Transform your business with automated payables
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LAUREN: Good afternoon, everyone. Please note that this event is being recorded. If you object to this recording, you must disconnect from the conference line. To ask questions during the webinar, please submit them using the Q&A chat box on the right side of your screen. I will now pass it over to Joe Flaherty to start our webinar today on "Transform Your Business with Automated Payables." Joe.

JOE FLAHERTY: Awesome. Thank you, Lauren, so much. And thanks to all of you for joining. So the topic we've got today is certainly relevant for a lot of our clients. Everyone is looking at ways to enhance their process, specifically on the payables side, but, of course, on the receivables side as well.

And I am so glad to have a client speaker here with me today, Deb Colon from Penske, who's going to share some of the steps that Penske has taken in the last number of years to enhance the processes, and to leverage some new technologies to really allow Penske as an organization to evolve their payables process. So I guess, Deb, without further ado, maybe you can just introduce yourself real quick, and share where you are and what you do.

DEB COLON: Sure. Good afternoon. Deb Colon from Penske Truck Leasing, Director of Financial Operations. I've been with the company for 35 years. I am responsible for $9 billion worth of payables. And that is whether it's T&E expense reports, purchasing of our trucks to have our business run, or just as simple invoice as a uniform invoice.

JOE FLAHERTY: Awesome. And I know Deb knows this, but one of my favorite parts of my job is sitting down and doing these sessions because it's frankly, a great first step for a lot of the attendees to actually see how do you implement change? How do you get buy-in from executive leadership to take on both big and small projects?

And I think one of the great things about what Penske's doing is you have taken on some pretty big process changes. You've implemented some really great technology that we're going to discuss today. But it's also just the little steps that you've taken along the way to find ways to adapt and to evolve. So I guess without saying too much or tipping my hat here, I guess, what was the first big change that you put into play at Penske?

DEB COLON: Probably the biggest change that we implemented is our virtual pay program. It was the ease of processing correct payments we know are going to our vendors now, and seamless reconciliation on the back end. It's not-- it wasn't time-consuming any longer. We knew that when we sent the virtual pay that the card was going to be run for the exact amount and no reconciliation, more or less, on the back end.

JOE FLAHERTY: Right. And just to be clear, when you say virtual pay, you're referring to a virtual credit card program, right?

DEB COLON: That is correct.

JOE FLAHERTY: Yeah. Yeah. So U.S. Bank brands it virtual pay. I know in the space it's virtual card. It's V card. It's any number of different nomenclature. But I guess in your instance, it was a pretty manual process before you started to leverage these virtual cards. Can you share what did the process look like? And what specifically are you using the cards for today?

DEB COLON: So we have a homegrown system service net. This is one of our processes that we use, where we record everything where-- when we fix our vehicles. And the location would go-- they would create the RO to fix the vehicle. That vehicle would be fixed.

We would need to call the supplier that was doing the work. We would have to give them a physical card number over the phone. We'd have to hope that they pay-- put the right amount in there, that they only use that card one time.

When we rolled out virtual pay, it was a program that U.S. Bank worked with us to implement it right in-- put the app right into our service net system, where what we do now is we make sure that we have an email address for the supplier. We click a button, and the virtual payment goes right to the supplier.

They have to still run a card, but there's limits that you can set on the card. You can have it go for the exact amount. You can have it only be useful for a period of time, say, 10 days.

Then once they run that transaction, what we did with the U.S. Bank is figure out a way to map it over to our ledger. And the allocation, the general ledger and the location that it's assigned to, goes right over to our general ledger. So there's no work on the back end for our field. So it streamlined that process immensely.

JOE FLAHERTY: Right. And you hit on a few of the key benefits there. So we get a lot of questions leading up to these events. And a lot of them focused on the control piece. What level of controls can come from various new payment methods? And certainly, virtual card does allow you guys to really lock down the exact dollar amount, who that card's going to. And on the back end, streamline that reconciliation activity. But were there any other benefits that you were able to realize from leveraging the card?

DEB COLON: Yeah. The biggest one I think that we've noticed was the security of it. This manual process that we did in the past by giving the supplier the P-card that we had-- the number on the card.

We know now that this virtual card can only be run one time, and it can only be run for the dollar amount that we say. In the past, they could have ran the card two and three times. And that's where the work on the reconciliation on the back end came, which took so much time. So security was a big enhancement for us.

JOE FLAHERTY: Yeah. And I can only imagine if you're using the same card over and over, and perhaps there's the same dollar amount that's taken, how do you reconcile that without picking up the phone, right? And I know this won't be the case for most of the people on the line today. But your percentage of vendors that are accepting the cards are pretty / right. What would you say? Was it 75%, 80%?

