5 Signs It’s Time to Automate Your Invoice Processing
There are few things that car owners dread more than the moment the check engine light goes on.
A check engine light can mean there are big problems in the way our car is running.
Accounts payable (AP) departments don’t come with a check engine light.
But there are five signs that your AP department might not be operating as well as it should.
- High invoice processing costs. Compared to their peers with little or no automation, AP departments with a high level of automation spend less than one-quarter as much to process a single invoice. That’s according to the Institute of Finance and Management (IOFM). AP automation solutions eliminate the manual, repetitive tasks that contribute to high invoice processing costs. Electronic invoices are automatically retrieved from e-mail boxes, File Transfer Protocol uploads, and supplier portals, invoice data is extracted, validated, and matched against the purchase order (PO) and proof-of-delivery information residing in the ERP, unmatched invoices and invoices requiring review are digitally routed based on pre-defined business rules, and approved invoices are uploaded into the ERP without the need for re-keying. In many cases, invoices submitted by suppliers can be automatically processed, approved, and posted directly to an ERP, without any human operator intervention.
- Long invoice approval cycles. Compared to their peers with little or no automation, IOFM finds that it takes AP departments with a high level of automation less than one-quarter the time to post an invoice for payment, from the time of receipt. The prolonged shift to remote working is making it even harder for AP departments to approve invoices on time, IOFM says. And routing invoices via e-mail is risky and doesn’t provide adequate tracking. Slow invoice approvals result in late payment penalties, more telephone calls and e-mails from suppliers about the status of invoices, missed early payment discounts, difficulty forecasting cash, and disruptions to supply chains. In an automated AP environment, invoices are digitally routed based on pre-defined business rules. There’s no chance of lost invoices. Approvers are notified that they have an invoice awaiting approval and alerted when invoices are approaching their due date. Invoices that sit too long are escalated. And graphical dashboards provide AP managers with real-time visibility into the status of invoices.
- Too many erroneous or duplicate payments. Highly automated AP departments report less than one-third as many duplicate payments as their less-automated peers, according to IOFM. Things will inevitably slip through the cracks when AP departments rely on spreadsheets or pen and paper to track their invoices. And with suppliers eager to get paid in this turbulent economy, many are submitting invoices multiple times to ensure they were received. What’s more, transposed numbers and other typographical errors that result in incorrect payment amount are inevitable when AP departments manually key data into their ERP application. AP automation solutions detect duplicate invoices. All invoice header and line-item data are extracted, validated, and matched with a high degree of accuracy. And data on approved supplier invoices is uploaded directly to the ERP without manual keying.
- Lots of supplier inquiries about the status of things. Accounts receivable departments are under tremendous pressure to get money in the bank faster. The turbulent economy has resulted in a spike in Day’s Sales Outstanding (DSO), late payments, bad debt, and write-offs. Without visibility into where things stand with their invoices and payments – or whether their invoice was even received – they are likely to call or e-mail. Twenty-two percent of AP leaders say that a spike in supplier inquiries is their biggest challenge as AP staff work remotely. Making matters worse, it can be harder for AP staff working from home to get answers to supplier inquiries. AP automation solutions empower suppliers with automated acknowledgements that their invoice was received, 24/7 visibility into the status of their invoices, and instant access to historical invoice and payment information. And in those cases where suppliers call or e-mail, AP staff can instantly access the information they need.
If your AP department is experiencing any of these issues, it’s probably time to automate. Like your car’s check engine light, things will only get worse if you wait.
Watch our video, “5 Signs It's Time to Automate Your Invoice Processing”
Don't wait, take action today! Check out our guide on how to get started on your AP Automation journey.