Here are five examples of how what's going wrong:
#1: Receiving disparate invoices
When dealing with many different types of invoices from regular and occasional suppliers, AP departments often have to deal with the lowest common denominator – unstructured paper and PDF data. For example, many organisations receive invoices electronically, in the form of pdf attachments to emails. However, in order to process them, they are printed out and placed in the towering pile of invoices that arrived by post – completely destroying the advantage of paperless receipt. Sometimes the arrival of an invoice is the first time AP is aware of a new supplier, which then has to be added to the growing supplier base just to pay an invoice.
#2: Processing hold-ups
It can take days for paper invoices to be keyed into the system. Next, AP staff must go information-chasing – identifying who placed the order, checking for authorisation, ensuring the correct goods and services were received and dealing with any discrepancies. The process is time-intensive which makes it expensive – using up valuable time of key employees. Inevitably, keying is also error-prone which creates further costly administrative time down the line. Yet another delay is the failure to spot simple and common invoice errors upon invoice receipt – for example receiving and processing a duplicate invoice, meaning it undergoes the whole input and matching process before being finally spotted – all that work then has to be undone.
Ultimately, achieving 100% electronic invoicing
and all the benefits that come from that will only be met by compressing the paper to as small a number of invoices as possible AND then automating the inevitable remaining paper. The paperless AP department is still a distant future. Organisations must also not overlook the bigger challenge of dealing with pre-matching exceptions. This is where technology and best-practice can deliver significant gains.
#3: Payment hiccups
Any goodwill generated with suppliers can evaporate quickly if paper invoices are mislaid, keyed incorrectly or get lost somewhere in approvals and processing. Without end-to-end visibility, it's hard for AP staff to work out what's happened and fix things – when the calls and emails start arriving from frustrated suppliers.
#4: Missed early settlement discounts
With invoice processing proving cumbersome, it's difficult for AP departments to unlock other value-add opportunities, such as the potential of early payments discounts.
#5: Lack of visibility into cash requirements
Without an integrated P2P and AP system
, often the first time a business is aware of a liability is when the invoice lands in AP. Delays within AP processes don't help matters either, creating uncertainty for individual budget-holders who are wondering whether they've under or over-spent. At an organisation-wide level, a lack of insight into day-to-day spending can leave a company suddenly short of cash and also impair meaningful decisions on big investments. 'Can we afford it?' may be a killer question that no-one can really answer.