More than 90 percent of all invoices worldwide are still processed manually, according to the Billentis 2017 E-Invoicing/E-Billing Report. Against this backdrop, accounts payable (AP) teams are feeling the squeeze, caught between two opposing forces. On one side, is the push to maximize performance and reduce operational expenses. On the other side are legacy systems and processes that stifle efficiency and add costs.
Of course, the seemingly simple task of processing an invoice is actually quite complex, with a multi-faceted workflow that presents plenty of obstacles for businesses wishing to streamline their AP activities. Even with some steps of their AP workflow automated, many organizations find that exceptions and a plethora of business rules necessitate human intervention.
For example, according to PayStream Advisors, 25 percent of the invoices that companies receive must be routed for manual approval, while AP teams spend 23 percent of their time entering data manually and conducting other inefficient processes. Such inefficiencies tend to lead to higher costs and create significant risks in terms of data reliability, agility, processing costs and, of course, long payment times.
Further, even those tasks that are automated frequently are disconnected from other systems in the organization, such as ERPs, which makes them less efficient.
In other words, the room for improvement is huge.
Most AP teams can relate to these challenges. After all, they often share many of the issues that the current state of invoice processing presents. Today’s businesses are grappling with at least one, if not all, of the following problems in their AP workflow:
Invoices come from multiple sources. Invoices come in from a variety of channels and in a number of different formats – email, paper, EDI, XML, fax, or manual entry in a form or check request. This situation creates multiple downstream processes that slow processing and increase costs.
Business rules for approvals are complicated. Invoices are typically routed through some sort of approval process, often to multiple business users based on complex business rules. As a result, approvers feel their workflow is too difficult to manage and not user-friendly. This perception leads to delays in approval and keeps users away from higher-value business activities.
Data entry is painfully manual.
Most invoice processes still involve a lot of manual work. EDI and eInvoicing solutions still see low adoption, so IT cannot solve this problem for the business.
AP process owners have no visibility into performance. While most ERPs can typically cover basic AP reporting, these reports cannot include true process or performance analytics. Therefore, while the business can measure historic financial positions, they cannot glean true insight from the AP process.
Thus, for organizations that haven’t fully automated invoice processing, the pain of grappling with legacy systems while trying to meet ever-shifting expectations can be summed up in five areas – inferior data integrity, increased cost, reduced agility, lengthened invoice processing cycles and dependence on IT specialists.
These challenges indicate an obvious need for automation. But automating portions of the process is clearly not enough. To minimize costs and maximize efficiency, AP needs to adopt appropriate technology to stay current and competitive. As Aberdeen Group points out, “To streamline AP workflows and the procure-to-pay supply chain, to achieve better, faster outcomes, and to empower both payers and suppliers, AP needs next-generation invoice automation.”
Why AP Intelligent Automation is a No Brainer
The most promising solution for resolving problem areas is to deploy a Software-as-a-Service-based Accounts Payable Invoice Automation solution (APIA). With APIA and SaaS, AP teams can improve accuracy, reduce or eliminate manual handling, and improve communications among systems with intelligent AP automation.
Further, SaaS offers a unique set of benefits that puts it ahead of other approaches for invoicing automation. Here’s how it directly addresses the specific challenges for AP and finance teams in the five key areas mentioned earlier:
Superior Data Integrity. With SaaS, all users access the same version of the truth, even across multiple regions and sites. Discrepancies are reduced, and invoices are much less likely to get lost or mishandled.
Reduced Cost. Automating AP invoicing reduces cost-per-invoice, and when implementing a SaaS-based solution, there isn’t a need to invest in hardware or software. Physical storage costs are reduced because invoices are handled electronically instead of manually. SaaS solutions that implement multi-tenant technology pass on the savings of their secure resource, efficient architecture to customers.
Increased Agility. SaaS is quick to deploy and effortless to update. AP invoice automation can be deployed in as little as a few hours. Software stays up-to-date with the latest security and functionality enhancements. Upgrades and enhancements are provided in near real-time, assuring currency and security.
Shortened Cycle Times. With much of the traditional workflow now automated and deployed via SaaS, processes are tightened, and visibility and accountability are increased. Invoice cycle times are significantly reduced, avoiding penalties and maximizing the opportunity to capture vendor discounts.
IT Specialist Independent. Your reliance on IT will be minimal because SaaS offers a self-service interface that doesn’t require IT specialists to implement and maintain. The team always has access to the latest build of the software, from any internet-connected device.
What should be clear from this list is that when it comes to AP invoicing, more automation is better. In fact, it’s a no brainer. With a SaaS-based approach, businesses cut processing times, lower cost-per-invoice and can take advantage of early-payer discounts – all of which are significant improvements over the current state of invoice processing.
Taking the Next Steps to Intelligent AP Automation
No matter how attractive, many AP and finance teams will find the idea of transforming such a complex process and implementing a SaaS-based APIA daunting – at least at first. But there’s a clear path that enterprises can follow to increase success rates and ROI.
Define goals and objectives. Decide whether you plan to implement intelligent AP automation across the enterprise or if it’s smarter to deploy on a smaller scale initially. Agree on a desirable and realistic timeline for deployment.
Include key stakeholders. It’s important to involve the right people from the start to make sure the solution is successful. Be sure to engage individuals from across the AP and finance teams, as well as procurement and IT. They will all have valuable information to include in defining the requirements for success.
Build a business case. Use the information from key stakeholders to build a solid business case for intelligent AP automation. Identify performance metrics that’ll be used to track and measure success.
Assess the current situation. Evaluate current invoice and workflow capabilities such as invoice cycle time and the quality of data capture. This data will help identify which areas to focus on first and will provide a baseline against which success will be measured.
Select the best solution. When evaluating vendors, look for someone with experience in deploying successful AP solutions across a range of organizations and a proven track record working with all major ERP and financial systems. The vendor should also provide customized solutions with powerful features. Other factors to consider include the Total Cost of Ownership (TCO), accuracy of data capture, capture formats supported, ease of use, licensing and supported languages and currencies.
7 Questions to Help Compare SaaS-Based APIA
When comparing SaaS-based APIA solutions, AP and finance teams should ask several key questions in order to make an informed decision. These include:
• Will the solution improve processing times with GL coding and two- and three-way invoice matching?
• Does it include built-in OCR technology and online learning to capture, extract and transform data?
• Does the solution have the capability to scale — including for multi-site, distributed organizations?
• Does the vendor provide localization capabilities, supporting multiple languages?
• Will the vendor provide your organization with a dedicated support team, 24/7?
• Will the vendor deliver updates and innovations quickly and automatically?
• Does the solution support any ERP, with certifications for Microsoft Dynamics 365 Business Central and Oracle NetSuite?
There’s so much room for improvement in AP invoice processing that the argument for intelligent AP automation is an easy one to make. With SaaS-based APIA, AP and finance teams will benefit from higher efficiencies, faster processing times and deeper insights, allowing them to be more competitive and work like tomorrow – today.