Accurate invoice payment is a fundamental aspect of sound financial management. In addition to ensuring proper invoice payment, the ability to reduce the cost of the Accounts Payable (AP) process is a significant benefit of effective Spend Control. Electronic invoice processing combined with electronic purchase request and authorisation make up the core of a modern purchase-to-pay (P2P) system
Automated invoice processing enables a high percentage of both PO-based and non-PO invoices to be automatically authorised for payment without the need for human intervention. It also eliminates payment of invalid or duplicate invoices, ensures proper cost allocation, speeds up the process to leverage available early-payment discounts and avoids late payment fees, provides the visibility to improve budget and cash management, and captures a record of activity that enables better spend analysis and minimises audit costs.
But many organisations find themselves today with a slow, labour-intensive Accounts Payable process where the majority of invoices are processed in paper form. In addition, too many are received with no supporting PO and/or receipt acknowledgement, so considerable time is required to locate a paper PO, or the requestor, and verify the invoice is valid. Complex invoices such as utility or telecom statements require a tremendous amount of effort to verify accuracy and allocate cost to different departments. Many invoices are never properly coded for either accounting or spend history purposes. Slow payment results in poor supplier relationships as well as added costs and ‘surprise’ cash requirements.
The result is that the organisation’s cost base is higher than necessary due to:
The organisation also may experience financial ‘surprises’ due to:
- High cost of the Accounts Payable function
- Payment of duplicate and invalid invoices
- Late payment fees, lost early payment discounts, high audit costs
- Sub-optimal supplier pricing because of frustration with lost invoices, late payments and Procurement’s lack of spend data when negotiating agreements
- Poor budget management because of inaccurate account coding and cost allocation
- Cash management problems because of poor visibility of in-process invoices and long authorisation cycles
Fast, efficient automated invoice processing can be a reality in your organisation within a short period of time using intuitive software solutions and proven deployment process. So what requirements are needed to address this critical element of Spend Control? Read Part 2 to find out.