Accounts Payable (AP) is ripe for innovation in the modern enterpriseAs new initiatives, such as dynamic discounting continue to grow in adoption, the nature of the AP function is fundamentally changing from cost center to value generator. However, many AP departments are unable to evolve and pursue this role because they are struggling with outdated technology and manual invoice processing.
Aberdeen Group’s survey report, “Reap the Benefits of Invoice Excellence with AP Automation,” sheds light on the state of AP automation today. Forty percent of respondents said the need for real-time availability of data is a key AP challenge, and 29 percent said difficulty locating/managing paper-based documents was a struggle.
To streamline AP workflows and the procure-to-pay supply chain, to achieve better, faster outcomes, and to empower both payers and suppliers, AP needs next-generation invoice automation.
Loose Integration Sinks the AP Ship
When it comes to invoice automation, “the devil is in the details.” Industry stats show that 8 out of 10 (or 82%) of all invoices will have at least one exception. Invoice exceptions are the governor of AP automation – you could be cruising at 65 miles per hour, but you’re crawling along at 30.
AP departments often struggle with exception processing due to weak integration with ERP systems. A complex workflow process must be designed and applied to root out exception causes that span a wide range of checks and balances involving enterprise resource planning (ERP) and other systems which are often too loosely integrated with invoice automation systems. All too often an exception isn’t identified and resolved until late in the process — stalling cycle time.
In Pursuit of AP Innovation
Done right, invoice automation can drive cost savings through discount capture, penalty avoidance, and lower labor costs, while improving the speed with which AP professionals can access payables-related information.
Fortunately, today’s next-generation invoice automation solutions are providing the AP change that’s needed. At the foundation, they are delivering powerful integration with ERP systems to support 2-and 3-way matching — to quickly resolve exceptions with little to no manual intervention.
Robust workflow support is providing better visibility and faster processing, to enable organizations to capture more early payment discounts. And mobile and cloud applications are helping to support real-time, secure access to invoices and related documents—on any device and from any location, to speed approvals.
The Transformation Journey
To better understand where to begin on the journey to transform the AP process, consider the following recommendations from Aberdeen Group’s previously referenced report, “Reap the Benefits of Invoice Excellence with AP Automation”:
• Review and define gaps in your Accounts Payable processes
Common gaps include degradation in automation due to integration challenges, a lack of operational visibility in AP processes, and an inability to capture supplier discounts.
• Select a solution(s) + workflow that addresses process deficiencies
The biggest deficiency in Accounts Payable processing is typically the space between the invoice automation solution itself and the business systems of record (i.e. ERP). Take a close look at the level and quality of integration and its impact on your operations.
• Commit to culture emphasizing improved supplier relationships
As part of AP transformation, many organizations are looking to provides suppliers with self-service access to instantly track status of invoices and payments, and support the offering of early payment discounts. This can provide a better customer experience for suppliers while cutting the cost of supplier management. As more organizations gravitate to this paradigm, its absence in your organization may put you at a competitive disadvantage.
AP Automation: The Challenge and Opportunity in 2017
Next-generation approaches to invoice automation ensure the procure-to-pay process is a well-oiled machine — so companies can quickly capitalize on every opportunity to capture every discount available while reducing per-invoice processing cycle time and costs. This is both a challenge and an opportunity for enterprises in 2017.
About the Author
Tom Franceski is vice president and general manager of DocStar – (www.docstar.com) – a division of Epicor Software Corporation. DocStar proven business process automation technology and workflow expertise empowers organizations to operate at peak performance, navigate change, and grow.