Parker Hannifin – Accounting
Watch the video on how Iron Mountain was able to organize a simple solution to Parker Hannifin's accounting system.
Parker Hannifin is a world leader in motion control technologies. Originally founded in the '20s in Cleveland, OH, it's grown to be over $10 billion dollars a year in sales. We build a wide variety of part for pretty much anything that moves: automobiles, planes, medical solutions, hoses, hydraulics. If it moves, we pretty much build a part for it.
We store our paper records for Parker Hannifin's corporate finance department and some of those records are accounting and records related to purchasing cards that over 3,000 Parker employees utilize. We have about 3,600 cardholders, we do about $11 million dollars spent per month, and about 50-60,000 transactions a month on these cards.
You have everything decentralized in over 300 locations with 100 operating divisions and the volume of those credit cards has increased 10-fold.
Each individual would give a statement at the month's end, they would have to sign and have their manager sign it, they would put their receipts and what we call the "blue bag envelopes" and they would send it in to corporate. The main problem was the lack of visibility for the division controllers. We would just randomly take every 20th blue bag that came in here, we would open it up. If you caught fraud on it, great. If you didn't, it got through. Our biggest challenge was one of accessibility.
We had the procedures in place to maintain documentation required for audit compliance, but accessing that information was time-consuming, expensive, and inefficient.
My main concern as a manager is that I want to discuss the merits of what we did, or didn't do. I don't want to spend time looking for documentation.
Jason Lance from our tax department was looking for a solution to bypass hiring temps to go out to Iron Mountain and pull receipts, pull packages, pull boxes for their tax audits. They would send folks into this facility and literally spend months reviewing and auditing documents. It was a difficult process, it was tedious. I'm not sure of the accuracy of it... everything was done by hand.
The ramifications of not having the missing documentation would include that fact that they would be construed as having been tax deficient and we'd end up paying taxes on an item that we potentially paid tax on originally while the single invoicing may result in a $10 remission of tax that could be extrapolated out to hundreds, if not thousands of dollars of tax.
What we did, was we said we could image these things for you and put them out there on an image repository. We call it our Digital Records Center for Images. And that way you can view those things online. We don't have to go through all the physical process of pulling the information and having you come out and physically audit.
They came to us with a solution and it seemed like a great product. The images were great quality. We worked with Iron Mountain back and forth with their team and came up with a really nice solution to the whole process.
We were able to look at the numbers and look at what they were spending and justify a solution to convert their receipts and the P card statement into electronic information stored in the Digital Records Center. And then for the old information, the boxes that were already on the shelves. We just imaged them On Demand when they need them for a state tax audit.
With the new solution, we're able to basically look a the actual spent and we can actually take a look at retail purchasing, restaurant purchases. And with the images On Demand, you can just look at that and we can focus on where the fraud areas are, instead of randomly opening up every 20th one.
The cost savings is fairly significant in complying with a single audit request. Our expense may have gone from 4 or 5 thousand dollars to $1,500 or something.
Not to mention the huge savings that's involved in the time that it takes to comply with that requirement as well as the request process by Iron Mountain locate a great deal more than the information than we were able to locate previously. Iron Mountain's solution completely changed the way we audit things. Everything's online where we can access this. Our division controllers can access all the receipts. The image enhancement, it worked out great and we had it up and running in 2 months.
My experience working with Iron Mountain as a partner has been very positive. They're clearly experts in document management, which is something that we weren't before.
What we're hearing from Parker Hannifin is that they love the system, it's easy to use, and they now have this visibility and a tool that they can really help manage this information.
The process has been great. The image quality is phenomenal. Even the small receipts that we used to get that were poor quality from either going through the mail or getting faxed over, we can now see even better on the image enhancement. They did have visibility before, now they have full visibility of everything.
The time i was spending securing the documents can now be spent securing answers to the questions.