Measuring the Effectiveness of Accounts Payable

Dispute Resolution scaled

In any organization, it’s highly important and useful to measure accounts payable for effectiveness. The importance of evaluating effectiveness is obvious; improvements are impossible without regular evaluation of the current process used. However, without proper automation, effectiveness becomes very difficult to measure consistently. One of the biggest obstacles in the way of successful reporting and invoice processing is the infamous invoice exception. Untold time and money have been spent reworking invoices that don’t follow company guidelines or cannot be properly matched. How invoice exceptions are handled plays a major role in the effectiveness of the accounts payable process—and thankfully, enterprise-level accounts payable automation can be the key to unlocking effective invoice exception handling.

The Most Common Exceptions

Depending on the complexity of your system and your number of guidelines, there can be several areas where exceptions occur. These exceptions can cause additional, unnecessary effort and time in daily invoicing processing. Some of the most common exceptions are:

  • Invoices that don’t contain all required information,
  • Lack of a valid purchase order,
  • Differences between product quantities or prices, and
  • Goods that have been invoiced but never received

Understanding where the majority of exceptions in your department come from aids in targeting and handling them faster. With paper processes or partial automation, these exceptions can be near impossible to manage in a timely manner. This is where the beauty of high-level automation shines.

Easier Exception Handling

Enterprise-level accounts payable automation excels in streamlining the way exceptions are handled. With invoice exception handling through high-level automation, exceptions are organized into a consistent workflow. Your team knows why invoices were marked as exceptions, what information was correctly input, and what information is incorrect or missing. For example, if an invoice is missing key supplier information that your team has identified as necessary, such as invoice number or supplier address, that information is highlighted so you know exactly what information needs to be requested.

Through electronic invoicing, discrepancies between product quantities and prices are highlighted for easier discovery. They can be flagged and handled by authorized personnel in the moment as they occur, on-site, or even from a remote location. If your team notices consistent issues with a supplier, guidelines and rules can either be updated in the system, or you can speak with purchasing about the issues and discuss how to move forward with that particular supplier.

The purchase-order-to-payment process can be tracked with greater efficiency than in previous manual or low-level processes. With the ability to perform both two- and three-way matching, this should virtually eliminate the problem of paying for goods that have not been received.

A More Effective Department

Once your invoice exception handling has been automated, it makes for a much faster and more efficient accounts payable department. By eliminating the amount of time spent on invoice exceptions, your team can devote themselves to more meaningful tasks. With more time spent on high-value projects, and extensive reporting abilities from enterprise-level AP automation, the effectiveness of accounts payable becomes clear and easy to track.

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