The Sports Car of AP Automation Solutions
Think about a sports car. Some may argue that a Fiat 500 is a sports car and technically that may be true. Although “sporty” it may be, I think a more accurate example of a true sports car would be a Porsche 911 or Corvette Z06. When you apply that way of thinking to AP automation we can see there is a few different opinions on what “automation” really means. I will address the differences in definitions of automation solutions while playing with this analogy of ground transportation and what the difference is between driving a Fiat 500 verses a high-end Corvette.
A paper based AP process is like walking from point A to point B. It will get you there, but not very fast and requires significant effort along the way. It may be hard to navigate on foot just as it is hard to route a paper invoice to the correct approver in a manual AP department. You (or the invoice) might get lost or have to spend time figuring out which is the correct route to take. You might have to ask for directions or stay put until directions are given which takes more time and requires help from others. Nonetheless, it does work and a lot of people are doing it, however it is just slow and it’s by no means ideal.
Now we introduce your first bicycle and things start to get a little easier. It makes going from point A to point B faster but obviously you still have to put effort into it. This would be comparable to adopting a back-end document capture and archive solution. Some call this a scanning solution or OCR. These types of solutions will scan the invoice so you have a picture of it, it will index some key fields so it can be looked up at a later date and it will store this data. This sort of product is pretty basic and focuses on the end of the invoice process; storage. Under this scenario, you are more efficient but are still missing a myriad of benefits. Imagine watching a Corvette speed by when you’re biking home in the rain!
If we think of the three parts of the AP process (in a simplistic manner) as receipt, processing and storage, there are significant improvements when we move this OCR or scanning process to the front-end. This means the invoice is scanned, some data is captured and indexed, and a certain level of validation can occur. Although this is a good start, it still lacks the processing aspects. This is where the front-end capture with matching and workflow come into play.
Now you’re 16 years old and you get your first car (let’s say it’s a Fiat) and boy does it move fast compared to riding your bike! It’s no Corvette but you undoubtedly appreciate it because you remember the effort it took to get from point A to point B before. This is analogous to a more advanced automation solution than the stand alone document and data capture pieces (the bike). It starts incorporating automatic matching of PO’s, workflow routing for invoice approvals, approval validations, business rules, approval limits, reminders/escalations, etc… This is all great but this is not yet the Corvette of E-invoicing solutions because we are missing one key participant that isn’t really involved at this stage. That key participant is the supplier.
Finally, the real sports car of AP automation we have been waiting for. The primary difference when we jump up to this level is the multiple on-ramps for supplier participation and interaction. We are still converting paper invoices into electronic formats but we are also pushing those suppliers sending paper to the more efficient methods like online entry, file uploads and EDI. Through a vendor portal that enables this supplier interaction, validations and matching error can now be pushed upfront and correct by the supplier before those end up in your AP department. The suppliers like this because it makes their payments more predictable. On this level of AP automation you have the ability to offer advanced payment term options, you can solve problems with interactive dispute resolution features and you don’t receive any more paper! All invoices, regardless of ‘how’ they are submitted (i.e. mailing paper invoice, online entry, file upload, EDI) all flow through a common workflow and matching process.
This is you in the car you always wanted and who would have thought that it’s so advanced it almost drives itself! Congratulations, you’re truly automated.