DEB COLON: For our first program that we rolled out it was 86% of our vendors adopted this. And they actually like the ease of the use of the program as well. They received an email. They needed to do a few steps, and they had their payment. So 86% was-- we were a little bit surprised by the adoption rate on it as well.

JOE FLAHERTY: Yeah. And just for the audience today, I mean, 86% is for the use case that Penske's using it for. In the industry, generally, we target between 20% and 30% of vendors should be adopting on the AP side of the house. This is a very niche use case. And frankly, that even is really strong adoption. So what Penske's done there is just incredibly impressive.

The one thing, I guess, before we kind of shift focus a little bit here, is I do want to call out to the audience that we do have a Q&A box. I don't know that we called that out at the start today. But if there are any questions on topics as we go through, just know that we are going to be monitoring that box, and we'll respond to questions, either as we chat through here, or at the end, if that makes more sense.

So the next topic that I know that you guys have put a ton of energy into is your invoice automation practice. And so I guess what provoked you to start looking into invoice data capture, or invoice automation, as we refer to it?

DEB COLON: That's a good question. What made us look into that is our process was totally manual. The invoice would go to our field associates. They would need to stamp the invoice with allocation. They'd need to put it in a FedEx pack, and send it to area-- a corporate area, that it was then manually keyed into the system. So it was very time-consuming. So we said, we have to come up with a process that's going to work better for us.

JOE FLAHERTY: And I know that there's a number of different ways that our clients leverage invoice animation software. And Chrome River, of course, is who you're using. But depending on who you're looking at, some map to a specific vendor's invoice. And so it looks at it, and kind of reads it because you've told it where to look.

But in your case, it's a little bit more dynamic rather than that. So it sounds like for you, right out of the gate it essentially read and figured out who the vendor was. Is that correct?

DEB COLON: That is correct. What the field does now is they take the PDF invoice. They email it into Chrome River. And they put the allocation in the subject line.

It goes into Chrome River. Chrome River OCRs reads the invoice. It takes the allocation off the subject line. It picks up the invoice number, the dollar amount, the vendor it's payable to. And then it sits in a queue, and it waits for our auditing group to go in and make sure all the data slots that were picked up are correct.

So it was a huge time saver. There is very minimal keying anymore that we have to change something. So, for us, it was a time saver, and we could allocate resources to where we need them for our customers.

JOE FLAHERTY: Right. Yeah. And that alone is an absolutely massive benefit to you. I mean, you did have not a completely manual process from the start, but a fairly manual process. And this essentially, has streamlined everything. Do you know loosely what percent of exceptions you have now, where you actually have to go back and look at the invoice itself?

DEB COLON: Well, we look at-- we audit all the invoices. But what we need to change-- the OCR rate is at like 95%. So it might instead of picking up the vendor where it's remitted to, it might pick up a vendor address where it's the physical address of the vendor instead of the remit to advice. But the OCR is really good. It works well.

The other thing that we liked about the Chrome River process is that you can build that system to work to your advantage. So if the invoice is over a certain dollar amount-- let's say, your policy says anything over $50,000 needs a higher approval. What will happen is you can build those rules right in Chrome River. And it will go to that one over manager, get the approval, then go down the path. So you can build your policy-- you can build your system around your policy.

JOE FLAHERTY: Yeah. Which, again, goes back to the control theme that we keep circling back to. And that's what all our customers are looking for. You want to streamline things, but you want to make sure that you retain the right level of control to make sure that things aren't too out of hand.

And I know you mentioned there was another area as well where you were using the invoice automation, data capture piece internally. Can you share a little bit-- I think it was what you were doing with your RO process.

DEB COLON: Yes. That is a different process where the allocation-- instead of having the allocation in the subject line, we are now going to put the RO number in the subject line. Because we need to close that RO back in one of our systems.

So what will happen is the location will put, again, the PDF in the file. Send it down in email. They'll put the RO number in the subject line. And then it will go into Chrome River. We'll audit it. A file will come out of Chrome River. And we'll input it back into our service net system so that it closes the ROs. So what was always a manual process is now all automated from wing to wing.

JOE FLAHERTY: Yeah. That's fantastic. And so I know that you've also integrated your corporate travel program into Chrome River as well. And you and I talked. And I remember you telling me the stacks of receipts that come in the door.

And I remember when I first started traveling a lot, I had a stack of receipts on my deck-- desk, rather, that I put in the manilla envelope, and I'd mail it over. And so it sounds like that's been a pretty good lift on your side as well, right?

DEB COLON: Yes. That has been. Just like you said, the traveler would manually fill out an expense report, staple all their receipts to it, send that report to the one over manager, have the manager approve it, and then put it in a FedEx, another FedEx package, and send it to a corporate processing department. That all went away when we went to Chrome River for our travel and expense.

