AP Automation Best Practices
Index 3 5 8 11 13 15 Introduction Invoice Receipt and Capture Simplified Invoice Processing Supplier Management and Communication Timely, Simple Payments Visible Reporting 17 Efficiency and Invoice Resolution Made Easy
Introduction Great companies never stop looking for reduce time and labour spent on repetitive tasks. Accounts payable processes, formerly a major resource obligation for businesses, can now be successfully automated. AP becomes a way to realise savings and improve visibility, quality and clarity of operations when it s automated. Administrative and support personnel can focus on more critical tasks and use their abilities to problem solve and focus on high-level functions, instead of getting bogged down in paperwork, data entry and other tasks that can be performed by AP automation software. 3
The removal of paper invoices, data entry errors and other relics of the manual AP process leads to a number of positive outcomes, but those hinge on following the best practices for automated AP. Even for companies that are using automated services, those at the bottom of the field see significantly less efficient processes and therefore, more wasted spending and a longer lag time between receiving the bill for a liability and successfully completing payment. Knowing that your company should use automated AP isn t enough it also has to locate the most robust platform available, implement it successfully and follow through on correct use. 4
Invoice Receipt and Capture A centralised invoice receipt and capture process is essential to AP automation. While it s a simple department, a unified capture procedure may seem like a newer concept. Capture software should be able to read webpage-based electronic invoices as well as emailed receipts. paper documents is a leading issue when it comes to the AP market, causing lost time and resources that could be better applied elsewhere. The general advance of automated management platforms in the AP field means invoice handling 5
their users a leg up on competitors that fall amongst the middle and the bottom of performers. Best-in-class AP automation platform developers continually devise methods to boost efficiency and accuracy and have an effective implementation strategy that passes on the benefits to program users with ease and simplicity. Complementary procedures also provide a distinct benefit that can help businesses choose a top AP automation provider. Whether a business is looking to upgrade its AP automation service or begin using a platform for the first time, a variety of secondary features are a strong indicator of a provider that uses best practices. Effective use of cloud-based data is an indicator of a best-in-class solution, as this strategy increases the ability of AP staff to review information, no matter where they re located or what device they re using. When choosing between AP providers and platforms, companies should 6
also demonstrate an attention to detail, optimising the progression of various steps in the process through incremental changes and advances in areas like error tracking, data enrichment and other small between providers. The best automation solutions should incorporate optical character recognition software to convert any paper documents without the risk of data entry mistakes. This solution moves beyond a simple image-capture program to actively and accurately convert printed information into actionable, segmented data. OCR technology can create significant savings, reducing processing time by as much as 75 percent. The shortening of processing time, as well as providing an easier path to meeting compliance regulations and visibility standards, are also benefits provided by the use of OCR technology. And no matter if receipts are submitted should be able to extract data on a line-by-line basis to ensure maximum information capture. OCR technology can create significant savings, reducing processing time by as much as 75 percent. 7
Simplified Invoice Processing Simplification and a straightforward approval hierarchy are keys for the most efficient AP automation. Removing the gratuitous human element from straightforward approvals saves money and gives employees time to work on more nuanced tasks, like dealing with issues on the supplier end. Personnel are free to focus on high-level approvals and making sure especially valuable assets are received correctly, instead of suffering under the weight of work that is more efficiently completed by a competent AP automation platform. 8
Software that can match invoices with purchase orders, as well as provide in-program solutions for handling exceptions, means an increase in visibility of AP processes and a reduction in misused resources. Tracking the progress of a purchase order or invoice through the system means it s easier to catch errors, check in on progress and answer questions about specific steps in the processing queue for each individual item. Being able to access the entirety of an AP program suite anywhere means issues are resolved more quickly than with static or manual systems. Managing a large amount of AP invoices can be difficult, especially when a wide variety of disparately priced services and goods are involved. Receipt confirmation 9
can be especially valuable in situations involving high-cost goods and large orders, along with critical services. the rules that best fits its processes, making sure efficiency and quality control are the foremost considerations. However, the line-item matching every invoice, especially for orders that are already known to be correct, can slow down payment processing and cost time and resources. AP automation best practice for this instance is a rule-based workflow that enforces the appropriate level of matching based on value and type. With this flexible tracking, the approvals process focuses on individual receipts for the truly important items, while more routine and known quantities can be matched on an overall invoice level. Bestin-class offerings let your company choose Best-in-class offerings let your company choose the rules that best fits its processes, making sure efficiency and quality control are the foremost considerations. 10
Supplier Management and Communication Part of reducing the AP workflow is working with suppliers to provide them with an efficient means of submitting receipts. Suppliers spend less time dealing with mundane details and, more importantly, your staff is freed up to focus on the more strategic and involved portions of their AP duties. Self-service will certainly be viewed as a positive by your staff, who won t have to spend the time tracking down pieces of paper and locating many discrete items just to be able to input accurate AP information. Some of the companies you work with may embrace the change early on as well. 11
