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Bourland & LeverichBased in Pampa, Texas, Bourland & Leverich (B&L) was founded in 1935 and is a leading provider of tubular goods to the upstream oil and gas industry. B&L has more than 550 active customers and 49 employees in 3 states.

IntroductionTypical Supplier ChallengesBourland & Leverich faces all the typical problems a supplier faces: lack of visibility into the invoice dispute process, manpower intensive paper processes, and high days sales outstanding (DSO, which is the length of time between invoicing and payment). Studies by a third-party research firm have revealed that DSO is on average in excess of 60 days in most oil and gas supply companies.

B&L is a tubular supply company and requires access to working capital to ensure they can respond quickly to customer requirements. Optimizing cash flow is critical. In an effort to reduce the more than 60-plus day payment cycle they were encountering, B&L offered early payment discounts of 2% to select customers if the payment was received within ten days.

Some took advantage of the discount offer, but many were unable or unwilling to streamline their payment processes to provide payment in 10 days or less. Many of their customers still had an onerous paper invoicing process that did not allow for quick payment resolution.

EnCana Oil & Gas (USA) Inc. was one such operating company. EnCana is a significant operator in the US Rocky Mountains, and a considerable amount of their capital expenditures is on tubular goods. In the past, they were unable to take advantage of early payment terms, but understood the savings potential if they could.

B&L wanted to reduce customer payment cycles and were willing to offer significant discounts as an incentive. EnCana wanted to take advantage of the cost savings associated with the early payment terms. The offer was truly was a “win-win” for buyer and supplier. The challenge was to streamline the payment process while ensuring EnCana’s expenditure approval process was kept intact.

Case Study:Automating Invoice Processes

SituationThousands of Invoices AnnuallyB&L generates nearly 10,000 invoices annually. Invoices are produced from their Solomon financial system. Paper copies of invoices and delivery tickets are mailed to customers after delivery takes place.

EnCana had chosen to streamline and automate its invoicing process by using ADP’s eInvoicing technology. One of the benefits cited for implementing the solution was to better capture early payment discounts. EnCana approached B&L, among other suppliers, to engage in a pilot for its electronic invoicing system, ADP® Invoice.

Automating the Invoicing ProcessADP Invoice automates the process of invoice generation, receipt, adjudication and approval, and streamlines traditional labor-intensive, paper-based workflow processes. In addition, detailed spend data acquired through the invoice process can be analyzed to identify inefficiencies and enable improved operational performance.

Implementing ADP InvoiceB&L agreed to participate in the pilot and implement ADP Invoice. Invoices would originally be generated in their Solomon financial system, and then be re-keyed in ADP Invoice. Delivery tickets and any other backup documentation required for EnCana to process the invoice would be scanned and attached to the electronic invoice. The duplicate data entry was later eliminated through a data upload using ADP Invoice’s “Log-in, Drop-off” capability, a very easy-to-use electronic file upload process.

The ADP logo is a registered trademark of ADP, Inc. ADP® Invoice is a trademark of ADP, Inc. and/or ADP P2P Canada, Inc. All other trademarks and service marks are the property of their respective owners. All rights reserved. ©2010 ADP, Inc.

During the implementation process, several key issues surfaced and were resolved. Issues related to which attachments were required, how to best utilize the ADP Invoice online dispute resolution, and how to best highlight discount opportunities were resolved before the “go live” date. The flexibility of ADP Invoice allowed these two user companies to adapt the technology to their needs.

ResultsFast Invoice ProcessingEnCana and B&L completed invoice transactions entirely online. On average, the process took less than 5 days, from submitting the invoice to payment. As a result, EnCana was able to take advantage of the 2% early payment discount and B&L received payment in less than a week.

Eliminate Duplicate Data EntryAll of B&L invoices for the pilot region were processed through ADP Invoice. EnCana later expanded use of the technology to all operating areas. The average approval time for a B&L invoice since implementation of the technology has been a little less than 5 days, with payment typically one to two days later. To further streamline the invoice generation process, B&L has implemented “LIDO” (Log In, Drop Off) functionality of ADP Invoice. Invoices are generated in Solomon, exported in a simple csv format, and then easily imported into ADP Invoice. This eliminates the requirement for duplicate data entry, and reduces potential inaccuracies.

Transparent Dispute ResolutionIn addition to reducing payment cycle time, both B&L and EnCana have derived other benefits from implementing the system. There is much more transparency into dispute issues – B&L is instantly notified of disputed invoices, can see the nature of the issue, and react accordingly, either by responding to the query, adjusting the invoice, or issuing a credit.

AuditabilityADP’s application also maintains a document journal of all of the actions associated with the invoice, including any comments generated by the concerned parties while the disputes were being resolved. This allows managers and controllers an “instant look” into the issues associated with problem invoices and quick determination of corrective measures to reduce the likelihood of it happening in the future.

Instant Status CheckB&L also can verify the status of an invoice at any given time – easily determining if it is in the coding verification process, the approval process, or if it has been approved for payment. This greatly reduces the amount of time spent trying to track down invoices on both sides.

SummaryA Great SuccessAdoption of electronic invoicing has been a great success for Bourland & Leverich. They have had payment times significantly reduced with a key customer, streamlined their dispute resolution process, and built a framework for expansion with other operating companies that adopt the ADP Invoice solution. EnCana has reduced expenditures on tubular goods, streamlined their invoice approval processes, and reduced the overhead associated with disputed invoices.