Many organizations around the globe continue to be encumbered with manual and complex processes for managing vendor payments, which contributes to staggering invoice-processing costs. A study by the Institute of Financial Operations (IFO) revealed that, on average, 50% of invoices are still received on paper, 37% by e-mail, and five percent by fax. In addition, according to a PayStream Advisors report from 2018, approximately 58% of organizations in North America still have not implemented invoice workflow automation, and the percentage is significantly lower outside of the United States and European countries.
This statistic is somewhat perplexing because, according to Gartner Research, automation of accounts-payable invoices produces one of the largest returns on investment when compared to other technology investments. According to research by Ardent Partners, organizations can reduce their invoice-processing costs up to 70% through automation. Furthermore, a 2017 study by Aberdeen Group reports that automation can reduce invoice-processing days from 20.8 to 3.8 and can increase invoices handled from 100 invoices per employee per day to 3,000.
Let’s take a look at four strategic benefits that private and public sector organizations can achieve using intelligent invoice-management solutions, operating in the cloud or on-premises.
Faster invoice processing, lower costs per invoice, and decreased error rates
A major problem confronting accounts-payable departments is long invoice-processing times, which produces higher costs per invoice as well as recurring vendor payment issues and stressed supplier relationships. Automated invoice-management systems can significantly speed invoice processing and reduce accounts-payable expenditures. Compelling features include intelligent capture and digitalization of invoice receipts, dynamic workflows, optical character recognition (OCR), e-invoicing, EDI ingestion, and more, reducing error rates.
Digitalization is a major factor in cutting invoice-processing times and associated costs. For example, invoice receipt can be ingested much faster through either emailing or scanning of invoices. According to the PayStream Advisors report, approximately 40% of intelligent invoice-management systems receive their invoices via email.
Quicker approval of invoices
An intelligent invoice-management system can dramatically accelerate the approval process for both non-PO and PO invoices. Invoices are digitized, the associated metadata is embedded within the work item and workflow, and the chart-of-authority employee approval data is accessed and utilized within the approval business rules. For example, if a non-PO vendor invoice for business travel enters the invoice-management system, the intelligent invoice workflow will electronically confirm whether the supervisor has the authority to approve the specific reimbursement amount. If so, the automated workflow will route the work item to the supervisor for review and approval. If not, the workflow will route the work item to a more senior supervisor.
Real-time invoice-processing visibility
Invoice reporting from non-automated processes is time-consuming, fragmented, expensive, error-prone, and largely inefficient. A significant value of automated invoice-management systems is that managers can view analytic reports in real time for visibility into invoice volumes, status, and process bottlenecks. The following are just some of the reports typically available with many invoice-management solutions:
- Central reports
- Audit reports
- Overdue payables
- Exception analysis report
- Cash discount forecast
- Supplier payment analysis
- Productivity report
- Key process report
Rapid reconciling of purchase orders
Finally, an automated solution can significantly relieve the hassles of reconciling supplier invoices with purchase orders, credit memos, and delivery receipts. OCR technology can greatly decrease the time necessary to track down missing invoices, good receipts, shipping orders, and so on, and send alerts flagging fraudulent invoices, incorrect pricing, and more.
In short, intelligent invoice-management systems automate many of the most unproductive and costly steps in invoice processing – manual data entry, approval routing, matching, and GL coding. By implementing invoice management in the cloud, organizations can streamline processes, boost employee productivity and efficiency, increase cash flow, improve supplier relations, and drastically lower processing costs. These lower costs can offset the subscription for software as a service – a fixed and predictable operating expense.
Get more insight on How Electronic Invoicing Can – And Should – Really Work.