Better management of early payment discounts keeps cash flowing into Alltel’s coffers.
by Marta Bright, May 2009
In a business climate where credit is becoming increasingly scarce and due dates are arriving more quickly than ever before, punctuality can definitely pay dividends. Since late 2007, wireless telecommunications giant Alltel has been capitalizing on early payment discounts to the tune of millions of dollars.
Headquartered in Little Rock, Arkansas, Alltel manages a service area that covers more than half of the continental United States and serves more than 13 million customers in 34 states. To manage the constant influx of paperwork generated by vendors in Alltel’s broader customer service chain, the company supports daily business operations—including high-speed invoice data capture—through software and technology solutions from both Oracle and its applications partner Brainware.
Together, these technology solutions support rapid data entry for processing and recording into Oracle’s JD Edwards World application suite, now a common business practice, according to Lenley Hensarling, Oracle’s group vice president and general manager for JD Edwards.
“Many JD Edwards customers utilize a combination of Oracle and partner solutions to complement JD Edwards World’s extensive ERP [enterprise resource planning] capabilities,” says Hensarling. “Products from Oracle partners like Brainware help customers rapidly automate data flow into JD Edwards World, which in turn lets them gain additional value faster from their baseline ERP investment.”
Feeding the Data Monster
Fundamentally, ERP systems are designed to handle business data and processes that range from mundane accounting tasks to highly complex supply chain activities. Without precise data, however, the usefulness of an ERP system can be compromised. Before bringing Brainware Distiller into the mix, Alltel’s manual invoice processing techniques were preventing the company from feeding information into its JD Edwards World financial applications rapidly enough to control how quickly vendors were paid. Sluggish payment processing also meant that Alltel could not effectively respond to a shift away from its traditional net-30 payment policy to a new policy called 2/10 net 45.
2/10 net 45 provides companies with both a buffer and an incentive. It offers lengthier payment terms of 45 days from the date of invoice receipt, while also providing for potentially significant savings via a 2 percent discount that’s offered if the total amount due is paid in full within 10 days of receipt of the invoice. “Given that Alltel spends billions of dollars on operating costs, we were at risk of losing enormous sums of money if we didn’t start taking advantage of early payment discounts offered by our various suppliers,” explains Scott Searls, senior vice president and chief supply executive at Alltel.
Falling into the Paper Whirl
Companies sometimes become overwhelmed by the challenge of manual invoice processing—a trap that analysts such as IDC’s Melissa Webster see as avoidable. As Webster, IDC’s program vice president for content and digital media technologies, explains, “Paper-intensive business processes are often still handled manually, which means they are very expensive, and they take a lot of time. Paper has to be shuffled around, documents get lost, and things are keyed in incorrectly. It’s very error-prone, the quality is inconsistent, and there’s a big-time delay as the paper works its way through the queue and through the hands of all the people who have to touch it.”
In the recent past, companies may not have had an alternative to a tedious, manual process—but some are seeing a clear path forward. Webster believes that the time is right for companies to begin exploring the benefits that image management and data capture technologies can offer. These technologies are now advanced enough to automate invoice processing and can be deployed with little or no disruption to a company’s existing infrastructure.