The trend to automate the payables process, from invoice receipt to disbursement, is definitely one that continues to grow.
Study after study has shown that when accounts payable departments use manual processes to handle paper or e-mailed invoices, response time slows and costs increase. We know that an automated payables solution can reduce invoice processing cost by up to 80% and reduce processing time by up to 70% per invoice. That translates into better cash flow and improvement over the management of working capital.
In an IdeaXchange blog earlier this year, Matt Clark, President and COO of Corcentric, discussed the KPIs AP departments should be using to measure their performance.
In the blog, Matt notes that the goal of accounts payable should be to ensure that the technology solution they select will enable them to process invoices in a straight-through manner with no human intervention. What is heartening is that the trend, as I said above, is definitely moving forward.
Yet even though automation has enabled companies to reduce their processing time, what is still a major problem is the time it takes to handle exceptions. Matt cites an Ardent Partners report that notes that the “average invoice exception rate rose to 23.2%, a 26% increase compared to 2017 data.” Since handling exceptions (including comparing, correcting, and often contacting suppliers) can take up to 24% of a processor’s day, this is a considerable burden on the accounts payable department.
But this is more than just a burden. Consider the cost to the company in a variety of ways. The time that employee spends on exceptions is time he or she is not spending on helping achieve company goals by focusing on more strategic tasks. The time spent on exceptions means that payments are delayed and potential early-payment discounts are not captured. Delayed payments and the need for phone calls and emails with suppliers can negatively impact the relationship a company has with its suppliers.
Automating the invoice approval process won’t eliminate 100% of exceptions but it can reduce them significantly along with the time it takes to manage them. Corcentric’s invoice management system is able to automatically match invoices to the purchase order and receipt of goods. When this match occurs, an invoice is automatically sent via straight-through processing to the company’s ERP system for payment. That means AP professionals are analyzing the exceptions to the rule; using time more effectively.
Once exceptions are identified, the solution automatically routes the invoice based on a company configuration/procedure. Users receive email notifications and reminder notices informing them of invoices requiring attention, thus speeding up the time it takes to handle exceptions and reducing potential disputes.
Read Matt’s full IdeaXchange blog to see how you measure up to your peers.