Disclaimer: Todd M. Albers is s senior payments consultant in the Payment, Standards, and Outreach Group at the Federal Reserve Bank of Minneapolis. He is the convener of the Business Payments Coalition e-Invoice Work Group and can be reached at todd.albers@mpls.frb.org. The opinions expressed in this blog post are those of the author, and not those of the Federal Reserve System or the Federal Reserve Bank of Minneapolis.
When you think about it, everything that’s involved in invoice receipt to payment is really just part of one interconnected process. If you slow down invoice receipt or processing, it slows down the payment process, which can be problematic for AP departments and suppliers alike.
Conversely, it’s in everyone’s best interest when e-invoicing and AP automation enable payment to flow smoothly. Suppliers can know the status of their invoices being processed and have the opportunity to potentially be paid faster. AP departments have greater visibility and control over their invoices, minimizing fraud, increasing efficiencies, and reducing cost. And, it allows them to manage their payments strategically. In some instances, it may make sense to pay early and get early-payment discounts or hold onto the payment until it is due, but in any case, without electronic invoices, it becomes more difficult for AP departments to manage the timing of payment effectively and avoid late payment fees.
So, how can organizations move toward automating invoicing receipt and processing and facilitating e-payment? Here are four best practices:
In addition to payments and invoice handling, there are many other benefits of e-invoicing and AP automation, including the ability to improve master data, which is the lifeblood for a company’s purchase-to-pay operations. By having more accurate master data, companies can conduct spend analysis, gain insight into outstanding liabilities, and conduct proactive working capital strategies. Poor master data governance opens the door for fraud, making it easy for bad actors to create fraudulent vendor records and issue fake checks.
There’s a lot of opportunities to improve your AP operations and benefit from e-invoicing, AP automation, and e-payments – which are all interconnected. To get there, make the business case, find a good partner and begin taking the first step on your journey.
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