We kicked off our accounts payable automation (AP) series with a look at how manual data capture processes can hinder your accountants and harm your bottom line. Following that, you learned about alternative invoice processing solutions that enable your AP team to focus on higher-value tasks.
To wrap things up, we’ll give you insights and guidance to help you find the ideal invoice data capture provider for your business.
Evaluate your current situation
Let’s say you know what’s wrong with your data extraction techniques, and you know what solution you’re going to use to make your AP team’s lives that much brighter. Now all you need to do is find an invoice data capture provider, right?
Well, it’s not quite that simple. Before you start approaching potential vendors, you’ll need to assess the state of your existing invoice processing method. This will give your provider a thorough understanding of what to fix, and how their solution can fix it. Also, any candidate worth considering will have questions about your current situation and you’ll need to have answers.
To ensure your new data extraction solution delivers precisely what your business needs without excessive features that add little to no value, take the time to do each of the following activities before you enter into discussions with solution providers.
Understand your existing invoice data capture process
Breaking your invoicing process down into steps will help you see what’s broken. Work with your AP team to examine your company’s entire procurement-to-pay (P2P) workflow, from requisitioning all the way to payment approval. Map out the procedure in detail so you can identify and locate steps that require improvement, replacement, or removal. This will also help you determine the scope for your automated accounts payable solution.
At the same time, keep an open-mind about revamping business-critical parts of your P2P workflow rather than just completely replacing specific stages.
Determine your goals
Ultimately, you want to reduce the total cost of ownership (TCO) of processing invoices while increasing revenue generation opportunities. To ensure you reach these two key goals, you need to dive deeper to figure out what your data extraction solution must achieve. For example, you might be looking to
- reduce or eliminate paper usage and paper-based processes
- get early payment discounts
- boost AP staff engagement and satisfaction
- increase AP efficiency
Once you know what you want to get out of your automated AP solution, you can set your project’s scope and budget and deliver a brief that enables candidate vendors to prepare accurate quotes.
List required integrations
Before you start looking for a new solution, get in touch with your IT team. Your new invoice processing solution needs to play nice with your existing enterprise resource planning (ERP) system and other company software that works with AP data. As you’re reviewing potential suppliers, your IT experts can evaluate each data capture solution’s security, configuration requirements, and access rights. IT can also determine whether the integration of each proposed solution will be an affordable breeze or an expensive hassle.
Define support requirements
Your candidate suppliers will want to know their required level of involvement in solution implementation, onboarding, and customer care. Determine whether you have sufficient IT resources to take care of all this on your own; if not, you’ll also need to evaluate the level of care prospective vendors can deliver. Check whether any of them have integration partners, as working with these partners can be an effective and efficient option.
Establish invoicing formats
In the first chapter of this series, we mentioned that many AP teams are still processing paper invoices. Some suppliers might find electronic invoicing is impractical compared to their established paper-based practices. Define your invoicing requirements so your prospective automated AP solution providers can give you a better understanding of their capabilities and limitations.
Decide on report formats
As you’ll be tracking and measuring the performance of your invoice data capture solution, the analytics and reporting that each vendor provides will be vital to the decision-making process. To ensure your comparison of reporting capabilities is effective, define your KPIs and analytics and reporting requirements clearly. Two important KPIs to track are the total time to process an invoice from receipt to payment and the size of the team required to process incoming documents.
Have all the answers about your business
Worthy candidates will want to know specifics about your AP team’s operations and data capture requirements. Make sure you can give them the answers they need to prevent future complications, delays, or additional costs. On top of queries about your current situation, as described above, key questions include:
- How many invoices do you process per month and per year?
- What channels do you receive invoices in? For example: email, fax, post, other?
- What kind of information do you need to extract in terms of specific data fields?
- Do you have invoices with line items?
- Do you check captured data against databases?
- What do you do with captured data?
- Which applications are/will you upload captured data to?
Questions to ask accounts payable automation suppliers
To get the right data capture solution for your business, you need to ask the right questions.
Here are some of the key talking points that will help you choose your accounts payable automation provider.
- Can the solution handle all types of invoice you receive?
- How does the solution learn new invoice formats?
- How long will solution implementation take?
- What are the pricing units - price per page, per document, or other?
- What is the TCO; that is, are there any additional costs (e.g. upgrades, updates, maintenance) that need to be factored in?
- Can you easily determine and itemize the actual fees you’ll be paying?
- Who will provide maintenance for the solution - the provider, the buyer, or a third party?
- Will the solution be on-premises or cloud-based?
- How does the solution keep data secure?
- Is the solution in line with your business’ data privacy policies?
- What are the solution’s false positive and manual data capture rates? Learn about these metrics and their importance.
Of course, you should always ask candidates for references and check how widely their solutions are being used. For instance, an accounts payable automation provider that serves several Fortune 500 companies is likely to have a very mature product and the development and support resources that a smaller startup doesn’t. At the same time, that smaller startup may offer equally reliable invoice data capture software that is more cost-effective at the outset and further down the line, and may be much faster to implement.
Finally, have shortlisted candidates help you build a business case to sell their solutions to your management team. Sales experts should be able to give you a full cost breakdown, a list of manual tasks that accounts payable automation will eliminate, a summary of time and cost savings, and an ROI assessment. But remember, the more details about your current process you have, the better data you will receive from prospective providers.
Selecting the most suitable automated invoice data capture solution for your business demands more than a simple feature and pricing comparison. A hastily chosen service provider can end up costing you more than you’d anticipated while causing your AP and IT teams a relentless headache. Taking the time to evaluate your business needs, calculate your budgetary requirements, and draw up a thorough RFP will help ensure you get the ideal invoice processing solution.
Our automation professionals would be happy to discuss your data extraction requirements or give you more guidance. Book a call with our experts.