AP Invoicing Service May 18th,

Mission and Vision Mission Develop a new service team responsible for the intake and processing of vendor invoices on behalf of the campus departments. Vision 1)All Purchase Order invoices are delivered to a single location 2)The new service team provides scanning, data entry, and quality assurance for invoice payments 3)Two-way matching reduces the need for Fiscal Officers to approve low value invoices 4)Departments can easily retrieve invoice payment status and request assistance with payment disputes 5)High-volume and high-spend vendors are transitioned to strategic invoicing methods, payment terms, and settlement options 2

Why Now? Invoicing over the last 12 months (March ‘14 thru Feb ’15) 10,500 invoices processed by campus departments each month 8,482 unique vendors 555 different initiators within the financial system 37.5 days from Invoice Date to date payment request is entered 2.5 days from when payment is entered to full approval 37% of invoices are paid late, according to invoice terms 3% of our invoices have early payment discount terms 0.3% of vendors have default discount terms established Top 50 Vendors (by volume) 58,033 invoices (45%) $34,307,000 in spend (8%) Potential early payment discounts (1%): $343,070 Total early payment discounts captured over last 12 months: $23,447 3

Why 2-way matching? Spend to Volume Table Invoice VolumeInvoice Spend Count% of TotalSpend% of Total Less than $50083, % $ 11,949,7483.0% $500 - $99914, % $ 10,550,6942.6% $1, , % $ 21,757,4265.4% $2, ,9997,7575.9% $ 27,605,3726.8% $5, ,9994,2933.3% $ 30,149,7197.5% $10, ,0002,6972.1% $ 37,469,4059.3% > than $20,0003,3372.6% $ 264,216, % Totals130, % $ 403,699, % 92%18% 8%82% 4 76%6%

Why Now? “Cultivate a Culture of Organizational Excellence, Effectiveness and Stewardship” – Chancellor’s Vision Plan Top Reasons: 1.Reduce overall workload for campus departments 2.Reduce errors through better quality control of invoice data 3.Increase discount capture rate and potential revenues through strategic settlement options 4.Provide single channel of communication for vendors and reduce fraud 5.Better alignment with best practices and procedures implemented by other Universities 5

Our Approach Phase 1: Information Gathering (January to July) Develop a partnership between Accounts Payable, Contracting Services, and Shared Services Center Solicit campus feedback and input into processes, visit other UCs to learn best practices, and identify stakeholder concerns Develop process flows, staffing requirements, and system changes Establish the Strategic Vendor Management team and new menu of payment terms Phase 2: Pilot, Measure, Report (July to January) Service team to begin processing invoices on behalf of units already supported by the Shared Services Center Implement and monitor 2-way matching workflow changes Identify and measure key performance indicators (KPIs), comparing service team to the rest of campus invoice processing Revise processes as necessary during the pilot 6

Our Approach Phase 3: Academic Pilot (January ‘16 to July) Service team to begin processing invoices on behalf of academic units willing to participate as early adopters Revise process flows to accommodate specialized academic needs, such as Uniform Guidance requirements Continue to measure KPIs, including error rate and number of disputes due to 2-way matching Measure increased discount capture rates due to efforts of the Strategic Vendor Management team Gauge readiness of service team to take on balance of campus invoices 7

Questions / Comments Project Contacts: Mike Kuhner Manager, Central AP/Travel Megan Villasenor Operations Manager, SSC 8