Fourth of 8 in the series. Read previous blog.
OK, so you’ve centralized receipt of invoices and started to scan paper invoices. Is that all there is to an accounts payable remodel?
Not if the goal is more than just eliminating paper. In a digital economy, the ability to improve collaboration with suppliers offers new business potential that involves much more than getting invoices to accounts payable (AP) faster. The larger goal is getting invoices through AP faster.
The scanning of paper invoices combined with optical character recognition (OCR) is sometimes considered a first step to better invoice management. But it shouldn’t be the last stop. With these tools, your AP team may still be spending too much time resolving invoice exceptions.
According to research from Ardent Partners, exception management has become the top concern of AP and finance professionals. In a recently released report, E-Payables 2015: Higher Ground, 48% of survey respondents cited a high percentage of invoice exceptions as the top concern in accounts payable, and 56% identified improving exception handling as the top strategy to achieve the next level of performance.
This will involve more than scanning paper invoices. When you consider the costs and resources needed to manage the scanning-OCR process, and the fact that you may still be dealing with a large volume of invoice exceptions, there’s a better way to spend your time and money.
Achieving touchless invoice processing
Here’s an alternative remodeling approach: Extend your payables system to a business network to enable touchless invoice processing. Business rules in the network handle the invoice validation for you. When the rules detect an error or exception, the issue is highlighted and the invoice is sent back to the supplier for correction and re-submission. Freed from managing transactions, your AP staff now can focus their efforts on pushing suppliers off paper to electronic invoicing and supporting procurement efforts to monitor their performance.
Furthermore, with a business network, you continue to leverage the investment in your existing ERP or payables system foundation. There’s no need to rip and replace; you simply extend what you have by connecting those systems to the network. And, as we learned in last week’s post, once you commit to this kind of transformation, you won’t turn back.
With a collaborative approach to managing your payables, you increase productivity, lower your costs, and accelerate invoice processing. This also helps you manage cash and working capital, which is a topic we will address in a future post in this series.
What about an organization that’s not up to code when it comes to PO usage and contract compliance? We’ll examine those issues in our post next week.
Chris Rauen is a solution marketer for Ariba, an SAP company. He regularly contributes to topics including e-invoicing and dynamic discounting as well as the value of collaborating in a digital economy.
Learn more about how to take your payables to the next level of performance in Ardent Partners’ research report E-Payables 2015: Higher Ground.