Organisations are slow to adopt technologies for their Accounts Payable (AP) processes despite the tremendous saving potential. The current processes are undeniably laborious, error-prone and time-consuming. Explore the benefits to adopt an automated invoice management solution.
Establishing an effective and optimised business process management is essential to every workflow, big and small. However, some processes hold more prominence for a healthy operation and growth than others. The accounts payable process is a critical business workflow. Managing it well is essential to protecting value creation and return on investment (ROI) while lowering overall costs and improving productivity.
Every purchase made by your company is more than merely a transaction. It holds a significant opportunity to gain savings and competitive advantages. If managed well, supplier relationships are improved, leading to greater business productivity and efficiency. Through leveraging the right technology and instilling the best practices, the accounts payable function would be more than handling invoices and purchase orders but be transformed into a value creation centre for your business.
The accounts payable or 'procure-to-pay' (P2P) process refers to the bookkeeping process of receiving, confirming, and unlocking funds for an invoice. The three main stages are the (1) purchase order, (2) receiving report and the (3) vendor invoice.
At the vendor invoice stage, the accounts payable department receives an invoice from the vendor for the goods received or services rendered.
During this stage, accounts payable personnel typically perform a three-way match to compare the purchase order, receive the report, and vendor invoice to confirm that these three documents have the same information on the price, quality, terms, etc.
Each requires additional time and effort to rectify should there be any discrepancies. The accounts payable personnel has to investigate the differences between the vendor, the receiving department, or the original purchaser. If all three documents match, the vendor invoice can be sent for final approval by an approving manager (or marked for payment if the amount falls within the pre-approved spending levels).
With most organisations using double-entry bookkeeping, approved invoices are marked as paid and recorded as journal entries in the appropriate sub-ledger of the general ledger once the accounts payable team issues a cheque or an electronic payment to the vendor.
the accounts payable process has a significant and daily impact on the health and performance of your organisation, it touches every dollar flowing out of your pocket in exchange for the goods and services you need to do business
Depending on the volume of invoices received by an organisation, the accounts payable process described above can be labour intensive resulting in high costs and human errors. To hold the fort in an ever-increasing competitive and complex marketplace, organisations can benefit from the 3As - namely Automation, Artificial Intelligence (AI) and Analytics.
Robotic Process Automation (RPA), or sometimes referred to as 'software robotics', is a form of business process automation technology that emulate typical humans interacting with digital systems and software. An organisation can reduce their reliance on mundane, manual-intensive roles prone to human errors and reallocating them on generating value with higher-level tasks.
An AI-supported process could stand-in for the three-way matching process. This will see a reduction in human-led errors and unnecessary delays. Each vendor invoice can be automatically checked against receiving records and the original purchase order. When exceptions are detected, they would be automatically flagged for review. Those that matched are automatically are routed for approval or payment. Less time and money are spent on data entry and chasing exceptions, seeing a reduction in the average cost of processing an invoice by up to 60%.
When paired with a customised analytics dashboard to uncover the financial health of your organisation in real-time, issues can pinpoint and tackled rapidly. Decision-makers now rely less on guesswork and intuition, making accurate and informed data-driven decisions based on the insights and information gathered from the various data sources.
Customised invoice management template by delaware for quicker go-live
Having total transparency into business spending allows for the finance team to manage their cash flow better. The invaluable insights gained can be used for strategic financial planning and growth.
By harnessing the potential of automation technology and applying AP best practices, organisations can ensure that every purchase is processed swiftly, efficiently, and accurately. Capture early payment discounts and avoid unnecessary late fees and penalties will allow you to build strong relationships with your vendors to achieve the best possible price and value.
In addition, reducing paper-based workflows and manual processes and the need for physical storage of paper documents minimises the organisation's environmental footprint and associated costs.
Investing in a robust Vendor Invoice Management (VIM) solution like delaware’s FAST-INVOICE is one of the most effective ways to apply the best practices to an organisation's P2P process.
Talk to our P2P experts at delaware
