Council's unpaid invoices 6 months after SAP go-live

Birmingham City Council – Europe’s largest local authority with a £3bn annual turnover – has had an “approvals day” to try and clear a backlog of about 10,000 unpaid invoices from its suppliers. The invoices were “struck” in a SAP-based financial system, more than six months after going live.

The council said this week [May 2008] it had cleared a backlog of invoices which built up when it implemented its “Voyager” system in October 2007 – but its spokesman added that this led to a build-up of unpaid invoices “further along in the payments system”.

The council set aside 13 May 2008 as an “Approvals Day” to clear backlogs and “identify and permanently eradicate any remaining payment issues that still exist”.

A Birmingham City Council spokesperson said today (15 May 2008): “A total of 2,000 invoices were cleared as a result of Approvals Day on May 13.


“This represented the start of a process to drive down the number of invoices that had built up in the system to 10,000. Efforts will continue in the coming days and weeks until the council is satisifed that all remaining issues relating to invoice payment are fully resolved.

“Clearing 2,000 invoices was a significant achievement, but, more importantly, it allowed the council to analyse the underpinning causes, ranging from the identification of supplementary training needs to tweaks to internal processes.

“There are no delays in invoices being scanned into the Voyager system. To put the current situation into context, the council receives approximately 3,000 invoices each day, and the overwhelming majority are being paid on time.

“However, the council recognises the problems that overdue payment causes our suppliers when problems arise and we are determined to minimise the number of these.”

Council officers appear to have been thrown by the rigour and depth of changes the SAP system imposes on the way council staff work. In February the council’s lead for the IT transformation Programme, Glyn Evans, told Computer Weekly that specific problems had been foreseen but “what we didn’t take into account was the cumulative effect”.

More recently staff have claimed that employees were assigned the wrong roles in the system – and when they rejected misdirected invoices these were later returned to them by the system. The staff say all they can do is register a support call – but they continue to complain that the responses to their queries are slow.

In February 2008 Computer Weekly reported that the Birmingham authority had 18,000 unpaid invoices and that bailiffs hade visited the council. Some suppliers withdrew goods and services, and some staff used their own money to buy food for a children’s care home. The council had told Computer Weekly that it expected to clear its backlogs of unpaid invoices by the end of February 2008.

The council’s IT transformation programme, which included the SAP project, was among the winners of the Cabinet Office’s E-Government Awards. Gordon Brown praised the awards winners in January 2008.

Details of Approvals Day are disclosed in an internal e-mail to staff which was leaked to a website popular with council workers, The Stirrer.

The email says the aim of Approvals Day is to clear work-lists of outstanding invoices in the [SAP] Voyager system.

It says: “There has been on average 10,000 stuck in Directorate approval work-lists for over a month with no real progress seen in this reducing top and settling at a lower level. Action plans are being put together for a three-month push to resolve all the obstacles for a sustained improvement.”

The email adds that Approvals Day should lead to a reduction in complaints from suppliers about non-payment of their invoices. It says:

“The 13th May 2008 will be a day when all Directorates are asked to give priority to clearing [invoice] Approval Worklists. To help staff to clear backlogs and deal with queries on complicated unpaid invoices, fewer new invoices than normal will be entered into SAP work-lists on 13 May.

“The main delays recently have been around complex queries and there is a need to clear worklists to be able to bring these to the surface and address them.”

But the email warns its staff that mass rejections of invoices to achieve empty work-lists is not acceptable. “Unusually high levels of rejections will be investigated,” says the email.

A 100-strong team of IT professionals implemented system. They were split between permanent council employees and people on secondment from a joint venture company that Birmingham set up with Capita in 2006. The joint venture, Service Birmingham, has a 10-year contract worth £470m to run the council’s IT function.

PricewaterhouseCoopers and Serco also helped with SAP implementation work at the council. About 500 council staff were transferred to the joint venture.

Links:

Birmingham Council’s SAP system – local MP remains defensive

SAP to Help Birmingham City Council to Achieve Savings of £1bn Over 10 Years

The Stirrer – popular website for Birmingham Council employees

Birmingham City Council bills unpaid as SAP project falters

Birmingham council signs UK’s largest local government software contract

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