Is the COVID-19 crisis a catalyst of change for Accounts Payable?

Article co-written by Ilija.Ugrinic, UK Commercial Director at Proactis, as seen on Global Banking and Finance Review

The 1988 United Kingdom postal workers strike proved to be pivotal in the way Procurement and Finance teams operated. With paper requisitions grinding to a halt, a new way of operating was born as the age of the fax machine began.

Over thirty years on, the UK (and indeed the entire world) is faced with a new challenge, different in nature, but once again forcing the quick adoption of a new approach and with it, the full ignition of remote working!

One challenge that we hear that Finance functions are facing is the ability to effectively and efficiently process invoices, and that’s difficult to hear because we are all intensely aware that the supply-chain is a critical success factor for all organizations.

When speaking to Finance departments, we’re seeing two distinct issues:

Receiving paper invoices

Many buying organizations have been communicating to their suppliers that they are unable to handle paper invoices due to a lack of staff in their offices to pick up and process them, and that they therefore need to switch away from paper to an electronic invoice format.

Before continuing, it’s important to clarify what we mean by electronic invoicing (eInvoicing), as it’s a broadly used term. One could argue that any invoice submitted via an electronic channel is an ‘eInvoice’, including scanned invoices sent by email as PDF images. However, in this instance, that would rely on OCR (Optical Character Recognition) or manual keying. A truly electronic invoice is structured invoice data issued in XML format, created using PO flip or directly entered via a portal, meaning the requirement for manual verification and checking is eliminated, and that leads on to the second challenge...

Manual data verification

Although better than paper for remote working, a switch to PDF invoices, be it data-layered or just an image, doesn’t solve the problem facing the AP team today.

Many who are at home trying to manually process PDF invoices which are received by email have a number of challenges. First, streamlining the process by which team members handle each invoice, download the PDF from the email, and store it centrally ready for processing. Second, is not having multiple screens to work on and needing to continually move between a PDF and the finance system in order to key in and check the data. This not only slows the process down, but it increases the likelihood of human error. Third, is the challenge of resolving missing and incorrect invoice information, which can be difficult enough when with colleagues in the office. A good example of this is missing PO numbers, a common challenge that is amplified when trying to get hold of people remotely!

The need for an agile approach

In our minds, although it’s tempting to try and turn to pure eInvoicing as the answer (i.e. XML and portal invoices), it’s not realistic to suddenly expect all suppliers to want/be able to switch in both the short or long-term due to skill, capacity or budget - especially given the challenges we’re all facing.

If organizations can help willing suppliers make the transition, then that’s a great goal to have, but COVID-19 hasn’t exposed the need to end paper invoicing. Instead we think it’s shown the need for an agile AP operating model – one which can efficiently handle paper, data-layer and image based pdfs, XML and portal invoices, regardless of how the team is set up; and one with structured, automated processes to engage internal employees and suppliers directly for speedy query resolution, all so that suppliers of all sizes can focus on delivering the best service they can to your organization.

So now is the time to step back and look at where you’re struggling at this moment in time. Is it in handling all invoice types? Or is it that the remote processing of paper and PDF invoices is leading to extensive manual keying and associated errors?

The answer doesn’t mean that you need to immediately replace everything you do – you could simply supplement weaker parts of your model with new solutions, services or processes.

If you’re facing these challenges, get in touch with us to see how we can help.