Case Study: JSM Manufacturing
JSM Manufacturing is a small, local company that manufactures personal protective equipment, such as surgical masks, gowns, and face shields. The company relies on a network of suppliers of raw materials, transportation providers, and for other required products and services. These vendors receive purchase orders from JSM for materials and services, and typically ship directly to JSM’s manufacturing facility. Invoices are sent to JSM’s accounts payable department for payment processing, which receives, verifies, and processes approximately 200 invoices per month.
It sounds like JSM Manufacturing has a well-established supply chain that includes multiple vendors and suppliers. The purchase order process and invoice processing are critical parts of this supply chain, ensuring that the company has the necessary raw materials and services to manufacture personal protective equipment.
However, processing 200 invoices per month manually can be a time-consuming and labor-intensive task, especially if the invoices have to be verified for accuracy and compliance with company policies. This can lead to delayed payments, which can strain the relationships with vendors and potentially disrupt the supply chain.
One possible solution to streamline the invoice processing is to implement an automated accounts payable system that can extract data from invoices and process them quickly and accurately. This can significantly reduce the time and effort required for manual data entry, verification, and approval of invoices. Additionally, it can provide better visibility and control over the accounts payable process, which can help avoid errors, duplication, and potential fraud.
Other benefits of an automated accounts payable system include:
- Improved accuracy and compliance: Automated systems can verify the accuracy of data, ensuring compliance with the company’s policies and regulations.
- Faster processing times: Automated systems can process invoices much faster than manual processing, reducing the time between receipt and payment.
- Better cash flow management: With an automated system, JSM can better manage its cash flow by scheduling payments according to the vendor’s terms and avoiding late fees.
- Improved vendor relationships: With faster and more accurate processing of invoices, JSM can improve its relationships with vendors by paying on time and avoiding disputes.
Overall, implementing an automated accounts payable system can help JSM Manufacturing optimize its supply chain, improve its financial processes, and better manage its relationships with vendors.