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The Last Roadblock

By Doug Bartholomew  |  Posted 2007-03-13 Print this article Print

Memorial Sloan-Kettering Cancer Center's shift to a hosted online payment service reaps $500,000 in annual early-payment discounts from suppliers who now get paid faster.

The Last Roadblock?

Although most of Sloan-Kettering's invoicing and payment processing is handled electronically, the organization's setup for compiling information on goods received still has a ways to go. Currently, this information comes either from a receiving clerk checking off the goods that have arrived and entering the data into a PC at Sloan-Kettering's receiving dock, or via an advance ship notice through an EDI transaction. "Obviously we'd like to reduce this kind of back-end roadblock to a fully electronic matching of all invoice-to-payment documents," Cassera says. To that end, her financial systems group has built and is starting to implement a new Web-based electronic receipt application for receiving-department employees.

The shift to Xign also brought in a bunch of suppliers that had eschewed EDI due to the cost. "Many suppliers with back-office operations that were not that efficient now were able to deal with us electronically," she points out. "We brought in a lot of smaller companies that we never would have gotten through EDI."

More suppliers, of course, are now getting paid on time. According to Cassera, on-time payments are way up, more than 95% today, versus just 15% before Sloan-Kettering started using Xign. The other 5%, she says, are invoices that require additional time for approval.

Instead of Sloan-Kettering cutting checks, most of the payments are handled through an automated clearinghouse. About 85% of invoices coming in to Sloan-Kettering are submitted electronically, most via Xign. The majority of the organization's 1,000 top suppliers use the online service to submit invoices and receive payments. "Our bigger suppliers are all doing Xign with us," Cassera says.

She admits that converting the remaining large suppliers may be more difficult. One reason is that some companies simply resist changing their processes and learning to use a new technology to bill their customers. "You have a lot of proprietary suppliers out there," Cassera says, referring to companies that provide a product or service that isn't easily replicated by someone else. "You can't tell someone who provides a specific patient-care item to take a hike."

Another reason some suppliers resist converting to electronic payments is that they don't want to share their banking information. "You are always going to have the one-off vendors who will not give you their banking information, and who still want a paper check," Cassera says. Nevertheless, she figures to get even more of Sloan-Kettering's supplier base on board over time: "Our goal is to get 90% of our invoices processed this way by the end of 2007."

Doug Bartholomew is a career journalist who has covered information technology for more than 15 years. A former senior editor at IndustryWeek and InformationWeek, his freelance features have appeared in New York magazine and the Los Angeles Times Magazine. He has a B.S. in Journalism from Northwestern University.
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