In 1985, John G. King started building homes under the JG King Homes banner. His goal was to design and build homes that families love, using steel frames as standard.
This commitment to quality enabled JG King to offer a 50-year structural warranty, something unmatched by any other volume builder in Victoria. And as a result, the company has won the hearts of the 10s of thousands of families who now live in their dream homes.
Today, JG King builds over 1,000 houses every year, and employs more than 400 people.
An AP team screaming out for help
JG King’s accounts payable team handle between 10,000 to 13,000 invoices each month. The AP team had grown to 16 just to cope with the sheer volume of work created by manual processes.
“We are a big business that was, in some ways, operating the same way as when John started it back in ‘85,” says Angelo Tsagarakis, Chief Executive Officer for KG King. “There were countless opportunities to better leverage technology to gain efficiencies in the business, and I identified the AP process as one such opportunity.”
Angelo says the lack of automation in the AP process had resulted in several problems.
“There was so much pressure on the team to process invoices that we were finding it difficult to keep people employed in the role. What was driving this pressure was the requirement to comply with the Security of Payments Act, which essentially means that if we don’t query an invoice within seven days, we have accepted it, and it is due.
“My team was burning out, and it was not uncommon to see them there at nights and weekends at period end. As a leader, I felt it my responsibility to solve the problem if not from a financial capacity in my role at JG King, but also from a human element,” continued Angelo.
Choosing the right partner for the job
JG King accepted proposals from four vendors to automate their AP process. They went through an extensive selection process and chose to partner with Redmap.
“Their sales process was one of the reasons I endorsed the Redmap offering,” says Matthew Thornton, Chief Information Officer for JG King. “They took their time to understand our requirements before even accepting our request to submit a proposal. They were transparent as to the risks they saw in the project and pushed back on some of our requirements.
“It was clear that they had done this before, and that provided me great comfort given that it would be my responsibility to deliver this project to the business.”
Implementing Redmap AP Automation
JG King uses two AP process-related applications to manage their business.
Workflow Management Suite (WMS) handles purchase orders and job costing management, and the invoices are posted into the business’s Timberlink ERP. A middleware product called InSynergy transfers the data between the systems.
At the core of all AP automation projects is a need to use data from the invoice to manage its approval in the business. To do this, Redmap extracts data from the invoice and compares it to the purchase order in WMS. If the invoice and purchase order match, all is well, and the invoice is posted directly into Timberlink. But if they don’t match, the invoice is sent to someone authorised to review and approve the variance.
“Our implementation was part product implementation, and part software development given the complexity in the business created by the multiple solutions that we use. It was further complicated by the fact that we are essentially four different businesses inside one, with very different requirements,” said Angelo.
One such complexity in the business is the management of invoices that need to be re-billed to other parties. On a job site, it’s not uncommon for subcontractors to cause damage (for example, the tiler may scratch the bathroom vanity), and the cost to fix the damage is passed back to them.
Redmap integrated the AR function of re-billing into the AP process so JG King could recoup these costs. Now, invoices with a re-billing component are sent to a further workflow to give the finance team visibility and raise the appropriate claims.
Building a brighter AP future
The project took almost 12 months to complete across the four different business units, and JG King hasn’t looked back since.
“I was really impressed with Redmap’s project delivery,” says Angelo. “Change is hard, and Redmap held our hand throughout it all. Whether it was pro-actively identifying issues or acting as a sounding board to bounce ideas off, Redmap really were our partner in this process.”
To allow their field staff to approve invoices on the fly, JG King issued them all with iPads. And the results speak for themself.
Invoices are now processed in close to real-time, the finance team has complete visibility of the AP process, and the business has realised an annual $750,000 cost-benefit to their bottom line.
“This project is a source of great pride for my team,” says Angelo. “Whilst it was very hard at times, and much of that was due to our internal challenges, I smile when I think of how far we have come. I knew that there were significant headcount savings in automation, and so as my staff left the business via natural attrition, I employed temp staff to re-fill the vacated positions. This gave me great flexibility as we started to go live business unit by business unit.
“The team in the field, the ones that we gave iPads to, used to drive into the Port Melbourne office from as far away as Ballarat to approve their invoices. Now they just get an email and do it on the spot.”
“We have dramatically improved our vendor relations, and the team has not had to report to work on the weekend for years. And of course, removing $750,000 worth of costs from the business didn’t hurt either,” concluded Angelo happily.
We have dramatically improved our vendor relations, and the team has not had to report to work on the weekend for years. And of course, removing $750,000 worth of costs from the business didn’t hurt either