Accounts payable professionals spend a staggering 84 percent of their time bogged down by a seemingly endless list of manual and semi-automated invoice approval processes, studies show.
In most AP departments, supplier invoices can be received in paper or electronic format by anyone, anywhere in the enterprise, including a branch office, centralized mailroom, finance department or a purchaser. The invoices are then reviewed and forwarded (usually via inter-office mail) for approval and coding. Much of the invoice approval process resides in the heads of seasoned, trusted employees who can go on vacation, go on maternity leave, quit or become sick, significantly delaying workflows. Any exceptions are chased through the organization. Once invoices are approved, invoice data is keyed into an enterprise resource planning (ERP) platform or other line of business system and the invoice is scheduled for payment and physically filed. Supplier inquiries and management and audit requests for reports and access to documents typically require manual document retrieval.
All this manual invoice processing results in costly and error-prone keying of invoice information, lost or misplaced invoices, long approval and exception resolution cycles (which result in late fees and missed discounts), compliance and security risks, high paper storage and retrieval costs, delays uploading data on approved invoices to downstream systems, time-consuming supplier inquiries regarding invoice and payment status and difficulty implementing operational best practices.
Invoice processing also consumes the time of accounts payable managers. Accounts payable managers spend a greater percentage of their time on transaction processing (36 percent) than on managing staff (34 percent), reviewing reports (21 percent) or planning (9 percent), IOFM reports.
As a result, accounts payable earned a dubious trifecta in an IOFM survey of controllers: it topped the lists as the most time-consuming, laborious, and paper-intensive finance and administration function, ahead of burdensome activities such as accounts receivable, payroll, tax, and audit and reporting. In fact, accounts payable received nearly twice as many votes from controllers as the most time- and labor-intensive finance and administration function than the next highest-ranked function.
AP automation solutions and invoice processing software reduce the cost of receiving, approving and posting invoices to an ERP.