Now, what they do is they take a picture, email the receipt into Chrome River. Then they physically go into Chrome River, and they attach that receipt to different kind of what we call tiles. A tile may be a breakfast tile, a lunch tile, a dinner tile. And then that's another system where you build your policy right into the system.

So, for instance, if it's over 60 days old, it needs to get a higher approval. If you're outside a limit of what you could spend for breakfast, it won't be a hard stop. But the system will tell you, hey, you exceeded the limit that's needed.

So we built our policy in the system and the ease for the associate to be reimbursed. In the past, it was a two-week turnaround time. Now, it's two days. So huge pickup for the associate.

JOE FLAHERTY: Yeah. And so you're getting rid of the paper. You're expediting the process. You're getting the enhanced control, building in those rules. Again, I know various companies have different rules on what the daily threshold is, or what the number of transactions is. And it sounds like you've been able to implement kind of all those through this process. So that's really great.

So we're now going to pivot to another topic that I know personally when I do these sessions, and I get the Q&A at the end, we get just so many questions about and so much interest in, and that is RPA, or Robotics Process Automation. And I know for a fact that you guys are doing some really interesting stuff.

So I guess just to tee it up, when did you start thinking-- or when I say you, of course, I mean Penske-- start thinking about RPA? And were there specific challenges that you had in mind? Or did you look for those challenges after learning some of the benefits?

DEB COLON: Yeah. So what we did-- finance is the group that started it at Penske. And we said we have to come up with a better way to do these mundane processes, where all we're really doing is putting a date in a data field, or just pushing an enter button to get something down the path. So we said, what can we do? So that's what made us look at RPA and begin to build our processes around the RPA.

JOE FLAHERTY: And, you know, that being said, can you give an example of one of the processes that you really enhanced leveraging the bot technology or the robotic process automation?

DEB COLON: Sure. I'll use the example of running our check run daily. Penske does a daily check run. And we have various different companies. We have Penske Truck Leasing, Penske Logistics. Then we have our Canada companies. And in order to run that check run, you have to do it by company code and by payment type. And you put the exact same information in the same data slot for every company code, every bank code.

So what we did is we said, OK, let's look at a robot to do this for us. And we started with very detailed process maps, and working with our IT group, and giving them the process maps. They come back to us, ask questions, and they build the robot to do what it needs to do. And then it was testing wing to wing.

The key there is your process maps need to be to the very detailed level, so that the IT person can build that robot for you. And you can also put in things like, well, if this data field is empty, skip it and go somewhere else. But that has to be in your process map.

JOE FLAHERTY: Yeah. And it's so interesting because you guys are doing something-- or frankly, did something-- very recently that another one of my clients had done. And that's-- it sounds like you hosted essentially a conference to talk about what you've accomplished, and to kind of drum up interest in finding other ways around the organization where this could be of help.

DEB COLON: Yeah. Yeah We did. We did exactly that we had like a gallery walk, is what we called it. And we had-- since finance was the only group that started with the RPA, we wanted to put it out to our other groups, like to our sales department, to our maintenance department, to our marketing department.

And so what we did is we had this gallery walk. And since I'm a person that implemented RPA, I was asked to speak about that. And we just gave little clips on how it helped us. And then we did like poster boards of this is what the process looked like, and here's what it looks like today.

So it was like a three-hour event where people could come to the gallery walk. They could ask us questions. What did you do to get this started? What was the most that you learned about this, from implementing your first robot to your third robot? And we were there for the three hours giving details to our other associates, other departments, that helped them move along.

JOE FLAHERTY: Yeah. And that's so cool. I know when we first started talking, you mentioned that there were three bots. But I would imagine after an event like that, in the very least, there's a lot of teams around the organization that are starting to map in a very detailed manner again their process, and trying to think of where can this technology really add value to take some of the burden off people, right?

DEB COLON: Right. It was really neat. Because even today-- the event happened in the beginning of October. Even today, we get calls and say, hey, how did you do this? Can you help-- could you walk me through this? What's the best practice for starting this? And it was an eye-opener on the number of processes that we could improve by RPA.

JOE FLAHERTY: Right. And one of the common themes before the session and in these sessions generally are, how did you implement this change? And that could mean implement virtual pay, or the invoice data capture. But RPA specifically, we're getting a lot of questions. But it's a pretty easy thing to get started on, right?

DEB COLON: It is. We had a team, an offshore team, that were ideal with building the RPA. And, like I said, in the past, it's all based on your process match. You have to have the right people, have the subject matter experts in the room to answer the questions, and to go through the process to the lowest detail that you can map it to. And our IT built exactly what we needed.

