AP automation – how to get to 90% straight through processing

AP automation – how to get to 90% straight through processing

My good friend and opposite number at Spend Matters, Jason Busch, had the privilege to speaking to Clalit Healthcare services a some time ago to understand how they’ve managed to achieve such high levels of straight through processing in their accounts payable.

Clalit Healthcare Services is Israel’s leading health care organizations and one of the world’s largest. It is revolutionizing the management of its entire procurement processes and supplier collaboration using the Nipendo Supplier Cloud platform.

Clalit Healthcare Services is the world’s second largest HMO operating 1,400 clinics, 14 hospitals, more than 400 pharmacies, and over 800 other medical facilities. With an annual purchasing volume of over US$ 2.5 billion, Clalit receives over 2 million invoices a year issued by thousands of suppliers. Over 1,500 employees are involved in the procurement and A/P functions.

Purchasing Insight logoAchieving 90% straight through processing through AP Automation

Using the Nipendo Supplier Cloud platform, Clalit has transformed a process that was heavily-manual, time-consuming, and error-prone, into an automated process that is speedy and virtually error-free. “Ninety percent of the invoices we receive are processed by Nipendo straight-through to our SAP system without any manual intervention, and this percentage keeps going up as we fine-tune our processes and the business rules that reflect them in the Nipendo platform,” said David Lugassy, Headquarters Administration Director at Clalit.

“This high level of automation has brought about significant benefits to Clalit and to our suppliers,” adds Mr. Lugassy. “Average invoice processing time has been reduced from weeks to just a few minutes, and errors have been reduced down to close to zero. Hundreds of employees have been freed up from manual invoice handling to manage higher value tasks. We are also helping the environment, eliminating the use of over 30 million sheets of paper each year.”

In addition to automating invoice processing, Nipendo enables Clalit to electronically issue purchase orders directly from their SAP system to the supplier. With all communication facilitated through Nipendo Supplier Cloud, changes and modifications are immediately reflected in the system of record. Order fulfillment is now fast, accurate, and requires no human intervention.

Each supplier invoice is validated by Nipendo in real-time against over twenty five different business rules relating to hundreds of data points defined by Clalit, ensuring the data is complete and matches the purchase order and goods received, as well as compliance with internal procedures and local tax regulations. In case of a discrepancy, suppliers are instantaneously notified and can immediately make the necessary corrections to facilitate errorless straight-through processing to the Clalit ERP system.

Jason describes it like this: “Clalit has a large and highly complex operational procurement environment, owning to its dual role as both a healthcare provider and payer. The level of automation that Clalit has been able to accomplish using the Nipendo Supplier Cloud platform across both clinical and indirect spend areas is a model for other organizations looking to create more effective and efficient supplier relationships and Purchase-to-Pay processes that would also result in better constituent outcomes.”

“Clalit has a reputation for being a leader in the adoption of advanced methods and technologies to improve efficiency, productivity, and quality of service,” said Eyal Rosenberg, Nipendo’s Founder and CEO. “Being the first healthcare organization to use the Nipendo Supplier Cloud is a testament to the vision and commitment demonstrated by Clalit’s management and staff.”

Over 90% of Clalit’s suppliers for both direct and indirect purchasing are currently connected to the Nipendo Supplier Cloud, realizing significant benefits that include shorter time to payment, real-time visibility to invoice and payment status, and a single-point of access to the entire history of their records of interactions with Clalit.

Suppliers connected to the Nipendo Supplier Cloud also have access to a wide-range of value-added services offered by Nipendo’s partners, including supply chain financing, access to online RFPs, digital signature, workflow automation, business intelligence capabilities,  and other related services. As of today, over 15,000 suppliers utilize the Nipendo platform, exchanging tens of thousands of electronic documents each month, facilitating over $5B in procurement a year.

Jason has prepared a detailed case study of Clalit available here.

For those wishing to see more of what Nipendo is up to, they’ll be at the PayStream Purchase-to-Pay Summit (Sep 16-19, Charlotte, NC) or visit www.nipendo.com.

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