By Nasir Khan
Do you know what the biggest resource waster in accounts payable is? If you guessed manual handling and processing of invoices, you’d be correct.
Think about it, physical mail needs to be opened and re-directed, emails forwarded and/or printed, approvers followed up, purchase orders validated, data entered, invoices filed…and that’s just to name a few of the steps.
Currently a high percentage of the invoices received by your business are okay for payment without much involvement from any one else in company. Why then is it such a drain on resources?
The reason is that staff treat every single invoice as though it requires further interaction, simply because they don’t know whether or not it’s ok to pay. The surprising thing is that the number of invoices that don’t require special attention could be as high as 60-70%. In other words, your team could be spending excessive amounts of valuable time performing unnecessary tasks.
That’s where accounts payable automation comes in. However, if not done right, AP automation can bring a whole new set of challenges. If you are looking at automating your accounts payable processes and making the team more productive then you need to ensure you avoid the following traps:
Poor Extraction Software
While extraction is key to reducing manual steps, if the software being used isn’t accurately capturing information up front then you could be adding additional time consuming work for your team. For example, not recognising characters or accurately picking up numerical data can hold up processing and create extra problems.
Missing Key Field Capture
Part of the account payable administrative burden is the laborious and repetitive task of capturing key data fields from invoices such as Date, ABN, Company Name, Total amounts and purchase order details.
A common shortfall we see with some AP automation software is the inability to always identify the key fields or recognise variables on an invoice such as whether or not there’s a purchase order number. What happens if your supplier changes the layout? Is the software used intelligent enough to understand it’s the same supplier even if the fields have moved?
Having only part of the information captured by automation and needing to input the missing key fields can prove to be more time consuming than manually performing the entire task from scratch.
Inability to add Intelligent Workflow
Capturing data is important, however only plays a small part of the AP process and can sometimes be meaningless without the ability to add smart workflow. For example if the data can’t be validated against information that already exists there’s no way to be confident that it’s correct. Ensure the solution you choose allows you to validate and match data against your other business applications. Such as matching the ABN to confirm its active against a master list or validating a purchase order against your ERP. From there you can apply intelligent workflow to automate the handling of any exceptions or the streamlining of common checks.
Inflexibility to Meet Your Business Requirements
Lastly and almost most importantly, some out of the box systems that can’t be tailored mean you end up with a fragmented solution and won’t maximise the potential benefits of automation. A good Accounts Payable solution should have the ability to be customised to meet your specific business rules. Rules such as approval workflows based on dollar amounts or approvals on specific suppliers.
How about a rule to speed up processing of an invoice for a supplier that provides an early payment discount? Or slowing one down for a supplier that has 60 day terms?
A well designed solution will allow you to focus on the small amount of invoices that actually require attention which means you can increase productivity in your Accounts Payable department by up to 81%!
We work in an ever changing environment, make sure you choose a system that allows you to change and scale the solution as your business changes, both quickly and inexpensively. Keeping these points in mind will help you avoid any perils along the way when choosing the right AP solution.
If you’re investigating the benefits of AP automation and the possibilities available, get in touch with Upstream for a demonstration.
P: 1300 772 772