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Breakthrough Process Improvement Case Study

“IMPROVING EMPLOYEE CLAIM REIMBURSEMENT PROCESS”

The Kanoo Group Central Accounts Team (Ashraf Ahmed, Ms Mariam Al Busaidi,

Mr. S.A. Kapadia)

SERVICES DIVISION

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• The Kanoo Group Services Division processes employees claims for reimbursement: – Immigration expenses for family visa processing

– Consulate payment for passport renewals

– Visa medical test related expenses

– Salik payments for company cars

– Telephone expenses

– Miscellaneous cash payments

• 1,800 person are covered under above services in Dubai and all Northern Emirates.

• Two full time equivalent (FTEs) employees were dedicated for the reimbursement process.

Introduction

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• The reimbursement process was having the

following chronic problems: – Complaints of delays in receiving reimbursement from

employees

– Loss / misplacement of cash vouchers and supporting

documents requiring re-verification by Accounts (rework)

– Revelation of confidential information of employees (e.g. salary,

age etc.) due to manual handling of claim documents by

multiple persons.

– Numerous follow up calls from employees to Accounts.

– Very difficult to check duplicate claims, hence insistence on

submitting original bills, which was not possible in all cases.

Business Case

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Stakeholders

• Internal customer departments

– Administration

– Public Relations

– Accounts

– Mail Room

– Cashier

– Kanoo JVs

• Kanoo employees

• Internal Audit Department

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Voice of Customer

• Employees want reimbursement of their

expense claims

– In the shortest possible time,

– With transparency

– With accuracy

• Internal Audit wants adherence to

company policies

• Admin and HR want to reduce paperwork

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Project Charter

• The Problem Statement: • Reduce paper consumption for claims

– 300 claim forms per month each with average 5 sheets by 60%

– 600 envelopes per month by 50%

• Reduce labour from 300 man-hours per month by 80%

• Reduce time wasted in searching for claim status from 25 man-hours to less than 2 hours

• Reduce loss/misplacements of invoices and resulting rework to zero.

• Reduce additional accounting transactions required due to transfer of employees during the course of the claim process.

• Reduce invoicing cycle time from 30 days to 10 day.

• Reduction in internal customer complaints from 30 to near zero.

• Reduce accounting man-hours involved from two FTEs by 50%.

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Project Team

• The teams involved:

– Service Accountant

– Administration Manager

– IT Department

– Software developer (Kanoo JV).

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Project Timeframe

– Start Date January, 2010

– Target completion by February, 2010.

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Process Flow (Before)

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Start

Employee incurs expense

Claimant sends supporting

documents to Payroll

Accountant, as and when

the claimant wishes

Company policies

for eligibility for

claiming expenses

Verify documents

submitted

All OK? Not OK

Payroll Accountant

prepares a Cash Payment

Voucher (CPV) giving

account code

Account Codes

Directory

Voucher with supporting

documents is checked by

Admin Staff

Approval by Admin

Manager

Claimant signs the voucher

in “Received by” column

Admin staff will submit to

Payroll Accountant

Payroll Accountant

distributes the approved

vouchers to the concerned

Claimants

Gives to Deptt

Secretary

Claimant in

Kanoo Main

Office?

Messenger hands

over cash to Deptt

Secy

Deptt Secy arranges

to send cash to the

Claimant

End

OK

Yes

No

Large number of status

query and follow up

calls from claimants

Loss of

confidentiality

(when

multiple

persons with

same name)

Paper

consumption (600

sheets + 300

envelops per

month)

Delays in transit (documents,

voucher, cash) for the people

working outside the Main

Office Deptt. Messenger

Goes to Cashier

Cashier checks,

pays cash and

enters data in the

Financial System

Messenger /

claimant signs the

CPV

Voucher lying in

deptt when

claimant on

vacation

Cash /

voucher lost

in transit

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Proposed Solution

• Admin and Accounts managers jointly reviewed the process and decided to simplify it.

• Decided to computerise the Claim Process.

• Requirements were given to IT Deptt. to develop a new module in the Payroll System for Expense Reimbursement.

• IT Department involved Gemini (Kanoo JV).

• Gemini developed the module covering the following types of reimbursements: – Emirates ID,

– Visa medical

– Immigration

– Miscellaneous 10

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Modified Process Start

Employee incurs expense

Claimant scans the

expense bills and emails to

Payroll Accountant before

20th of each month

Claimant scans the

expense bills and emails to

Payroll Accountant

Payroll Accountant checks

the bill, if OK adds to the

appropriate expense head

in payroll system for the

employee

Payroll system

automatically generates

entries for the financial

system

Reimbursed expenses are

listed in the Salary Slip

Salary slip is uploaded on

Kanoo Intranet

Salary + reimbursement

amount is credited to

employees’ Bank

Accounts

Employee downloads

Salary Slip

Report on expense

reimbursement is

generated and presented

to Admin Manager for

approval

Note:

For urgent payments,

weekly processing of WPS

can be made.

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Test Run

• Test Run was made in February, 2010

• Salary Slip format was modified to list the expense reimbursement items.

• More expense categories were added.

• Each expense category was linked to the Financial System through its account code.

• Automatic posting of reimbursed expenses to the Financial System was achieved.

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Communication of Change

• Staff were informed of the new system

through a circular

• Manual Expense Claim Vouchers were

discontinued from April 2010.

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Benefits 1. Confidentiality of the employees’ data is protected as only the

employee and the Payroll Accountant can see the documents.

2. Reduced the flow of paper within and between departments.

3. Standardised cycle for submission of expense claims (once in a month by the 20th)

4. Reduced follow up calls to near zero.

5. Reduced incidents of misplacing vouchers and resultant rework and re-verification.

6. Reduced Accounting manpower requirement from two FTEs to 0.25 FTE.

7. Reduced the workload of the Admin Manager, Cashier, mail room, departmental secretary and messengers.

8. There was positive feedback from the employees on the new process.

9. Reduced handling of cash therefore reduced risk and reduced insurance expense.

10. Checking for duplicate claims has become very easy.

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Horizontal Deployment

• The same system can be implemented in:

– Kanoo Group Abu Dhabi

– YBA Kanoo Group, Oman

– YBA Kanoo Group, Bahrain

– YBA Kanoo Group, KSA

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Further Improvements

• The system will be made web-based so that

employees can query claim status on-line from

anywhere in the world.

• Weekly processing of claims through WPS for urgent

reimbursements.

• Including expense claim module in the employee self

service module of the new Payroll system.

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Single Point Lesson

• Instead of approving papers one-by-one, data can be

entered in the computer and one single approval can

be taken for a batch.

• Rather than entering data in the computer at the end

of a process, it is better to enter it in the beginning.

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Recognition

• Appreciation received from external and internal

customers.

• Appreciation of project team by Group Management.

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