Case Study: A Switch to Electronic Invoices Cuts Costs for Tim Hortons
Problem: Tim Hortons, the fourth largest publicly traded restaurant chain in North America, sought a more efficient and cost-effective system for handling invoices from its multitude of suppliers.
Solution: Partnered with a provider of hosted electronic invoicing (e- invoicing) solutions.
Results: Since going live with an e-invoicing system in August 2009, Tim Hortons has reduced its operational costs in its accounts payable (A/P) department by nearly 50 percent.
Deluged by paper-based invoices, which required employees to open envelopes and key information into a system, Canadian-based quick-service restaurant chain Tim Hortons decided a more efficient and more environmentally friendly system for processing suppliers' invoices was needed. Tim Hortons turned to Transcepta, a provider of hosted e-invoicing solutions.
Transcepta's e-invoicing system is designed to manage the A/P department of a company as large as Tim Hortons — as of October 2010, Tim Hortons had 3,703 restaurants, including 3,082 in Canada and 567 in the U.S. By having its suppliers send their invoices electronically, Tim Hortons realized several benefits, including reduced A/P costs, more productive employees and the elimination of nonvalue-added elements of the invoice to payment cycle (i.e., vendors get paid faster and Tim Hortons gets a better real-time analysis of available cash flow).
"We were able to move from receiving 100 percent paper to diverting a large portion of our invoices to an electronic medium," says David Kraulis, senior manager of financial operations, Tim Hortons. "The beauty of that is it allowed us to deal with some of our large-volume vendors in a uniform way, and in many cases without the need for intervention by an administrator."
And for good measure, all this was achieved in a relatively seamless transition over the course of a few weeks. Tim Hortons had little to no involvement in training its suppliers on how to interface with the brand via Transcepta's e-invoicing system (Transcepta takes care of the entire onboarding process for all participating vendors), and its internal staff needed little training as well.
"For our administrators, whether the invoices come in through the e-invoicing solution or they've been scanned and put through our optical character recognition software, it's not visible to them," notes Kraulis. "If it requires their attention, they have an electronic record in their queue. Whether it's come in through the scanner or e-invoicing, it's seamless to them."
An e-invoicing system sounded all well and good from Tim Hortons perspective — reduce costs, increase efficiency … what's not to like? But without supplier adoption as well, the whole plan is a bust. This wasn't an issue for Tim Hortons, however. While some of its suppliers were already familiar with e-invoicing networks and willing to participate, others needed some convincing.
For those hesitant vendors, Tim Hortons laid out the value proposition of Transcepta's e-invoicing network. Yes, there's a nominal cost up front for their participation, but that money is more than recovered in the long term in the form of postage and paper cost savings, as well as savings associated with the labor cost involved in sending out paper invoices. An e-invoicing system also meant that vendors would be getting paid faster.
"Tim Hortons views Transcepta positively because not only is the solution good for Tim Hortons, but it's attractive to its suppliers as well," says Shan Haq, Trascepta's vice president of marketing and sales.
With nearly 40 percent of its invoice volume now arriving via e-invoicing, Tim Hortons' transition from a paper-based A/P company to a more efficient, environmentally friendly brand is under way. High-volume suppliers have been targeted first for e-invoicing, with more set to join the network in the coming months.