JOE FLAHERTY: And the thing I love best about what you guys did is every organization, or most all organizations, have these tasks that people are doing on a daily or weekly basis that are just repetition. It's just copy here, paste here. And if you think about one of the biggest risks to organizations right now it's employee retention. You want to make sure your employees are happy.

In those sorts of roles where people are just copying and pasting, that's not going to make a good long-term employee-employer relationship. So what you're doing is you're able to then take these individuals and give them more meaningful tasks, or let them focus more of their time and energy on things that they actually want to be doing. And that downstream helps everyone. Right?

DEB COLON: Right. We constantly ask our teams, ask me why you're doing what you're doing. Ask me why do I have to do this like this? Always ask the question why because there's always a better way to do something. And Penske is continuously moving forward. RPA was a big time saver for us.

JOE FLAHERTY: Yeah. Awesome. I know we've kind of hit on some of these key best practices that I'm showing on the screen here. But when you think about some of the change, some of the new technology that Penske's leveraging, where do you start? I mean, I see the first box here. Start with a discovery team, huddle, ideation. That is natural, right? But you guys are doing such a great job with that.

DEB COLON: Yeah. By asking our associates to ask us why we're doing what we're doing, they bring so many different ideas to us. There's so much good stuff going on. So what we do is we come up with the idea. We ask the subject matter experts of that process.

And then we look at it all throughout the department. We consider how it's going to affect the other departments within our company. Because somehow, payables touches everything. Everybody's sending you in information. It touches all departments.

And then what we do is we bought-- excuse me. We gain buy-in from our stakeholders. And then we take the presentation to senior management. And we say, OK, here's what we feel that we can save. And even as simple as all those FedEx packages coming in the mail-- that was a huge savings for us just when we implemented Chrome River for the invoicing.

And once we do that, it goes to our senior management steering committee. And they decide, hey, is this something good to move forward with, or should we not? Nine times out of 10, depending on the homework that you do to present to them, they say go ahead and move forward.

And then we go out to the marketplace, and we look for that person that's going to-- that we think is going to help us. We bring them in, two or three companies, four companies. And then decide which one is going to fit us-- fit our process the best.

JOE FLAHERTY: Right. Awesome. And one of the things you hit on is determine what are the cost savings going to be? When you run these things up the pipe, it certainly helps if you can say, and by the way, we're going to save this much money. And if we look back at some of the initiatives you've implemented, virtual pay, you're getting a rebate. And you're moving away from check in many cases, many organizations.

The invoice automation piece-- there's definitely cost savings there. RPA-- cost savings, employee retention. All sorts of these things really just stand out. And that's just such a critical piece. In addition to we often hear just making sure that there is buy-in across the organization. What is going to be most meaningful? What's going to drive the most impact for us.

So I guess kind of as we get ready to close-- and we do want to leave a couple minutes for Q&A here. Looking forward, what is Penske going to be doing in the future? Are there new solutions you're looking at or anything like that?

DEB COLON: Yeah. Yeah. Actually, we are going with AP Optimizer with U.S. Bank right now, which that is, again, a more secure method. What happens is we send a file to U.S. Bank. They're going to scrub our file and say, these people that you pay by check, we know that they accept virtual pay, or they accept ACH. We're going to pay them ACH for you or virtual pay. Again, more secure method of doing that.

That will be rolled out January of 2023. We're just working through all the processes right now. And that's just one of the things that we're doing moving forward.

JOE FLAHERTY: Awesome. Yeah. That's such a big one. And what you're doing with RPA across the organization-- we already covered that one. But that is so huge.

So I guess in closing here, we do have a couple of minutes left. I wanted to give those attendees an opportunity if you do have questions to go ahead and share. And then we'll just give it a couple minutes.

And I know there were a couple of key themes leading up to the session. So if you do have questions, please put them in the Q&A. Or after the session, please feel free to message us-- or me, I guess. I'm not going to set you up for this, Deb-- just with any questions that come up. Not seeing any come through quite yet-- haven't been addressed as one-offs. Great.

So I guess as we get ready to close here-- didn't get any questions in. But I did want to share that we will have a survey that's going to be circulated out. And Lauren, I think we're going to put that right in the QA box, or email it after the fact. So you'll see that come through, so that you can just click on the link. We want your feedback, and we want to hear what is working, or potentially we could change and focus on in the future.

So I guess in closing, thanks, everyone, for your time. Deb, thanks especially to you and the U.S. Bank team that put this all together. It was a great session. And I know that we're going to get some great questions as a result. So--

DEB COLON: Yeah. And thank you for having me.

JOE FLAHERTY: Yeah. Great. All right. Thanks, everyone.