Accounts payable technology in America has become well-established and is advancing rapidly. However, as with other technologies, even though positive changes are occurring rapidly, they are not necessarily being rapidly accepted.
Defining the Problem
The most efficient accounts payable process is one that is fully automated. Eliminating errors inherent in human intervention. Optimally, this requires the participation of both the supplier and the buyer from development of purchase order to payment of invoice.
A recurring problem for businesses is that even though they may become automated and may even have set up a vendor portal as part of their AP automation system, some of their suppliers may elect not to use the portal. They may still continue to send invoices by older, less efficient methods, such as via mail, fax, email or PDF. This occurs in 80 percent of cases.
The result is that invoice payment is significantly slowed down. Invoices from multiple suppliers arriving in several different formats must be manually reviewed for errors and omissions, and then converted to the buyer’s automated system for processing. This defeats the purpose of automation in the first place, which is to eliminate error and streamline accounts payable functions.
Factors Compounding the Problem
Ted Ardelean discusses the possible reluctance of suppliers to participate in electronic invoicing in his article titled, “When Perfect Technology Does Not Deliver Perfectly”. Mr. Ardelean admits that businesses in the US have a more difficult problem than in some other countries, since invoicing formats are not government-mandated. He argues that the standardization of invoicing benefits everyone.
To bolster his argument, he makes an interesting analogy to the Industrial Revolution, in which standards for the uniformity of products became a reality. At first these standards were ignored, but once they were widely accepted, they opened the door to mass production, lower costs and higher quality products. He concludes that if government mandates are not a possibility, businesses themselves should set standards for invoice presentment, by the formation of business rules to which their suppliers would be expected to adhere.
Closing the Loophole
To keep pace with such problems, automated invoice conversion is now offered as an option in many E-invoicing solutions. Automated invoice conversion can accurately read and convert the information from diverse types of invoices delivered in different ways. However, the information on the invoices must be present and accurate.
The addition of established business rules for the data on invoices is the missing link in this process to insure greater accuracy. Once these rules are formulated for the supplier to follow, only the occasional exceptions to the rules need to be examined manually. According to Mr. Ardelean, this can bring the accounts payable process up to 98 percent automation.
The good news is that any business can implement these procedures, substantially increasing the effectiveness of their electronic invoicing system and bringing it up to nearly full automation, even without supplier adoption of e-invoicing.
Referenced Source: Paytech, December 2015: Ted Ardelean: “When Perfect Technology Does Not Deliver Perfectly”