Government Agency Reduced Vendor Payment Time By 95% With GLSS
New York
Government
Finance
95%
- The problem: In the world of government, efficient operations are key to success. Recognizing that improvement work is critical, this organization faced a pressing challenge: speeding up vendor payments. Vendor payments were averaging 56 days, leading to frustrated vendors and disruptions in operations.
- To tackle this, the organization partnered with GLSS’s Lean Six Sigma Green Belt Training & Certification, known for its innovative instructional design and engaging content. This collaboration set the stage for transforming outdated processes into efficient, streamlined operations that benefit both vendors and internal teams, reducing the payment time to an average of 3 days—a 95% reduction.
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Government agencies face unique challenges when it comes to operational efficiency. With public funds at stake and strict accountability requirements, every process must be both thorough and timely. Yet many agencies struggle with outdated systems and complex procedures that create bottlenecks and delays.
Vendors voiced their concerns about delays in receiving payments. According to the established guidelines, payments should be processed within 10 days after an invoice is sent to Accounts Payable. However, the reality fell short of expectations. The prolonged wait not only frustrated vendors but also risked losing valuable partnerships, which could further disrupt the smooth flow of government operations and financial accountability.
Process improvement work became critical to the organization’s success, as inefficiencies were threatening vendor relationships and potentially increasing costs. The agency chose GLSS’s Green Belt Training & Certification to help tackle these challenges head-on.
A closer look into the issue revealed two main culprits:
- Vendor Setup Issues: Depending on the type of cost, vendor information was sometimes not properly set up in the Accounting system. This misconfiguration led to delays when invoices needed to be processed.
- Timing of Invoice Submission: Invoices sent during certain busy periods of the week took longer to process due to the heavy workload in the Accounts Payable department. This timing issue compounded the problem, stretching the processing period beyond the targeted 10 days.
The team, with guidance from GLSS, confirmed the root causes and set the stage for lasting improvement.
To resolve these challenges, the organization implemented two key strategies:
- Optimized Invoice Timing: By collaborating closely with the Accounting Department, they identified the best times to submit invoices. This coordination helped in aligning the submission process with the department’s workload, thereby reducing delays.
- Pre-Submission Checks: Before sending an invoice for payment, staff now verify that the vendor is correctly set up in SAP. This proactive step ensures that all necessary details are in order, preventing avoidable setbacks during processing.
These targeted improvements made a significant impact, reducing payment time from an average of 56 days to 3 days—a remarkable 95% improvement. As a result, vendors began receiving payments faster, which enhanced the overall relationship and trust between the organization and its business partners.
Moreover, the new system improved the accuracy of expense accounting, ensuring that financial records were both timely and reliable.
with GLSS
The faster vendor payment project is a clear example of how focused improvement efforts can lead to real, measurable benefits. By choosing GLSS Training & Certification, the organization leveraged innovative instructional design and dynamic content that drove quicker, more effective results.
With the project now a success, the organization is not only enjoying improved vendor relationships and streamlined accounting but is also well-positioned for future success. This strategic move sets a strong foundation for continuous enhancement, ensuring that the organization remains agile and responsive in an ever-evolving governmental landscape.
*We value our clients’ confidentiality. While we’ve changed their names, the results are real.
