessment of the current AP workflow, spotlighting breakdowns:
- 30% of invoices were still handled manually across 3 different systems, causing approval delays
- Just 5% of available 2%/10-net-30 early payment discounts were captured
- A full 55% of payments went out late, with Floyd incurring $200,000 in late fee penalties annually
- Leadership lacked clear visibility into key metrics like invoice cycle times, discount capture rates, and late payment frequency
This baseline analysis shed light on not only where the problems existed, but also the significant money left on the table. They estimated over $650,000 in early payment discounts were missed each year due to approval lags. Combined with the $200,000 in late fees, optimizing AP would free up over $850,000 annually.
Executing the Solution
With quantified metrics illuminating the path forward, Floyd's team got to work streamlining their processes:
- Automated PO and invoice matching was implemented, accelerating approvals and reducing exceptions
- Intelligent OCR invoice capture was integrated to digitize and extract data from supplier documents
- Custom workflows were created to route invoices based on discount deadlines, ensuring discounts were captured
- Approval hierarchies were refined to meet discount windows and prevent late payments
As new solutions rolled out, they monitored success metrics closely to validate impact. Within 5 months, the results spoke for themselves:
- Early payment capture surged from 5% to 94% of available discounts
- Late payments dropped from 55% to under 10% of invoices
- Invoice processing time was slashed by 55%
In total, Floyd unlocked $850,000 in added annual cash flow.
Their AP optimization efforts delivered a 10X+ ROI almost immediately. More importantly, Floyd's leadership regained clear visibility into their processes through actionable data and metrics. They could now spot potential issues quickly and control outcomes with confidence.
The Path Forward
Like many distributors, Floyd left significant savings buried in their systems and workflows. But through targeted assessments, data visibility, and workflow automation, they unearthed over $850,000 in added annual cash flow.
Your organization likely has hidden pockets of AP leakage and savings upside too. The first step is shining a light on your processes through detailed metrics and analytics. Quantifying performance baselines unlocks the pathway to transformative improvements.
Are you interested in shedding light on your own AP flows? Let's connect to discuss mapping your processes, diagnosing pain points, and spotlighting savings. We work with your current systems to identify the right processes and reduce wasteful ones, build secure and stable automated workflows, and bridge the gap between new and existing systems. If you have struggled with invoice processing and you’re noticing a hit on your bottom line, we'd love to connect. Set up a time to talk to our team to learn more!
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