By Nasir Khan
Do you know what the biggest resource waster in accounts payable (AP) is? If you guessed manual handling and processing of invoices, you’d be correct. Without an AP automation solution, 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 anyone else in the company. Why then is it such a drain on resources?
The reason is because staff simply don’t know whether or not it’s ok to pay each single invoice, treating it as though it requires further interaction. 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 AP automation is not done right it 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 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 tasks. Examples include 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. They also may not 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, requiring input of missing key fields can prove to be more time consuming than manually performing the entire task from scratch.
Inability to add Intelligent Workflow
While capturing data is important, it only plays a small part of the AP process and can 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. This could include matching the ABN to confirm it’s 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 are left with a fragmented solution. This means you won’t maximise the potential benefits of automation. A good Accounts Payable solution will 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?
Unleashing AP Automation
A well designed solution allows you to focus on the small amount of invoices that actually require attention. As a result, benefit from increased 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. Keep these points in mind to help avoid any perils along the way when choosing the right AP solution.
Interested in investigating the benefits of AP automation? Get in touch with Upstream for a demonstration on the possibilities available today.
P: 1300 772 772