The “Touchless” Accounts Payable process: What the ideal paperless environment would look like

By Chris Doxey, Source-to-Pay Consultant at Doxey, Inc.

The “touchless” Accounts Payable (AP) process utilizes a combination of Purchase-to-Pay (P2P) automation and Accounts Payable best practices. Examples of P2P automation features that lead to a “touchless” AP process include eProcurement, a supplier portal with self-service onboarding, and eInvoicing with general ledger interface.

An example of AP best practice is the delegation of authority via workflow. Many leading practice companies were already paying suppliers electronically, but have recently started utilizing the ACH remittance process to reduce paper. To ensure that your “touchless” environment is working properly, I suggest using an automated self-assessment process that validates the accuracy of your payment process.

We’ll now explore the components of the “touchless” AP process in detail:

Automated PO Requisition Process: Upon approval, POs can be electronically invoiced from suppliers directly for a paperless process. Automated matching occurs between the PO and the invoice when it arrives to validate price, quantity, line amount and items ordered. All invoices matched can be tracked against the PO until the PO is closed to account for blanket POs or partial payment against an open PO.

eInvoicing: eInvoicing is the exchange of the invoice document between a supplier and a buyer in an integrated and agreed upon digital format eliminating paper completely and reducing cost. Imagine no more paper invoices!

Automated Approval Process: This is where the invoice approval process is linked to your company’s Delegation of Authority (DoA) policy. The process is completely automated based on defined rules via workflow. The workflow determines if an invoice needs approval; who the appropriate approvers are; and in what order approvers should approve payment of the invoice. The workflow then sequentially asks each approver in the approval list to approve invoices online. For example, you can define a rule so invoices over $100,000 (or a specific amount designated in your DoA policy) require CFO approval and then CEO approval.

Most leading practice companies link the DoA policy to the job levels within the employee master file. A DoA table is then established as the driver of the approval workflow. If an approver moves to a different position or department, or leaves the company, the approval tables are automatically updated. 

Automated ACH Remittance: As companies increase their electronic payments to suppliers, many are moving towards sending the automated remittance advice as confirmation indicating that the invoice has been paid.  This best practice helps reduce paper and moves closer to a “touchless” process.

Supplier Portal:  As supplier portals move beyond invoice status tools, many solutions are now delivered as a shared buyer service which accommodates eInvoicing and provides many additional benefits. Supplier portals provide:
  • Reduction in paper invoices as suppliers send their invoices electronically.
  • Faster transactions with integration to ERP software.
  • Stronger supplier relationships with a well-defined onboarding process and real-time invoice status.
  • Digital signatures to guarantee authenticity and security.
  • Flip POs for easy invoicing.
  • The ability to correct errors on the spot to prevent payment delays further down the line.
  • The ability to begin using sales catalogs for greater accuracy.
Accounts Payable Self-Assessment Process: One of the goals of an Accounts Payable department is to pay a supplier “once and only once.”  Rather than have a third party or external audit firm identify a control weakness; many companies have worked with a solution provider to implement a self-assessment process that identifies a possible duplicate payment before the payment is initiated. This software considers “fuzzy” logic algorithms that flag a potential duplicate or erroneous payment. This self-assessment process can often be included in a company’s internal control program.

Dynamic Payables Discounting: Dynamic discounting is a solution that gives buyers more flexibility to choose how and when to pay their suppliers in exchange for a lower price or discount for the goods and services purchased. The “dynamic” component refers to the option to provide discounts based on the dates of payment to suppliers. Solution providers help both buyers and suppliers optimize their working capital positions by providing a collaborative platform where buyers, suppliers, and third-party financing providers can negotiate and execute early payment offers.

Conclusion
A 100% “touchless” Accounts Payable process may be difficult to achieve and is dependent on your environment. Do you use POs? Are you a manufacturer? Is most of your spending of an indirect nature? However, a savvy AP leader should have the strategy in place to move to a paperless environment. It all starts with implementing some best practices including electronic payments, the automated ACH remittance and the automated workflow process. Best practices establish the foundation for AP automation and can lead to the achievement of your “touchless” process. The success of your new “touchless” process can be measured not only by improvements in metrics, but by the results and impact of your automated self-assessment process. Lastly, dynamic discounting can be a “win-win” option for both buyers and suppliers.

Register now for our upcoming webinar: How to Achieve a Zero Touch Accounts Payable Process