Con Edison Accounts Payable?
The Accounts Payable department is one of many crucial departments of Con Edison, and it has a significant impact on the company’s finances. This is the group of people who are supposed to pay all the bills and invoices that are associated with the business expenses of Con Edison. Con Edison is one of the biggest utility companies with over $12 billion in annual revenue, therefore the company must maintain strict control of the cash flow and one way of doing this is through proper AP process to ensure good relations with the vendors.
In this blog post, we will further discuss the AP procedure in more detail based on Con Edison’s case such as the general responsibilities of the team, invoice processing, as well as technologies and strategies associated with the successful AP performance.
Some of the main duties and responsibilities held by the Con Edison Accounts Payable Team include the following
The Con Edison AP department is relatively small having approximately 50 employees and their major responsibility is to ensure that the bills of the company are paid.
The key responsibilities of the AP team include:
- Invoices receipt and approval – Before payment, invoices that vendors present to Con Edison must be checked and verified by the AP staff to ensure that the charges billed are correct; goods or services were received, and the terms of the invoice are compliant with Con Edison procurement policies.
- Crediting customer's accounts – All the invoices need to be inputted into Con Edison’s financial management software where the charges are posted to the respective accounts in the general ledger.
- Vendor relationship management – most of the AP employees are in direct contact with the Con Edison vendors to clarify any issues that may surround the invoice process, and payment feedback among other issues.
- Issuing payments – The AP team sends invoices for payment once they have confirmed that they are good, and the payments are made by the due date or earlier. Amounts paid over $10,000 may need additional authorization from the payment’s management.
- Sustaining control – Based on control objectives, it is very crucial for AP to adhere to policies that can reduce fraudulent activities and other mistakes. This entails documentation, approval, and audits to ensure all the procedures are in place and have been followed.
This brings us to the understanding of how the invoice processing workflow increases efficiency.
Some of the strategies that Con Edison has adopted to enhance efficiency in AP include automation and reducing procedural activities.
Here is an overview of how invoices get processed:
1. Invoices are retrieved by email or postal mail and then inputted into the company’s accounting software. Electronic invoices are pre-scrubbed to avoid duplicate invoices, so there is no need to manually eliminate them.
2. Invoices are processed and passed through one of the several approval workflow levels depending on the amount of the dollar and type of expenditure. In this area, the respective costs are approved by the relevant stakeholders such as the operations managers.
3. If all the required approvals are received later, the invoices are placed for payment on the next check run. When the invoice is urgent, it can be processed separately for the payments.
4. The Con Edison ERP system links with its banks to initiate payment information and issue checks or ACH transfers to pay the vendor bank accounts when payment is due.
5. Any payments or even differences that may be required after a payment has been made are resolved by Con Edison’s vendor management personnel.
Structured approval workflows and connectivity to the Con Edison system’s information enable the utility to process a large number of invoices expeditiously but with defined control points.
Technological Systems That Support the AP Division
Some of the other software tools and IT systems that Con Edison uses to enhance productivity in its accounts payable group are; These include:
- Software programs for automatic recognition of characters on invoices and other documents obtained through scans
- Integrated system that links AP to other significant accounts operations including purchasing, stock, job cost, etc.
- Electronic procurement tools such as web-based supplier portals used in submitting and inquiring about invoices
- Treasury workstations for communication with the bank and handling of payments
- Tools that provide AP leaders with working reports to monitor payables backlog, payment exceptions, duplicate payments, etc., in real-time.
These aspects of systems integration, automation, and reporting help the AP department at Con Edison to work flexibly and provide data-driven insights to the company, as far as the necessity of changes in the department.
Additional procedures that enhance efficiency practice
In addition to its solid technology foundation, the Con Edison AP group focuses on several best practices that boost productivity and reduce operating costs:
- Ensuring strict adherence to the company’s procurement policies through training and exhaustive audits. This helps eliminate maverick spending and avoids the need for manual inputting of invoices for approval and payment.
- Proposing the development of virtual credit card payment for high-frequency and low-value merchants. This significantly reduces the costs of processing payments.
- Engaging with the vendors to promote the e-invoicing strategy. E-invoices, unlike paper bills, are not subject to delay or error, which is characteristic of paper bills.
- Presenting rooms and open channels through which internal stakeholders can forward AP inquiries. Minimizing the number of questions posed to AP through pre-emptive answering of questions also reduces the prevalence of such messages.
- Documentation and sharing of the vendor performance scorecard on aspects like payment accuracy, dispute trends, etc. This makes procurement to have more data regarding vendors.
When the enabling technologies are integrated with the value-adding initiatives, Con Edison’s AP department is capable of achieving improvements to an even greater extent in the future.
The following is a description of the future vision for the accounts payable role in Con Edison.
The general issue of increased complexity is a problem that Con Edison struggles with as the company develops, integrates new technologies, and acquires additional vendors. These challenges are effectively addressed by the AP team with a notable contribution to the progression of the finance function.
Looking into the future, Con Edison will continue working on the AP automation improvements to achieve higher levels of straight-through invoice processing. With machine learning, it becomes possible for there to be more intelligent and automatic invoice validations and approval routing. From a supplier perspective, Con Edison’s business strategy involves getting more vendors to engage with the Ariba Network for fully digital procurement/AP transaction cycles.
Such measures and many others will enable the Con Edison AP group to manage increasing invoice traffic and at the same time provide top-notch vendor experiences – which is essential to maintaining streamlined operations across the entire organization.
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