If you’re still processing invoices manually, maybe it’s time to institute a “hands off” policy.
In the age of automation and at a time when companies are looking for ways to increase efficiency and decrease costs, Accounts Payable departments are evaluating the benefits of automating their invoice approval processes. Manual processes and multiple human touches decelerate the speed at which invoices are approved. This affects your ability to manage cash flow, decreases your discount capture, and can adversely affect your relationships with your suppliers. Late pay is never a prescription for good relations. Now imagine if you could accelerate your approval process by getting the number of human touches down…way down.
With the right AP automation solution, you can accomplish this goal and many companies have already done so. In fact, an Aberdeen Group study, “AP Invoice Management in a Networked Economy,” estimates that best-in-class organizations can have between 70 to 80 percent of their invoices go through the approval process with no human touch…”zero touch.”
There are 5 steps that an invoice goes through from the time it’s received until the moment payment goes out and at any one of those junctures, human error can intrude and create roadblocks. But digitizing and normalizing all data and automating the approval process makes those roadblocks disappear.
Zero-touch, step by step
For suppliers who have signed on to your AP automation solution, their invoices are entered into the system where all data is standardized and normalized and begins its journey through the approval process without any processor opening an envelope or downloading a pdf. For suppliers who still to use paper or email, the right solution will offer a scan-and-capture capability that will render the invoice into an e-invoice.
Since the parameters have been set for formatting prior to implementation of a solution, the system will be able to discern the appropriate approver and send the e-invoice directly to that station, again with no human touch.
For those invoices that require multiple or hierarchical approvals, the system will continue to directly move that e-invoice through the approval process. Pre-determining and configuring those approval controls means AP has to make no touches throughout the process.
As in every part of life, nothing is perfect and not every invoice will be able to be sent, straight through to payment, with no human intervention. When an e-invoice enters this step in the process, it’s matched against the original PO and the Receipt of Goods. When setting up the system before implementation, you should determine what your “workable tolerances” are when it comes to your matching tools. Should the match fall within that tolerance, it will be sent straight through to your AP or ERP system for payment. Otherwise, an exception will be notified and the e-invoice will be routed to the authorized person for further action. That authorized person will either approve the e-invoice and re-send it through for payment, or will mark it for further action. It’s only at this point that any interaction and “touches” may occur.
ACH or virtual card payments can be sent directly into your supplier’s AR system. No paper checks to process. No envelopes to address. No postage to pay. NO TOUCH. Again, nothing is 100 percent. You may still have some suppliers who insist on paper checks. Make sure you work with a solution provider who can provide that service when necessary.
What’s not noted in the above steps is the enormous benefit to stakeholders, from procurement to AP to supplier that is a result of the 24/7 visibility into invoice status that an automated AP approval process allows. It all adds up to less errors, greater efficiencies, lower costs, more information, and faster payments.