Improve your Accounts Payable
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Five Steps to Improve Your Accounts Payable Performance
Step 1: Digitalize It
Step 2: Aim For 100% Purchase Order
Step 3: Automate It
Step 4: Dispute Management
Step 5: Transparency and Control
The future of AP processing is interesting and the possibilities to improve the performance are numerous. Many tend to think that eliminating the paper shuffling will solve all problems and make the company cutting edge. However, getting rid of paper is only the first basic step to improve the accounts payable performance. After that, there are still many ways to make AP better. We should actually ask ourselves, does even AP have to exist in the future? We will list five steps in improving your AP performance and hereby, in this paper, start with step one; Digitalize It. Then, step by step, we will take you through four other important factors in creating a well performing AP. In step two we will focus on aiming for a 100 % purchase order. Step three will be focusing on Automation, step four on Dispute Management and in step five we will finish off with the subject Transparency and Control. Let us start with step one;
Although new technologies and vendors have appeared lately on the market, many AP departments are still dealing with a lot of manual transactions. Paper-based invoice processing can no longer meet the needs of most organizations, therefore more and more AP departments are planning and implementing accounts payable automation. Getting invoices as PDF files is not enough, digitalizing is. Implementing an e-invoicing system is one of the fastest ways to move your AP department from a manual operation into an automated operation with less paper and manual data entry.
Let us start by defining what an electronic invoice actually is. As IOFM reports put it; “electronic invoice is an invoice generated by a vendor in electronic form. For instance; an EDI invoice or an invoice that is generated by the vendor on your vendor portal – are e-invoices. Another example of an e-invoice is a so called Purchase Order (PO) flip invoice. Your purchasing system allows the vendor to take PO information and flip it into an invoice that is transmitted back to your system.
Many tend to think that an invoice arriving in your e-mail, is an e-invoice. An invoice sent as a PDF file to your mail has become more and more popular and is often said and thought to be an automation. No. That is not the fact. You still need to deal with the paper and you still need to input the data unless you use a data capture tool. Of course, it reduces the cost of handling paper. What it does not solve, is how you get the data from the file into your system.
Eliminating paper invoices will give you significant cost savings and give distinct advantage over companies depending on paper. AP departments that handles loads of paper invoices will struggle with complex processes and high cost.
There are many e-invoicing solutions, and an important thing to understand is that these solutions are available to all size companies. Naturally large companies are the greatest users of electronic invoicing as they usually have more IT resources and larger budgets.
Go electronic, and the result will be numerous operational and strategic benefits. There will not only be cost savings but also business efficiency and revenue opportunities through the ability to automate the invoicing process and integrating with other business systems. Cost savings can be up to 60-80 per cent as sorting, registering and manual data entry of paper invoices are eliminated. The AP accuracy and productivity will improve significantly as well. Not to mention the sustainability objectives – removing invoices sent all over the world will have a significant impact.
To briefly summarize it all;
A paper-based invoice processing system can no longer meet the needs of most organizations. The goal is not just to get rid of paper and digitalize it. That is just the first step towards automation and improving your AP performance. Find more insight in the next paper as we will focus on aiming for a 100 % purchase order.
Qvalia is an AP transaction specialist, working with over one thousand companies, offering services for automating the AP process.
We believe that the world is facing a significant paradigm shift: With ever greater numbers of customers and suppliers connected to the same cloud service, errors in transaction flows will increasingly disappear, but so will thousands of hours of time-consuming invoice management.