AP workflow automation can turn Accounts Payable from a back-office burden into a front-office asset. This can take place by streamlining the invoice processing time from 30-to-45 days down to 1-to-5 days in order to capture discounts and reduce costs.
Current AP Workflow Trends
A leading technology research and consulting firm, has recently evaluated AP Departments in different industries to compile data about AP workflow. The results show 41% already are using AP workflow automation, another 19% are planning on its adaptation, and a rather high portion 40% are not planning on automating their invoice processing.There are myriads of reasons to automate invoice processing; reducing costs, losing fewer invoices, a faster approval cycle, an increased ability to capture discounts with Dynamic Discounting and fewer exceptions are just a few.
The World of AP Workflow
Invoice processing starts with Accounts Payable actually getting the invoice. In a manual system, invoices are received on paper, usually through the mail. Once received, the invoice must be processed by hand. AP workflow automation receives the invoice electronically.
The method of automating invoices is E-invoicing with three primary methods of getting the invoice: Direct integration (EDI, usually via XML), Online Fillable Forms or OCR. Direct integration involves installing a direct networking line into a supplier’s business, to send invoices electronically to the buyer, usually as an XML file. Online forms are usually web-based, and the data is either sent via email as an XML attachment, or it’s processed by the application supporting the form and sent as data directly to the invoice processing system. Optical Character Recognition (OCR) converts scanned images or text into machine code. The OCR process extracts needed data from the invoice and sends it to the validation process. Advanced OCR technology processes input from the mailroom, from email (both the body and attachments), and online portals.
The print-to-cloud solutions processes PDF files in the cloud, and the data is validated. If no errors occur, the invoice information is sent to the next process, or the PDF is returned with error messages indicating the missing or invalid data.
Strategic Benefits of AP Workflow
Information is available in Accounts Payable. The problem, until now, has been how to get it out of Accounts Payable and into the hands of strategic planning. When a business implements AP workflow successfully, AP specialists are freed from the day-to-day laborious work and now can start concentrating on three specific areas such as working capital management, supplier management and spend management.
Choosing the AP Workflow Solution Best for You
There are many AP workflow solutions available on the market today. To choose the best one for your particular situation, you need to employ some ‘best practices’ techniques to work your way down to the best product for your business: cloud vs. ERP software, metrics, and peer benchmarking. If your business relies heavily on its ERP, then your best bet is to use a cloud AP workflow and integrate it with your ERP software. To determine if a product is best for your company, develop metrics, such as invoice processing time from start to finish. Finally, determine what your peers are using, by attending conferences and finding out what solutions have worked best for them. AP workflow offers organizations the opportunity to streamline its invoice processing, cut costs, and garner invaluable information from its AP departments. It makes no sense not to automate your invoices, including AP workflow. If not already implemented any insightful CFO will keep his or her eye on the point of diminishing returns and will have an AP workflow plan waiting in the wings.