Sure, invoices that match to a purchase order (PO) can be posted and paid with minimal effort.
But getting approvals on non-PO, unmatched PO invoices or those that require review – such as high-dollar invoices, invoices from a strategic supplier, or invoices for a business unit – can be time-consuming.
AP staff must determine the purchaser, route the invoice for their review, nudge purchasers who don’t approve invoices in a timely manner, and chase down any lost or misplaced invoices. A single delay in the approval process can create a bottleneck that can disrupt a company’s supply chain.
Slow invoice approvals are exacerbating the supply chain issues many companies are experiencing.
Think about companies that have a complex or dynamic buying or purchasing process and generate a lot of invoices.
The problem with invoice approvalsSome AP departments rely on paper or email processes for routing invoices for approval. Others use the workflow functionality built into their enterprise resource planning (ERP) application. While others use legacy workflow platforms that do not provide up to date features and functionality. Many AP departments increased their use of email for routing of invoices internally and externally when their staff shifted to remote working.
But all these approaches to invoice approvals require a significant amount of manual intervention, creating lots of opportunities for errors, delays and potential risk of fraud and compliance issues.
Consider the shortcomings of using email to route invoices for approval. Emails are buried in an ever increasing amount of work and are hard to keep on top of. Email is not secure. Email doesn’t ensure chain of custody. Email cannot enforce separation of duties. Emails can easily be misrouted and fall into the wrong hands. Emails don’t provide AP staff with visibility into the status of the review. Email doesn’t log actions taken on an invoice, so there’s little accountability. And there’s no stopping someone from deleting an email ahead of a company’s retention schedule.
What’s more, emails don’t provide much efficiency in cases where multiple individuals – say an office manager, a line of business manager, and vice president of operations working in different geographic locations – need to review a single invoice. It might not be easy for everyone in the approval chain to access the supporting documentation they need to decide. An approver also may not be clear on who to send an invoice to next. Invoices also can easily become misrouted or lost.
All the while, AP staff can never be sure where invoice approvals stand in the process, meaning bottlenecks can go unchecked and suppliers can’t get an update on the status of their invoice.
It’s not uncommon for AP teams to waste a lot of time each month on back-and-forth phone calls and emails chasing down invoice approvals. Slow invoice approvals frequently result in late payment penalties, missed opportunities to capture early payment discounts, more telephone calls and emails from suppliers about the status of invoices and payments, and difficulty forecasting cash flow.
How to automate invoice approvals
Cloud-based AP automation solutions accelerate invoice approvals.Unmatched invoices or non-PO invoices that require approval are digitally routed to individuals based on highly configurable business rules. Workflow rules can be configured based on an organization’s unique policies and procedures. There’s no chance of invoices going to the wrong individual, becoming lost, or falling into the hands of bad actors, and the company’s workflow rules are always enforced. Purchasers are notified of invoices awaiting approval and alerted when invoices approach their due date. Supporting documentation can easily be attached so reviewers have everything they need in one place. If invoices are not acted upon quickly, they are automatically escalated to a manager for review. Invoices also can be re-routed to another individual when an approver is out of the office. Throughout the process, AP staff have real-time visibility into the status of invoices, so they can resolve bottlenecks to ensure that approvals stay on track and payments are made on time.
Automatic logging of all actions taken on an invoice also improves accountability.
In today’s remote working environment, any business can benefit from workflow automation. But businesses with staff spread across offices, facilities or subsidiaries in numerous geographic regions can see significant improvements in the time it takes to approve invoices and pay suppliers. Workflow automation also helps businesses scale without the need for more AP headcount.
If it’s taking your organization longer these days to approve invoices, IPS wants to speak with you. Contact us to arrange a time to speak with one of our automation experts about your needs today!
Why should I use IPS to automate invoice processing?