There are lots of good reasons for businesses to pay their suppliers electronically.
AP leaders may pine for the day when supplier invoices digitally flow through their department, without human operator intervention. But at most organizations, that’s a far-off dream.
From September 20-23, my colleagues and I had the opportunity to travel to the annual Shared Services and Outsourcing Week (SSOW) event in Orlando, Florida to learn about the latest innovations and trends in shared services, outsourcing, and automation. It was the first in-person event that ActiveWorx attended in a year, so we enjoyed getting face-to-face with fellow financial solutions providers and hearing success stories from global organizations.
Businesses have a lot riding on their ERP.
The ERP manages policies, payment terms, supplier data, and financial information. As the financial nerve center of the enterprise, ERPs rely on timely, accurate, and complete AP data.
But the data that most ERPs get from the AP processes that feed them is anything but. Incredibly, many AP automation solutions are only loosely integrated with the ERPs that they provide.
NORRISTOWN, PENNSYLVANIA, UNITED STATES, September 21, 2021 (IssueWire)
It wasn’t supposed to be this way.
For years, accounts payable (AP) leaders pined for the days when invoices would flow through their department and post directly to their ERP, with little or no intervention required by AP staff.
AP automation solutions and invoice processing software would make it all possible.
While 77 percent of AP departments now have deployed some type of AP automation solution1 – scanning software, optical character recognition (OCR), a supplier portal, or something else – most AP departments are still manually handling most of the invoices they receive from suppliers2.
It’s not uncommon for a single invoice to be handled five or more times before it is approved for payment. In addition, many AP departments exacerbate the problem by paying their suppliers with paper checks, which require staff to print, stuff, mail checks, and manually reconcile bank statements.
Why AP is so labor-intensive
Every manual task in the accounts payable cycle results in higher costs, more opportunities for errors, a greater chance of delays and lost invoices, and less visibility into where things stand in the process.
Automation isn’t to blame for all these manual tasks. Instead, the fault lies with the piecemeal approach most AP departments have taken to automate their invoice processing and supplier payments.
When processing invoices and paying suppliers, AP departments big and small rely on an assortment of point solutions and closed-loop networks, each with its logins and passwords, user authentication, file formats, and proprietary integrations. Manual intervention and data silos abound. As a result, the typical AP practitioner spends 84 percent of their typical workday on manual, repetitive tasks such as keying data, shuffling paper, and chasing down information.
Manual tasks undermine the entire accounts payable cycle: