What is Accounts Payable Optimization?

Posted by Rich Arminio on Aug 26, 2021 10:15:13 AM
Rich Arminio

Is your AP automation solution falling short on expectations?

If you are nodding your head, you are not alone.

IPS AP OptimizationSeventy percent of AP departments now have some type of invoice processing technology, the Institute of Finance and Management (IOFM) reports. But few AP departments have achieved truly electronic touch-free processing. And even fewer are delivering benefits beyond the AP department.

That’s because AP automation isn’t enough for today’s economic and business realities.

AP departments need to optimize their operations. Accounts Payable optimization combines advanced end-to-end technologies with industry experience and expertise in business process improvement to deliver strategic as well as operational benefits – exactly what a business expects during turbulent times.

Why consider Accounts Payable optimization

Many weary AP leaders are so grateful for the incremental improvements they receive from automated solutions such as OCR that they never consider what they might be missing out on.

Wondering if your AP automation system is falling short?

Here are four signs that your AP processes aren’t optimized:

 

1. Too many manual processes.

Many AP departments remain bogged down with manual processes long after automating. Manual keying. Physically routing invoices for approval. Chasing down information. Responding to calls and e-mails from suppliers about the status of invoices and payments. The root of the problem is that traditional AP technologies take a piecemeal approach to automation, resulting in processing gaps that create inefficiencies. For instance, many AP solutions can’t extract the data from invoices that arrive via e-mail. Some solutions require information on approved invoices to be rekeyed into an ERP. Others can’t automatically match invoices to purchase orders or delivery receipts that reside in an ERP. And when there are manual processes, there are going to be errors that make things worse.

2. Slow cycle times.

Faster invoice approvals are one of the biggest reasons that accounts payable departments automate. Slow invoice approvals result in backlogs of invoices, late payments to suppliers, more calls and e-mails from suppliers wondering about the status of their invoices and payments, missed opportunities to capture early payment discounts, and difficulty forecasting cash. The automated solutions used by most AP departments only go so far in accelerating invoice approvals. Poorly integrated components require handoffs that delay approvals. Invoice workflows can’t be dynamically adjusted. And it’s hard to identify bottlenecks and inefficiencies in the accounts payable cycle without an end-to-end solution.

3. Poor visibility.

Tightly managing cash flow and corporate spending means more in times like these. But the hodgepodge of siloed solutions that most AP departments use to process invoices makes it difficult to get a complete picture of where things stand. Reporting was an afterthought in many AP systems. Key data is not captured. Information is not timely. Data is poorly organized. People are even still working and approving invoices via their email boxes. Information may not be accessible to decision-makers when, where, and how they need it. It wasn’t supposed to be this way for AP departments that automated.

4. No revenue opportunities.

AP has historically been perceived as a tactical back-office function. A drain on company resources. A cost center. The automated solutions deployed by most AP departments do little to dispel this notion. While most automated solutions help AP departments reduce overhead, the technology doesn’t deliver value to the enterprise.IPS AP Automation Solutions | Let's Talk

It’s easy to see how traditional automated solutions can leave AP departments wanting.

Taking automation to the next level

Accounts Payable optimization delivers the operational improvements of traditional AP automation solutions, and then some. By combining advanced technology with industry experience and expertise in business process improvement, AP automation delivers tantalizing strategic, as well as operational, benefits.

  • Touchless processing. AP optimization uses advanced technologies such as intelligent capture and machine learning to virtually eliminate human intervention for data extraction, general ledger coding, invoice matching, invoice approvals, exceptions resolution, and ERP upload. It’s possible for AP departments to wipe out the handling of paper and e-mailed invoices. When invoices and data flow touch-free through the accounts payable cycle, costs are lower, the chance of errors is reduced, and cycle times are accelerated. Eliminating manual, repetitive tasks also frees AP staff to spend time on higher-value activities such as analyzing data, collaborating with stakeholders, and building relationships with suppliers
  • Next-day turnaround. It can take days or weeks for an AP department to get approval on an invoice, even in an automated environment. AP optimization solutions solve this problem by combining industry experience and expertise in business process improvement with advanced digital workflow technology such as intelligent queuing of work, notification of invoices awaiting approval, automated alerts that invoices are approaching their due date, escalation of invoices that have not been acted upon, and real-time dashboards that empower AP managers to see how things are progressing and to take proactive measures to resolve bottlenecks. The cloud architecture of most AP optimization solutions also makes it easy to support decision-makers who are working remotely. AP optimization is so powerful that some providers of the technology guarantee next-day turnaround on invoices submitted by suppliers.
  • Real-time visibility. AP optimization instantly puts smart insights at the fingertips of those who need them. There’s no need to guess about operational performance, cash flow, and corporate spending. Dashboards, drilldowns, mobile access, exports, and ad hoc reports detail metrics such as the number of invoices awaiting approval, the value of invoices awaiting approval, the number and value of exceptions, spend by supplier, business unit or category and more. By tying all actions of the invoice and recording them in a single solution enables AP Departments to have transparency like they never have had before. This information can guide decisions in all corners of an enterprise.
  • Cash-back rewards. Imagine if AP could cover its overhead and return money to the business. It’s possible with AP optimization. Unlike legacy AP automation solutions with a singular focus on invoice processing automation, AP optimization takes an end-to-end approach to digitizing the AP cycle that includes supplier payments. Electronic payments provide AP departments with an opportunity to free up cash by eliminating manual tasks and reallocating staff to higher value activities. Businesses also can earn cash-back rebates on card spend – sometimes enough money to cover all the costs of an AP department, and then some. While more providers of traditional AP automation systems have electronic payment capabilities, only AP optimization solutions use predictive analytics and proprietary supplier enablement strategies to achieve best-in-class supplier adoption of electronic payments.

With optimization, AP departments can achieve the full benefits of digital transformation.

If your AP department is dissatisfied with the results of its automation efforts, it may be time to consider an AP optimization solution that combines advanced technology with industry experience and expertise in business process improvement. No automated solution can match the touchless processing, fast turnaround, visibility, and cash-back rewards provided by Accounts Payable optimization.

Contact IPS to speak with one of our optimization experts about your needs today!

 

FAQ

What are the benefits of accounts payable automation?

Why should I use IPS to automate invoice processing?

 

Tags: AP Workflow, Invoice Processing, AP Automation, Accounts Payable Workflow, AP Automation Solutions, Accounts Payable Automation, Accounts Payble Optimization