The advantages of electronic submission mean quicker turnaround on tracking and payment. Of course, not all suppliers will view a selfservice program positively from the onset. Programs that encourage and enable vendors to submit their original invoices in electronic format are more common with the best providers. Because many suppliers don t derive a direct benefit from beginning to use a new form of invoice submission, it can be tough to convince them to start using a system that mainly helps a business partner. The solutions developed by best-in-class AP automation companies create pathways with few barriers for vendors, facilitating the entire process. The advantages of electronic submission mean quicker turnaround on tracking and payment, opening up the possibility for early payment discount. 12
Timely, Simple Payments 1 7 4 8 3 6 9 5 2 Timeliness is always a factor when it comes to AP functions. Quick payments can result in discounts and keeping your books up to date carries plenty of benefits as well, including a current picture of company finances and spending. The accuracy of spending forecasts also increase with the quality of information provided by a best-in-class AP automation system, providing better indicators of possible changes for better and for worse. Being able to track and quantify these changes ahead of time lets businesses maximise positives and control negative outcomes. 13
Once again, cloud-based solutions are the best option for AP automation because of the increased ability to track and access information about all steps of the process, including payments. Instead of being tied to a static system, AP solutions using the cloud let personnel track invoices and payments in the system no matter where they are or when they need to access the information. Timeliness can be a critical factor when confirming a payment or answering an urgent question from a supplier about compensation, so the additional flexibility and quick response of the cloud is preferred when it comes to AP automation. The automation of AP processes means it s easier to use Automated Clearing House payments instead of wasting resources on procuring, writing out and sending wire transfers and checks. The ubiquitous nature of electronic payments means that acceptance isn t a concern for the vast majority of suppliers. Besides the financial cost of sending payments by purchasing wire transfers or checks, the repetitive task of creating, filing and sending paper payment documents is an easily avoidable time drain for your employees. Time previously spent dealing with payment types can be put toward situations that require critical thinking and decision making, instead of just rote repetition and mechanical movement. 14
Visible Reporting The benefits of AP automation should be easily visible. Increased visibility drives understanding of AP processes, compliance with company regulations and state and federal laws and the The consistent nature of data, both in appearance and how it s stored, means finding a specific record or pulling up an entire transaction history is far easier than with a manual or semi-automated AP system. Transactions purchases of a low cost but high volume can now be organised and viewed easily, adding another useful control to the process. Additionally, the bestin-class automation solutions include accurate, real-time visibility into how money is being spent, 15
device in a taxi or hotel room. devices means managers looking into a paid invoice or beginning the search for a less-expensive supplier can do so whether invoice resolution are both easy with the best AP automation solutions. Increased visibility and interactivity of data means tracking important metrics is less time analysis is easier to conduct when all the necessary information is at the right employee s fingertips. Savings that weren t previously evident may be located though a small time investment once a best-inclass AP automation system is set up. And an AP system s ability to work on mobile Increased visibility and interactivity of data means tracking important metrics is less time consuming and 16
Efficiency and Invoice Resolution Made Easy Top AP automation platforms provide a focus on quickly creating monetary savings for users above and beyond the implementation and operating costs of the system. Invoice processing time can see a drastic change when a best-in-class AP solution is implemented as compared to average systems or manual processes. Best-in-class providers can bring standard invoice turnaround time down to 4.8 days, as compared to the 17.4 days from beginning to end required by others. The difference is even more striking when it comes to invoices that have an exception involved, like a disputed cost or other disagreement. While top 17
AP automation providers can turn around invoices with exceptions in an average of 7.1 days. AP automation providers can turn around invoices with exceptions in an average of 7.1 days, other systems take 29.8 days nearly a month to do so. Meeting payment discount deadlines becomes substantially easier with an AP automation platform because of the significantly shortened turnaround times on invoices. of a previous AP system, early payment discounts may have been unusual or simply unattainable. Getting payments during an established window is almost assured, leaving much less worrying about compensating suppliers for fees and penalties stipulated in contacts. The amount of overall exceptions is also significantly lower with the best AP automation providers, further driving the 18
ability to get discounts. Best-in-class platforms bring the exception rate for purchase order-based purchases to just 4.6 percent as compared to the average of 8.7 percent. The disparity between acquisitions not involving a purchase order is even greater, with top performers providing an exception rate of 3.8 percent instead of the average of 8.1 percent. With about half as many invoices getting lagged down by exceptions, turnaround time increases and purchases are tracked and paid for more quickly with best-in-class providers. $$$$$ 19
www.concur.com.au/invoice-management +61 (2) 9113 7344 Sources: 1. Aberdeen Benchmark Report 2013 ( From the Shadows to the Forefront ) 2. Five Reasons to Automate your AP Processes - http://www.accountspayablenews.org/ap-automation/ reasons-to-automate/191-five-reasons-to-automate-your-ap-processes.html 3. Paystream Advisors, Data Capture for Accounts Payable - http://www.paystreamadvisors.com/ eresearch/research-vault.cfm?eresearch=data%20capture%20for%20accounts%20payable%20 §ion=1## 4. Concur internal presentation on receipt matching and ERP ( Receipt Confirmation Launch Plan ) 5. Accounts Payable Controls - http://www.accountingtools.com/accounts-payable-controls 6. Invoice Approval Process - http://www.accountingtools.com/invoice-approval-process 7. Aberdeen AP Optimization report ( The E-Payables Solution Selection Report ) - http://www.adp.com/p2p/ pdf/white_papers/aberdeen_epayables_solution.pdf Precise Business Solutions, Level 1, 116 Hobart Street, Mt. Hawthorn, Western Australia - 6016 +61 8 9242 5933 solutions@precisebusiness.com.au www.precisebusiness.com.au