Original Date: 01/23/1995
Revision Date: 01/18/2007
Best Practice : Quick Pay Invoiceless Payment Processing
By developing a Quick Pay Invoiceless Payment Process, Sandia National Laboratories (SNL) now have a paperless invoice system that pays the supplier automatically upon receipt and validation of material. In June 1993, Sandia implemented this system, one that allows Sandia to automatically pay for materials which have been received in accordance with the terms of the contract but without requiring a supplier invoice. Prior to Quick Pay, Sandia accounting was responsible for logging a purchase and processing the vendor invoices. Files had to be maintained with hard copy invoices for auditing purposes. The cabinets to hold these files consumed space and necessitated personnel.
A team from Sandia visited the Ford Motor Company to review its invoiceless system and determined that the system could be tailored and adapted for SNL use. Using agile manufacturing philosophies, the team developed an enhancement to its system. When a purchased item is received and validated, the system feeds the shipper number into the system, setting up automatic payment.
SNL and their suppliers have both benefited. For the supplier, there is no invoice to generate and send, payments are made in a timely manner, and problems with lost invoices are eliminated. Sandia saved $15K in 1994 by not processing supplier invoices, equal to one-half Full Time Equivalent and requiring no storage space. The system has eliminated invoice handling, and Sandia National Laboratories rarely make late payments, capturing 98% - 100% of their discount opportunities.
Sandia National Laboratories have found that an ongoing education process is critical for success because of employee reassignment and continually establishing new suppliers. In pursuit of continuous improvement, Sandia is looking at iterative payments (progress payments) for valid receivables and labor contracts as potential areas to apply the Quick Pay principles.
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