Invoice automation is a top priority for accounts payable departments.
Even accounts payable departments that are largely automated plan to deploy more automation.
End-to-End Invoice to pay automation is long overdue at most departments. Manual, semi-automated and legacy OCR invoice processes increase costs, errors, and cycle times at a time when businesses can least afford them.
Is your business on the fence about deploying an invoice automation solution?
Here are three reasons to do so:
1. High costs: Traditional approaches to invoice processing cost too much. Processing invoices in a manual, semi-automated or legacy OCR environment result in keying of invoice information, lost or misplaced invoices, long approval and exception resolution cycles (which result in costly late fees and missed discounts), compliance and security risks, high paper storage and retrieval costs, delays uploading data on approved invoices to downstream systems, supplier inquiries about invoice and payment status, and difficulty implementing operational best practices. Manual processes also increase the chance of costly payment errors. Duplicate payments and over-payments account for 2 percent or more of all payments at 14 percent of the businesses, IOFM benchmark data finds. A rule of thumb is that a duplicate payment rate over 0.5 percent indicates weak processes, or a master vendor file that needs weeding out, per IOFM.
- 2. Long cycle times: Long invoice approval cycles is a big challenge for accounts payable departments. In a typical accounts payable environment with approvers working from home, getting invoices from one party to another requires staff to scan invoices and e-mail them to the appropriate individual. Invoices routed via e-mail are hard to track and are more likely to be sent to the wrong individual, overlooked, or accidentally deleted. Long invoice approval cycles result in backlogs, late-payment penalties, more calls and e-mails from suppliers regarding the status of invoices and payments, and difficulty forecasting cash flow. Long approval cycles also make it hard for businesses to capture early-payment discounts. Eighty percent of businesses surveyed by IOFM receive invoices that offer early-payment discounts. In fact, 5 percent of those surveyed said that more than 25 percent of the invoices their business receives offer discounts for early-payment, while 3 percent of businesses say between 16 percent and 25 percent of the invoices they receive offer early-payment discounts. Businesses that take advantage of just a discount term of 1/10 net 30 earn an annualized 18 percent return – a lot more than they can earn from a typical interest-bearing bank account. But most businesses capture less than 21 percent of all early-payment discount offers, and 12 percent of businesses are unable to capture any early-payment discounts, IOFM finds. Slow invoice approval cycles are largely to blame for these missed discounts.
- 3. Poor visibility: Manual, semi-automated and legacy OCR approaches to invoice processing do not provide the visibility that accounts payable departments need to assess their cash position, avoid late-payment penalties or to make informed decisions about early-payment discount capture offers. Senior finance managers also lament the lack of visibility into invoices and payables documents. Manual and semi-automated invoice processes are the primary contributor to the problem: key information is not captured, data is poorly organized, information is not timely, systems are not well-integrated, and decision-makers do not have access to key variables to know the best time to release cash. Moreover, it is hard for staff to track the status of invoices and other documents in a manual or semi-automated environment and to ensure that the appropriate individuals have approved documents in a timely manner. Paper invoices can sit for days on an individual’s desk, get stuck in inter-office mail awaiting approval, or become lost or misfiled. In tough times, businesses need better visibility into their cash and spend.
Manual, semi-automated and legacy OCR invoice processes are no match for these challenges.
That is why more accounts payable departments plan to deploy an invoice automation solution.
Is your accounts payable department considering deploying invoice automation software? If so, IPS wants to speak with you. Contact us to arrange a no-obligation consultation with one of our experts!