Managing Old Receipts and Purchase Orders

Managing Old Receipts and Purchase Orders Mark Kirkland – Boise Inc.. August 27-29, 2012

Abstract Whereas there are many automated PeopleSoft processes for closing PO's and Receipts, there are many transactions that do not meet the criteria to Close even though the transaction is essentially complete. Open PO's and Unmatched Receipts represent a potential liability to the company. Boise Inc.. has added two new strategies/policies to deal with these transactions, and uses several customized programs and Pagelets to achieve compliance.

Objectives Objective 1: Share with User Group Boise Inc..'s strategy on handling aging receipts and PO's Objective 2: Gain insight on how other companies handle these situations.

Boise Inc.. Background • Boise Inc.. is a publicly traded company (BZ) • Boise Inc.. was spun off by Boise Cascade about 5 years ago. • www.boiseinc.com • Boise Inc.. manufactures Paper, Packaging, and Newsprint, as well as specialty Papers like Label and Release products • Leader in the Recycled Paper market

Boise Inc.. Background • Installed PeopleSoft in 1997 • PeopleSoft Version 9.0 • PeopleTools Version 8.51 (October 15th, 2011) • Support for Boise Inc. and Boise Cascade, LLC • 27 PO Business Units • 134 Buyers (~135,000 PO Lines/Year) • 171 Receivers (~145,000 Receipt Lines/Year)

Boise Inc.. Background • HQ - Idaho • St Helens, OR • Wallula, WA • Deridder, LA • Jackson, AL • International Falls, MN • Salt Lake City, UT • Waco, TX • Burley and Nampa, ID • Salem, OR • Sparks, NV • Hexacomb (13 BU’s) • Tharco (10 BU’s)

Why are we here today? • Who has Unmatched Receipts > 60/90/180 days old? • Who has PO’s that have been open for more than 60/180/365 days? • Who is concerned in your company about the status of these documents? Buyers, AP, Controllers, Auditors? • How did these documents get in this status?

Problem • Purchase Orders and Receipts are sometimes left in a status that will not allow the system to close them through normal processes. • If the Purchase Order or Receipt is left in this status but is actually complete, they continue to represent a potential Liability, and these create ‘noise’ for various stakeholders that has to be dealt with on a continual basis.

Back to the Basics • A Purchase Order is a contractual agreement to procure goods or services • There is an expectation that what is ordered is what will be received and paid. • Without further changes to the Purchase Order, the PeopleSoft system has no way of knowing ‘intent’ of Open Purchase Order Quantity or Amounts

Contributing Factors • Boise Inc.. typically requires a Receipt for all purchases of physical Materials. These Receipts go through Matching (a three way match) • Boise Inc.. typically does not require a Receipt for Services (or we use Receiving is Optional), and we typically use Amount Only Purchase Orders. These PO’s will go through Matching (a two way match).

Contributing Factors • Vendors are a major source of problems • Nature of transactions can present problems with application of cash, and ultimately late invoicing • Vendors are increasing the number of drop shipments, splitting up shipments and invoicing inconsistently • Vendors may not keep Buyers informed of credits or warranty work • Communication – centralized Accounts Payable and decentralized Purchasing

Example – Receipt Left Open • PO is written for Qty 2 • Two Receipts are written Qty of 1 • Vendor decides to not bill for second Receipt (warranty, good will, etc.) • Second Receipt will never Match • Since the Receipt will not Match, it will never Close

Example – PO left Open • Boise Inc.. uses a tremendous amount of Blanket Purchase Orders. • Example • 10,000,000 LBS of Caustic Soda for a fiscal year • 215 Receipts are written for a total of 9,000,000 LBS • All Receipts are Invoiced and Matched • 1,000,000 LBS of material are left to be received, but a new Blanket is written for next fiscal year

Accruals • Receipts for Inventory Items accrue and are sent to the G/L on the day they are entered. • Receipts for Direct Charge materials • Accrue the day the Invoice is entered • Accrue at month end through Direct Accruals • Service Purchase Orders • Manually accrued at month end for Services received but not yet invoiced

Basic Problem • A great deal of focus has been given to why Purchase Orders and Receipts are put into situations where they will not Close automatically (order of events can be problematic). • There are Buyer errors on PO’s, Receiver errors, Vendor invoicing errors, problems entering Vouchers, and system errors. • There is nothing systematic about human error and attention to detail.

Thinking about the Box • Boise has been in this position for many years • Is the problem • Inside the box? • Outside the box?

What can be done to help users? • Training has not been as effective as desired • Get more Information to the Users • Delivered Queries • Delivered Reports • Pagelets • Systematically fix problem • Policy on Open Receipts • Policy on Open Purchase Orders

Delivered Queries The PeopleSoft Scheduled Query functionality delivers to the users email spreadsheets on the following: • Match Exceptions • PO’s that are eligible to Close (but have not) • Unmatched Receipts > 60/90 days

Delivered Reports The PeopleSoft Scheduled Report manager delivers to the users and Vendors the following: • Expediting Report (Buyers and Vendors) • PO’s that have not had any activity for 180 days. • Unmatched Receipts > 60/90 days

Pagelets

Pagelet – Match Exceptions by Buyer

Pagelet – Overdue PO Lines

Pagelet – Overdue Match Exceptions

How Receipts Close • Receipts Reconcile– Runs twice a month • Manually Match Individual Receipt Lines per Buyer Request • Manually Match Mass Lines of Receipts by Buyer Request • Per Policy, Automatically Match Receipts that are over 180 days old

How Purchase Orders Close • PO RECON – Runs twice a month • Buyer Override – Reconciliation Workbench • Mass Closure Request by Buyer • Per Policy, custom automated process to automatically Close any PO that has not had any activity for over 180 days.

Reopening Closed PO’s • Although this is possible, Boise Inc.. has discontinued this functionality. • Too many problems integrating PO’s after their initial Closure with third-party CMMS system (Maximo). Problem are compounded with further Invoices and/or Receipts • Greater question on why a PO needs to be opened

Automated Process for Closing PO • Buyers receive a report on the 10th day of the month. • Report lists all PO’s by Business Unit, Buyer, and Vendor Name that have not had any activity for 180 days • Only Buyers with a PO in this status receive the report. • Pending Buyer interaction, on the 24th day of the month, these PO’s are automatically Closed.

Managing Old Receipts and Purchase Orders