Accounts payable is a crucial artery for the operation of many organisations. But as a business grows, the number, detail and spread of its operations can transform invoice processing from something manageable to a strategic headache. Manual, siloed procedures that worked for a smaller business now hobble the organization with inefficiency, cost and risk. It is with true change that we look directly at our broken processes and understand that the answer to greatness does not reside in some small tweak somewhere, but in embracing an entirely new model.
The High Cost of Disparate Systems and Data Silos
A large company may also have some geography or divisions, who use different procurement (or purchasing) and accounting systems. This lack of standardization results in data silos, and it’s next to impossible to get a single view across the company for spending and liabilities in real-time. An invoice that is unable to enter the next workflow stage because of a purchase order that is still stuck in another stage can be time-consuming and require AP to do too much staff work rather than performing value-added tasks. Efficiency and transparency suffer under this navel-gazing.
The Fix: The solution is to put in place a cloud-based single source of truth. This all-in-one, end-to-end invoice management process solution easily integrates with any ERP, breaking down information silos and providing real-time visibility to the complete lifecycle of an invoice, from initiation until payment anywhere in your business.
The Burden of Manual Data Entry and Human Error
Probably the most common and obvious is manual data entry. When AP departments are flooded with thousands of invoices by mail, email, and fax, workers need to type in data one line at a time manually. Furthermore, being a manual process, this is extremely time-consuming and prone to error. One simple typographical error in an invoice number or amount can result in duplicate payments, resulting in overpayments that are incorrect and lost early payment discounts that go straight to the bottom line.
The Fix: Leverage Intelligent Automation. Optical Character Recognition (OCR) and Artificial Intelligence (AI) consume and process invoices with over 99% accuracy through both, with layout flexibility, supported formats independent of language. This automation eliminates manual keying, significantly reduces processing time, and allows your team to concentrate on exception management and strategic analysis.
Inefficient Approval Workflows and Bottlenecks
In a large organization, an invoice will likely need approval from several departments and managers. A paper invoice can languish on a desk for days, or an email approval request on route to sign off can be lost at the bottom of an inbox. Without effective automated routing, AP clerks spend far too many hours hunting down approvers and chasing after them, resulting in extended cycle times, unhappy suppliers, and possibly strained supplier relationships.
The Fix: Deploy rules-based workflow routing to automate the workflow processes so that they follow predefined rules. You can also use more advanced end-to-end invoice management software to set up rules that automatically send invoices to the right approvers based on factors like vendor, amount, and department. Approvers get notifications automatically and can approve or reject from any device. Escalation mandates make sure you’re not held up. It results in an orderly, auditable and efficient approval workflow.
Lack of Visibility and Poor Cash Flow Management
With no unified system, having current visibility into accrued obligations is also nearly impossible. GNDB decision-makers come under pressure to make important cash flow decisions using out-of-date or incomplete information. The lack of visibility makes it hard to leverage discount opportunities and pay when payment is due or optimize working capital. And it makes the monthly close process a frenzied, manual scramble.
The Fix: Get Broad Visibility with a Single Pane of Glass. A modern AP automation solution presents a real-time dashboard populated with updates on the status of all invoices, crucial metrics such as invoices processed per FTE, and impending outflow requirements. This provides CFOs and controllers with insight to drive proactive financial decisions, improve forecasting accuracy, and reduce their closing process.
Compliance Risks and Audit Difficulties
The compliance and audit nightmare of paper-based processes. It’s almost impossible to keep an unbroken chain of custody on invoices, and demonstrating compliance with company policies or with regulations like SOX is a time-consuming, high-wire act. Tax auditors waste valuable time flipping through file cabinets, moving paper from one stack to another, and scanning spreadsheets all of which makes audits more expensive and less efficient.
The Fix: Start a digital audit trail from day one. Automation itself ensures a full, immutable digital audit trail throughout the life of an invoice from once it is received, including data capture through all the approvals and processing. Reforming audit trail makes compliance easy and cuts audit prep time from weeks to hours, while also reinforcing the company’s internal control.
Conclusion
The challenge points of the large enterprise invoice process are related, and addressing them piecemeal with point solutions can only take you so far. The only thing that’s ever going to really make things better is a ‘whole’ approach. By engaging an expert to add an end-to-end invoice management solution, businesses can convert their AP from a cost centre gobbling up labour hours into a strategic wing that not only reduces inefficiency and strengthens supplier relationships but also provides financial intelligence that becomes the valuable compass navigating the business forward.
