How your Accounts Payable department functions can significantly impact your business. Recent trends have highlighted the importance of effective, transparent Accounts Payable processes.
A recent study by Forrester found that the single greatest factor in increasing a supplier’s willingness to collaborate with and share innovations with a customer was the timeliness of and visibility into payments. The Covid-19 pandemic has increased the importance of effective cash management, of which Invoice-to-Pay is a key lever.
Getting started with automated invoice processing
Before getting started with invoice automation, it is important that you identify and remove the barriers to its adoption. Gartner has identified that Accounts Payable must overcome a number of challenges with their AP automation.
Step 1: Analyze current processes
The goal is to understand how you process invoices today, where bottlenecks and delays exist and how much it’s costing. You will identify opportunities to improve your current processes.
Step 2: Centralize invoice management
Consider establishing a centralized or shared service for invoice management. Implement a standard approach that captures invoices into some type of electronic form.
If you need to capture invoices in multiple locations, use a standard approach and centralized electronic filing system that will streamline your manual approval process.
Your primary goal at this point is to capture invoices as soon as possible and to position yourself for later automation.
Step 3: Standardize policies and procedures
Your goal here is to clarify to your organization exactly how invoices should be processed. This will guide your current manual processes and prepare you for automation of your policies and procedures.
Step 4: Automate
Once you have established your policies, procedures and controls, you are ready to automate.
The most important thing to first put in place is a single “processing engine”. You want a single, consistent invoice automation process regardless of how many ways you initially capture invoices.
You can leverage a combination of scanning, OCR and keying to capture paper invoices.
Your goal is to process as many invoices as possible “straight-through” with little or no human interaction and to significantly streamline the discrepancy resolution process.
Once that capability is in place, you can work on incrementally improving the front-end capture process. We will discuss that more a little later.
Step 5: Enable supplier self-service
In this step, you have to make status information available to suppliers via a secure self-service Internet portal.
Your goal here is to eliminate the time AP personnel currently spend on the phone answering supplier questions about where their invoice stands and when they will get paid.
Step 6: Leverage information for better sourcing
With all your payment activity electronically captured, the procurement department will have better information for spend analysis for purposes of supplier base consolidation and other sourcing activities.
With a reputation for paying on time and making it easy for suppliers to manage their accounts receivables with you, suppliers may be more willing to give your organizational preferential prices and terms.
Your ultimate goal here is to provide your procurement people with information and on-time payment performance that enables them to gain even better value from suppliers over time.
Step 7: Incrementally automate invoice capture
As soon as you have your invoice processing automated you can turn your attention to finding even more efficient ways to capture invoices.
This can be done on an incremental basis and/or by adding capabilities like invoice upload or “PO Flip” to your supplier portal.
All of these methods will act as an increasingly efficient means of moving invoices into automated invoice processing.
Your goal here is to continue to take cost and time out of invoice capture.
Benefits of automated invoice processing
Using invoicing software , enterprises have unlocked the power of accounts payment.
They have accomplished this by using smart matching across orders, contracts and receipts; together with one-click workflows that manage line level allocations and tax treatment automatically.
By removing the overhead of supplier queries with real-time supplier updates, the AP team can focus on innovation and real exceptions.
The key to these performance levels is the embedded smart matching that uses supplier master data, orders, receipts, even contracts to automate the process for payment of invoices.
Exceptions can then be handled with one-click approval for invoices or by simply appending the missing PO number, to complete the auto-match.
However, the real power of invoice automation is that all this matching is also available within the supplier portal linked to the Invoice Hub.
Continuously evolving
The ability to continuously evolve is critical to achieving a return on investment and should be at the heart of all digital transformation initiatives.
This is why many agencies provide the analytical intelligence necessary to evolve, adapt and improve invoice processing.
Any efficient solution in place can enable your AP team to also create new templates and processing rules without breaking the system.
