October 2011

Invoice Audit Productivity: From 19th Century Textile Mill to SaaS

by Peter Yelle

Contact Telecom’s offices are in a converted 19th century textile mill. In fact, the heavy timber floors above and below you in each office are the same ones that supported the spinning machines, looms and thousands of workers in the mill.

Working in a place like that is a daily reminder of how automation has taken us from sweat factories to air-conditioned offices in just a few generations. Wonder what those factory workers would say if they knew that 160 years later a SaaS server in the same mill would do the work of hundreds of employees?

Of course, each generation has its own definition of what constitutes “tough work.“ Most of us have probably held a job where either the hard physical demands or sheer boredom of the job taught us the value of the phrase: “Work smarter, not harder.”

For me, the “job from hell“ came in the summer after graduating from college. While waiting for my first engineering job to start in September, I took a stint helping my kid brother install lawn sprinkling systems. The work was back-breaking and quite boring, but I took heart in the thought that in a few short weeks I would never again lay plastic pipe in orange-burnt lawns.

Later on, when I worked for a wireless service provider, the leadership supplied the tools to make our tasks less tedious, more interesting. They also pushed us to “re-invent“ our work and get jobs done quicker and better. That, in turn, enabled the company to launch and thrive.

Today, of course, automation is everywhere in telecom. The Excel workbooks of the early ‘90s have given way to predictive analytics on databases. And innovations in least cost routing and other real-time analysis are making service delivery better, more efficient and more profitable.

What’s Your State of Automation?

So when it comes to invoice reconciliation, are your processes and tools modern and efficient, or is your company stuck in a 19th century time warp? How do you know if you’re processes need an overhaul? Well, here’s a quick list of process problems that we’ve seen at service providers:

Your Invoice Reconciliation is behind the times when ...

Most of the invoice data is siloed in static Excel spreadsheets or Access databases on various desktops.
Your colleagues in the audit process pass work to you via email, phone call or paperwork dropped in your desk’s in-basket.
You are constantly reacting to audit fire drills instead of methodically following a process.
You struggle to or can’t complete your invoicing audits before the following month’s bills arrive.
Further development of your internal audit software won’t happen until the recession ends and IT starts hiring again.
You are filing claims for wholesale invoice errors that are costing you more to file than you will actually recover in revenue.
You file audit forms and claims via manual or paper processes.

Invoice Reconciliation Automation Case

Service providers often underestimate the staff hours being wasted due to process inefficiencies like the ones I just described. To give you an idea of the productivity gains you can achieve, I’ve summarized the Before and After case of applying our SaaS tool, BDA, at a U.S. carrier. It’s a tier 3 carrier in the local telecom and CLEC businesses that grew by acquiring eight to 10 other telecoms in recent years. The company serves both residential and business customers.

invoice productivity chart

In the chart above, we estimated the number of man hours spent by the company before and after they implemented the SaaS.

The company’s processes were heavily mired in manual processes. Overall, the “Before“ breakdown shows roughly 80 percent of man hours were devoted to clerical and IT (Red) tasks and only 20 percent on actual auditing (Green) tasks.

In particular, the company was performing lots of data entry to get invoice data into a format suitable for running reports on a home-grown system. About six of nine people involved in reconciliation were devoted to the data-entry task, and it’s a big reason why it took the company all month to audit its invoices.

Even running the reports was time-consuming because it required auditors to sit at the machine and select “Yes“ or “No” options from hundreds of prompts.

Another big time-waster came from inter-team communication and passing audit steps to back and forth. These human interactions — emailing, using paper forms, and phoning — slowed the process down considerably. In addition, if people were pulled away to perform more urgent work, there was no way on checking the status of individual audits so they could be managed and moved forward. Instead, people needed to wait for the output of other people’s work.

The smaller chart on the right side shows the amazing “After“ results of implementing the SaaS. First of all, the company was able to reduce the invoice audit team from nine to three people. Even still, the small team could finish the invoice review cycle in a fraction of the original time, with the staff of three devoting less than two hours a day to meet the schedule.

Overall, audit cycle man-hours were reduced an incredible 90 percent — from approximately 1,100 to only 96 per month. Best of all, by outsourcing IT functions to the SaaS and eliminating setup tasks such as invoice conversion and poor communications, the actual time spent on high-value tasks (research, auditing, and claim resolution) rose to 92 percent. Using automation, the analysts are able to focus on the task that requires their attention and knowledge, while the clerical tasks are completed with minimal oversight: invoice collect, tracking, data management, and claim creation, submission and tracking.

Conclusion

The case study I just described is not an exceptional one. Most of clients have seen similar results. It’s typical to see audit man-hours reduced by between 80 and 90 percent or more. Automation removes unnecessary labor and clutter, streamlines the process so the user can be an analyst, and provides a high return on the time invested.

Even with pivot tables and home-grown BASIC routines, the individual user spends considerable time reviewing and manually pushing the process along. With automation however, you’re able to apply documented rules and criteria to real-time data sets.

In a SaaS application like BDA, an administrator sets the rules and only exceptions are presented for review. In this way, your priorities naturally float to the top of your audit reports. What’s more, the conversion of invoices is completely outsourced. Forms are automatically filled out by the system. Even claims are filed automatically. Rather than wasting time sending emails and administering the flow, work is pushed automatically to the user, filling up his or her queue.

Finally, with greater process automation, auditors are freed to what they are trained to do best: audit. In other words, running the monthly audit check will not longer be a “job from hell.“ Having an excellent tool and process backing them up, your auditors will spend their time productively, chasing down high-value inventory issues as opposed to filing billing claims on issues that cost more to go after than they’re actually worth.

This article first appeared in Billing and OSS World.

Peter Yelle

Peter Yelle is a partner at Contact Telecom LLC . With more than 20 years of professional engineering and product management experience in the telecom and wireless industries, he has been instrumental in bringing effective telecom solutions to market. Yelle holds a Bachelor of Science in Electrical Engineering from Northeastern University in Boston.

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