Keeping pace with today’s competitive working environment means that businesses need to face the challenges of employee productivity, head on. With the UK sitting one step behind France and Germany, businesses cannot afford to fall further behind on the productivity step ladder.
Companies are increasingly becoming digital enterprises. With large volumes of documents, data is everywhere and companies need to effectively manage, store and access this data wherever and whenever they might be, in order to operate efficiently and boost productivity. It is quick access to information that allows organisations to innovate and keep pace with competition. However, even as organisations start to realise the power of digital transformation, many are still struggling to implement the relevant automation processes.
The finance department is a key component of any organisation. Yet manual, laborious processes are causing a slow-down and dramatic reduction in productivity. One particular sticking point is the traditional accounts payable (AP) process.
Manual AP processes are a huge drain on time and money for organisations. The process is long and cumbersome. Typically, invoices are sent to multiple touch-points throughout the enterprise, which at best is a smooth, but time-consuming task. At its worst, these manual processes can see time-sensitive invoices sitting on desks for several days, weeks or even months as they come up against several stalling issues, including discrepancies and delays. Yet, worse still, it’s not uncommon for invoices to be lost or misplaced, which only causes delay and could result in a duplicate payment to the supplier.
Manual AP processes are not only a burden on time and resources but they can often be highly chaotic: both of which are excellent reasons to automate the process and there are many benefits to be gained from doing so.
Automating AP processes
AP automation starts with digital transformation. As paper invoices enter the enterprise they need to be digitised before they are ready for automated processing. Intelligent capture solutions extract invoice data automatically and validate by referencing against enterprise data. The solution ‘learns’ as operators review and correct data, to further increase efficiency and accuracy. The clean, accurate data is then ready to be delivered to approval workflows and the Enterprise Resource Planning (ERP) system. Invoices that match their purchase order number can be processed for payment automatically. Having all invoices – both paper-based and electronically received – processed by the same solution will bring ease of use to the AP department, allowing the invoice automating process to become seamless.
AP and finance departments are served by accurate, real-time information for process analysis, troubleshooting and accurate reporting. Monitoring tools track invoices at each step in the process, to help identify and resolve bottlenecks and deliver key performance indicators (KPIs) that inform managers of processing performance. Intelligent invoice capture solutions support a quicker and more efficient AP process, which allows for faster payments and more accurate financial planning.
Setting out clear goals
Organisations have different volumes of invoices, resources and business environments that should be factored into goal-setting when moving to an automated process. Some of the typical goals of AP automation include:
Higher quality of data – Automating the receipt, scanning, extraction and validation of invoice data reduces data entry errors by 95 per cent. It validates invoices with corporate data including vendor masters and employee directories. This technology should eliminate duplicate invoices, perform purchase order and line item matching, and validate contract rates. High-quality data drives the efficiency and effectiveness of the downstream process. Invoice error rates should decline by 95 per cent. ERP data quality should increase to 99 per cent.
Transparency throughout the invoice processing lifecycle – The process should be completely transparent at every stage and feature real-time visibility of cash. Invoices become visible within hours of receipt. Workflow monitors and on-demand enquiries provide real-time process status. Financial reporting should be accurate.
Optimisation of payment process – Late payment penalties and extra administrative overhead involved in dunning should be completely avoidable. The ability to capture early payment discounts should also increase to 90 per cent. Dynamic discounting (trade financing) is a possible source of additional savings.
Scaling automated AP processes
By digitising invoices directly upon entry from any location or device, it creates more efficient processes within the global enterprise, and therefore allows for much greater flexibility and scalability to future proof the business. Processing large volumes of invoices from multiple locations on one single platform can not only reduce the risk of lost documents, lower shipping costs and avoid unnecessary delays. Centralising invoice management can also boost standardisation across large, multi-location enterprises and enables outsourcing of the AP process to shared services centres.
Automating AP processes brings an array of benefits to the business. It enables the finance department, among others, to streamline administrative and approval processes, which increases speed, quality and visibility. Ultimately AP automation reduces costs, strengthens internal controls, enables the optimisation of cash flow, and has a positive effect on supplier satisfaction. As a result, employees can spend more time on important tasks that bring value to the business. However, organisations should carefully consider their key goals ahead of deployment and again at regular intervals thereafter. The automated process exposes the data required for daily optimisation, and for periodic management review and adjustment.