Accounts Payable Efficiency (2): How to Streamline Your Invoice Processing
As we saw previously, invoice data extraction can be a time-consuming task with a high potential for creating inefficiencies throughout your company. This is especially true if your data capture process requires manual operations at any stage. Excessively long and cumbersome accounts payable (AP) tasks has internal and external impacts, from bottlenecking other departments’ projects through late payments to vendors to delayed product launches.
Once you’ve identified inefficiencies in your AP process, you can start developing, implementing, and monitoring improvements. In our conclusion to this two-part series, you’ll get a better understanding of the far-reaching benefits that come with better AP time management and accuracy. We’ll also advise you on automation tools and techniques you can use to ensure your department delivers maximum value to your company.
AP efficiency benefits everyone
Before you can start making improvements to your company’s AP process, you’re probably going to require buy-in from the C-suite. Your plan may also need the blessing of other departments, such as procurement and legal, and the rest of the financial team. Therefore, you need to highlight the benefits that efficient invoice processing delivers to individuals, departments, and the company as a whole.
Generally speaking, the time you save on invoice data capture means more revenue goes to your company’s bottom line. Just as inefficiencies drive costs up throughout the AP process, efficiencies can drive costs down at every step. An intelligent automated data extraction solution can save your AP staff several weeks’ worth of man-hours they may have been dedicating to tasks like invoice template creation, data entry, and PO matching.
Reductions in man-hours mean lower HR costs per invoice. At the same time, greater efficiency keeps functions like procurement and vendor relationship management running smoothly and cost-effectively. And if you work with suppliers that offer early payment discounts, a streamlined AP process can cut costs even further.
You can also save as you scale. With greater prosperity comes more transactions and more financial documents, and the potential for higher storage costs. Paper filing systems, on-premises storage, and legacy accounting software can’t match the scalability of cloud-based data capture solutions, which offer a cost-effective means of acquiring more storage space whenever your company needs it.
When your team is spending less time processing invoices, they can focus on value-generating tasks, such as those outlined in Ardent Partners’ The State of ePayables 2018 report. The study points out that “the contemporary AP function is dynamic in nature and can support operations and impact performance in a variety of ways.” Greater efficiency frees your department to take on a more active role in several areas, including 1
- Fraud prevention
- P2P technology
- Improving payment operations / platforms
- Supply Chain Finance / working capital
- Drive financial visibility to stakeholders
- Spend management
- Supplier relationship management
- Cash management and corporate liquidity
Better information sharing
A centralized cloud-based invoice processing solution saves everyone the hassle of a paper chase or hunting for digital copies in a vast forest of files. By “everyone” we mean more than just your team, but anyone who needs access to processed invoices, such as
- Customer service experts when they’re authorizing refunds
- Vendor relationship managers when they need to check late or missed payment claims
- Financial team members responsible for reporting to auditors
More actionable insights
When you integrate an AI-powered data capture platform into your company’s network, you can gain more actionable insights than with manual or template-based solutions. Invoice processing software that enables agile financial reporting dashboards to pull data from it in real time can provide your company with valuable analytics.
This overlaps with improved flow of information throughout your company. The metrics gained through a smart data capture platform can, for instance, help other units manage their budgets better and identify opportunities to improve procurement functions.
How to improve AP efficiency
As we saw in the first part of this series, you need to measure the KPIs and monitor the qualitative elements of your AP process. This enables you to determine which stages need fixing, offers some insight into how to make those fixes, and helps you establish goals for improvements to your invoice data capture procedure.
Implement intelligent automation
Chances are you’re already looking into automating your AP workflow. Of course you can’t completely remove the human element – nobody is going to allow robots or algorithms to handle approval and auditing activities in their entirety. So determine which AP procedures you want your intelligent automated data capture solution to manage for greater accuracy and efficiency.
Automation is especially suitable for handling these steps, as presented in Accountancy Age:
- Document recognition and smart data capture
- Organization of unstructured data
- Data extraction to other business units
- The initiation of processes dependent on sets of business rules
- Subsequent financial processes, such as reporting and auditing
This is where the effort you put into identifying areas for improvement in your AP process pays off. You and your team can easily track KPIs and, when necessary, optimize automated processes systematically, rather than in an ad-hoc manner.
Introduce or improve PO matching
If your company does not have a PO matching system, consider introducing one. The advantages of doing so include:
- Reduced data capture requirements; for example, AP no longer needs to extract line item data
- More effective fraud prevention
- Faster and simpler approval
- Greater transparency in reporting and auditing
It’s more likely that your company has a PO structure. Smart document processing can automatically match PO numbers in your AP system against those in invoices. The value of the recovered man-hours depends on how much manual effort your current PO matching procedure requires.
Work in the cloud
A cloud-based AP solution can not only save your team a considerable amount of time, it supports more efficient collaboration between departments. Once the platform captures invoice data and stores it in the cloud, stakeholders can access and work with that data with greater efficiency and transparency than paper- or template-based processes.
You might come up against some resistance against the idea of moving financial information from on-premises storage to the cloud. The most probable concern will be potential security risks. The truth is, a cloud-based platform can deliver benefits that cancel out these risks, with physical data security capabilities that are above and beyond those of your corporate servers.
To keep your data safe at all times, your cloud service provider patches its storage systems, network, and software continuously. You also no longer have to worry about backups since your reliable partner in cloud technology takes care of them for you.
Get closer to IT
As they audit data extraction platforms from a technological perspective, your colleagues in IT should play a major role in suppressing security concerns. They can also help you choose the solution that best helps your company achieve its business objectives. Once you’ve settled on a platform, make sure IT keeps you informed about the progress of the setup and integration procedures. Doing so enables you and your team to support other departments during and after onboarding.
Efficiency elevates the AP function
Businesses that have adopted cloud-based document data capture are experiencing huge improvements in accuracy and efficiency. For instance, one of our clients reports that Rossum provides over 90% accurate document data extraction and frees up 70% of managers’ time, enabling them to “focus on high-priority and client-facing work.”
The benefits you gain from a streamlined AP process are numerous. The automated data extraction platform that delivers these advantages should meet some essential criteria, including:
- fast setup
- simple integration with existing / legacy software
- intuitive interface
- quick onboarding that requires little to no training
A more efficient AP process will enable your team to become a key value driver in your organization. As they eliminate manual tasks, smart automation and cloud technology can help your team play a far more vital strategic role across units, especially finance and procurement.
You will need to take a fair amount of time to prepare and plan for the implementation of a smart data capture platform. You’ll recover that time quickly and easily once your chosen solution is up and running.
1 Ardent Partners, The State of ePayables 2018