AP transformation Part 1: Leaving paper in the dust

Corcentric

Picture this: you return to work after a relaxing weekend and are greeted by a pile of paper invoices that would give Mount Everest a run for its money. Your head starts spinning thinking about the amount of time you will spend on manual data entry and how this will likely lead to missed vendor payment deadlines. What a Monday.

Now, picture this: you return to work after a relaxing weekend and are greeted by an organized, clean desk. You open your laptop to check on a recent batch of digitized invoices. They’re being processed on-time, and it looks like you’ll be able to capitalize on early payment discounts. That peace of mind you had all weekend is going to carry into the week.

The difference between these two scenarios: an end-to-end accounts payable (AP) automation solution that creates a streamlined automated workflow. But before we explore what that is, let’s break down why the first scenario was so stressful.

The problem with paper

While there are plenty of companies that still have paper-based AP processes, the widespread use of digital technology across all business operations has AP departments and key stakeholders alike rethinking how they process and pay invoices to ensure cost savings and increase efficiency. Bottom line: once you peek behind the curtain of manual processes, you discover an overwhelming number of inefficiencies. Getting rid of paper (paper checks, paper purchase orders, paper documents) throughout your payable system is invaluable.

Some of the most common challenges companies face with traditional AP practices include:

  • Human error: there is a high risk of data entry errors when it is being done manually. Inaccuracies in financial records can cause payment delays and costly disputes.
  • It will cost you – time and money: manually processing invoices is time-consuming, requiring more labor hours, which means you must pay more people to work those hours. There are also the expenses associated with potential mistakes, printing, and storage.
  • Limited visibility: a lack of real-time visibility leaves companies struggling to monitor the status of invoices, which affects cash flow and compliance with payment terms.
  • Higher fraud risk: manual processes are more susceptible to fraud due to a lack of encryption and access control.
  • Fractured vendor relations: late payments and invoice errors often leave vendors feeling frustrated and reluctant to agree to favorable terms and pricing.

This list does not cover all the frustrations that can potentially arise when relying on paper-based accounts payable processes. Overall, the inefficiencies inherent in manually handling AP functions hinder productivity and the ability to scale operations. So, how do you eliminate paper processes to create a paperless system?

End-to-end AP solutions to the rescue

Managing AP, from processing an invoice to paying it, is a complex undertaking. It requires the right combination of software and services to maximize efficiencies and support growth.

That’s where an end-to-end AP automation solution comes into play. Something that applies technology and managed services to invoice capture, invoice approval, payment authorizations, and payment execution. A reputable provider will actually go beyond making your payments, offering ongoing support with supplier enrollment, business process optimization, and more.

Let’s explore a few key features you can expect from a comprehensive AP solution.

Automatic invoice capture

No more redundant manual entries forcing you and your team to make sure invoice information is correct. Automatic invoice data capture uses intelligent technology to create digital invoices, allowing for the capture, classification, extraction, and validation of data from any type of invoice. This brings the same level of speed, accuracy, and security to every invoice. Having all invoices in one place provides better visibility into spending patterns and helps organizations make informed decisions about their purchasing and payment processes.

Online approvals

Automating and digitizing your invoice approval workflow significantly cuts invoice processing time, as well as processing costs, and eliminates the possibility of duplicate payments. This feature should allow for three-way matching and straight-through processing which routes approved invoices directly and electronically into your ERP. This is the optimal way to ensure accurate and timely payments. It’s also the optimal way to identify discrepancies and create an accurate audit trail. With less touchpoints for your AP staff, they can focus on more productive tasks.

Electronic payments

You shouldn’t be struggling to complete the final leg of your AP process, nor should a provider leave you high and dry to complete the last mile alone. Automatic electronic payment systems accelerate every step of the PO-to-payment cycle, reducing the cost of making payments and eliminating fraudulent payments. All your transactions are consolidated into a single payment file, executing payments to suppliers via electronic and revenue-generating payment methods. A key part of this feature is financial flexibility – the system should accommodate a variety of payment methods so that suppliers don’t feel backed into a corner.

Coming up in Part 2

In the race to keep up with manual paper-based AP processes, nobody wins. You and your AP team are constantly stressed by looming deadlines and a never-ending mound of data to enter, while your suppliers are unhappy with overdue payments and having no visibility into the status of invoices. The goal should be to implement a nearly total paperless AP process (there might be those outliers that still rely on paper, but those should be rare). An AP software solution that optimizes your payables process from start to finish automates the transactional and streamlines the tactical, setting your company up for strategic growth.

Stay tuned for Part 2 of this series, where we will dive deeper into the efficiency gains of an end-to-end AP solution and quantify its impact.