A common challenge was the need to reduce costs, as well as the number of AP staff, while improve the effect of financial decision making. Yet, many continue to struggle with processes that are "heavy" in paper, error and delays, and inadequacies of ERP systems that do not go deep enough into the AP process.
The discussion focused on the need to tackle more of the upstream business processes, including supplier enablement, document/electronic invoice receipt and workflow approval routing to resolve ailing ERP processes.
Multiple ERP solutions
The situation could not be worse in organisations that have multiple ERP solutions or multiple instances of a single ERP. Executives struggle with disparate data and lack a single spend control "umbrella" to support a common AP process. As a result, their AP teams largely focus on "just paying suppliers" rather than being value-added departments that manage payment services and supplier relationships.
Broad function scope
While, ERP systems cover a broad function scope and offer a degree of integration across their different applications, such breadth often leads to a lack of focus on Spend Control issues - the impact of which is felt in AP. ERP systems were primarily designed to support the purchasing of direct material for manufacturing or sales and are cumbersome at best when it comes to indirect goods and services needed by the rest of the organisation.
Complex invoice processing
Invoice receipt, workflow, approvals, matching and overall process management are problematic, especially when purchasing activities are non-PO related or are processed outside of the ERP system. For most, invoice processing takes too long, especially where there are large volumes of invoice transactions or decentralised AP processes. The ability to validate, clean and process an invoice often takes days or months; not minutes:
- Discrepancies are the rule
- Invoices are held up in error
- "Just paying" invoices is common
- Early payment discounts are lost
- Duplicate and suspect invoices are onerous to deal with
- AP interaction with suppliers around payment status is extensive
The list goes on. Executives must seek to enforce a consistent AP process organisation-wide to improve productivity and reduce operating costs.
ERP vendors by their nature have tended to focus on deployments of a relatively small number of suppliers and fail to factor into account the requirements of middle market and small suppliers. Yet, these suppliers can account for the highest AP invoice workload and cost. While, ERP vendors have taken steps to automate a proportion of supplier transactions, clients need the ability to scale to hundreds, if not thousands, more.
In tough economic times, executives are looking to extend their spend coverage and increase the value of their ERP system. There are a variety of techniques that can be used, of which the merits were discussed. Usually, organisations require a single platform that enables a choice of techniques to support a diverse supplier engagement strategy:
- Increase the number of supplier catalogues
- Embed suppliers within the processes to manage their own data and catalogues, collaborate and trade online, and manage their own enquiries
- Adopt electronic commerce techniques e.g.
- Receipt of invoice files directly from the supplier
- Receipt of individual invoices via email with intelligent email scanning
- Supplier entry or PO Flip on a Supplier Portal
- OCR scanning (or a full document and data capture service) for paper invoices
- Purchase Card statement integration
- Ensure compliance across all suppliers, terms and prices
- Manage spend and AP processes across challenging spend categories (travel, contingent labour etc.)
In summary, executives should evaluate solutions that can add-value to (not replace) existing ERP investments and extend capabilities into cost saving opportunities. This also means moving away from legacy, point-based approaches to a complete organisation-wide re-alignment that is supported by "best-in-class" automation and process support. AP invoice solutions can be used to reduce costs and provide increased throughput with existing resources.
are architected for complex Spend Control processes and integrate with ERP systems, such as SAP, Oracle, Infor and Unit4. PROACTIS has extensive experience with enabling the electronic invoicing process as a core part of any P2P roll-out and within complicated ERP environments for both high and low volume suppliers. This includes electronic exchange of all types of business documents (on-boarding, purchase orders, supplier invoices, self-service and performance management) with the entire supply base, regardless of size and/or type of supplier arrangement (PO-based, non-PO-based, pre-approved etc.) or spend category.