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Rejoy Nair

Why Automation is the Future

Per the IOFM’s 2018 Future of Accounts Payable Study, by 2021, 51% of accounts payable practitioners anticipate that their department will eliminate most of the paper invoices it currently receives from suppliers.

Businesses worldwide are increasingly realizing the need to automate their accounts payable department to create a future where invoice processing is no longer a time-consuming, tactical back-office function.

The most important aspects for any organization looking to implement Automated Invoice Processing are:

Control the ability to ensure that invoice processes are being executed well. It is the capability to prevent financial abuses and hold people to account. The more regulated the industry is, the more important the aspect of control is.

  • Control the ability to ensure that invoice processes are being executed well. It is the capability to prevent financial abuses and hold people to account. The more regulated the industry is, the more important the aspect of control is.
  • Efficiently process millions of invoices. Organizations can’t allow much to go wrong.
Paid Invoice

Challenges that invoice workflow automation targets to solve:

Some critical areas of concern:

Invoice Workflow

Here are 6 Account Payable Best Practices to get the most from your Automated AP Solution

The following best practices serve as the foundation for an efficient, effective and comprehensive Invoice Workflow Automation Process

1) Automating Invoice Data Entry

Manual data entry is mundane, error-prone, and low-value work from a revenue generation perspective. The AP executive performs tasks across disparate systems like supplier matching, data reconciliation of master or source as required, PO matching, tax encoding, etc. To make it even more complex is that Invoices come in different varieties – in different files, formats, layouts, fields, and field structure, delivered through a variety of channels – email, paper invoices, fax, EDI, web apps, ERP supplier portal, etc.

2) Following the Pre Requisites to Invoice Processing

  • Proper archiving, i.e., Preserving the original submitted invoice in its original format and digital format. Organizations should maintain a centralized, searchable archive for invoices to ensure ease of accessibility.
  • Rules engine to validate invoice data against ERP data, eliminate duplicate invoicing.
  • Having resolution workflows for discrepancies that may arise.

3) Using Complementary Extraction Technologies

  • Ability to extract data from semi-structured documents.
  • Ease of configurability and maintainability.
  • Extractors use a combination of Field-position based locators, regex pattern recognition, cognitive vision, ML, and Deep Learning AI to improve accuracy and reliability.

4) Reducing Re-keying wherever possible

Invoice processing software features should include:

  • Pre-built or ingestion of taxonomies for matching of invoice fields; tax codes
  • Perform automatic PO Matching
  • Enable automatic payment approval workflow
  • Integrate AP with your back-end ERP or financial systems

These directly influence the accuracy and quality of invoice processing.

5) Resolving Data Errors Automatically

  • Set up rules engines to identify data discrepancies and use plugins and integrations to route discrepancies to a human operator for efficient resolution.
  • Innovative use of UI and ML algorithms that learn from the Operator’s actions continually improve the software’s ability to automatically resolve data discrepancies, making it feasible for processing high-volume jobs.

6) Automating Purchase Order Matching

Variances in Invoices, POs, and Goods Receipt Notes should be addressed effectively and swiftly. This entails an elaborate automatic PO matching that uses supplier master data, reconciles data, and triggers a workflow that automatically logs in a ticket or notifies users through emails about discrepancies.

7) Enhancing Non-PO Invoice Processing

Variances in Invoices, POs, and Goods Receipt Notes should be addressed effectively and swiftly. This entails an elaborate automatic PO matching that uses supplier master data, reconciles data, and triggers a workflow that automatically logs in a ticket or notifies users through emails about discrepancies.

8) Automating escalation workflows

Invoices awaiting approval add to the workload and processing inefficiencies. It retards the process momentum and introduces latency, delays, late payments, and disgruntled suppliers

The automated invoice workflow process should access the user-hierarchy matrix and trigger time-based escalations or reminders to managers whenever necessary. Exceptions that cannot be handled also need to get triggered as issue-based escalations. It should be possible to introduce SLAs at the invoicing level to overcome the problem of unattended invoices.

9) Embedding Internal and Regulatory Controls, Enable Auditing and Compliance

  • Introduce quality assurance that includes post-approval review.
  • Availability of extracted, corrected and approved invoice data to auditing staff.
  • Flag of violation of internal controls to concerned authorities for appropriate conflict resolution. E.g., Payment approval attempt by an employee not authorized to do
  • Flag invoices that fail to meet regulatory compliance

10) Managing Dashboard and KPIs

  • Insights for management to improve upon process gaps and optimize workflows. This requires defines KPIs, collecting process-relevant data, calibration and measurement of KPIs, and visualizations through intuitive dashboards
  • Monitor service SLAs, productivity, and process-specific attributes – accuracy, reliability, etc
  • Meet internal employee and external supplier commitments
  • Plan to improve ROI, reduce TCO

11) Centralize Receipt of Invoices and Final Payment

Single enterprise-wide visibility into liabilities is critical in managing financial risk and supplier relations. Misplaced, duplicate, indecipherable invoices create imbalances, risk of fraud, and a sapping effect on employees.

The solution?

Organizations should harvest invoices to a central unit and standardize the process for receipt of invoices. Preferably, suppliers should have access to the supplier portal to post and view the status of their invoices being processed. The automation solution should directly pick up and pipeline the invoices from the document repository of submitted invoices.

12) Flexibility to Change

The Invoice workflow automation process should be able to adapt to new changes – technological and organizational. It should be possible to integrate useful modules and remove some whenever necessary. It should be modular, flexible, and responsive to business needs.

13) Supportive Electronic Payment

  • Integration with ERP, third party utilities to schedule payments.
  • Integrating with Payment gateways
  • Automatically notify remittance details to the supplier

Summary

Failure to digitize, standardize, and automate are key transformation bottlenecks. Moving forward, paper-based manual processes can only be a stopgap arrangement, as these are neither scalable nor can their performance be improved dramatically. Electronic-based systems are scalable, improve quality, performance, and compliance with various regulations and standards.

The benefits of Invoice Workflow automation are manifold and encourages further automation efforts to achieve financial agility in Accounts Payable Processes.

Whether you need to digitally transform a simple task or an end-to-end process, we can help you do it.

Contact us!

Rejoy Nair

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