Given the current economic climate, most organisations are looking for ways to increase efficiency through the reduction of wasteful resource expenditure. The Accounts Payable (AP) process is a very good example where substantial efficiency improvements can be made, and real quantifiable bottom-line savings realised!
Current inefficiencies can often be linked to slow, inaccurate, and poorly defined paper-based workflow and capture processes. The result is: re-work when processing duplicate invoices, ‘lost’ vendor payment discounts, poor working capital management, and a poor vendor feedback and experience when querying the status of an invoice. The question is – Where to begin?
1.Free yourself from paper
Invoices and credit notes are often received in paper format, even though we all know that the use of electronic documents have many advantages over paper. Of course, vendors should be encouraged to send invoices in electronic format by rewarding them through speedy feedback, processing, and payment. Where organisations do not have the ‘luxury’ of Electronic Data Interchange (EDI) systems, other, less costly solutions are available! It must be noted that it is best practice to scan and capture all received paper invoices and credit notes as early as possible in the AP process.
2.Scan, capture, and identify duplicates as early as possible
Vendors often send the same invoice via multiple channels (in their enthusiasm to be paid). This can be the cause for a lot of unnecessary re-work as part of the AP process before discovering that an invoice is a duplicate and discarded. The early capture of fields that uniquely identify the invoice, such as the Invoice number and Vendor number, enables duplicates to be identified at a very early stage in the AP process.
3.Use the invoice information that you have in the capture and validation process
Information that you already have in the back-end accounting system such as outstanding PO numbers, and anticipated invoice amounts from a specific vendor can be used to increase the accuracy and reliability of the captured invoice information. In the case of manual capture processes, this information can be used as default values or selection lists to minimise the impact of human error. When capture automation is used, such as Optical Character Recognition (OCR), and the automation technology is closely integrated with the back-end accounting system, this information can be made available to the automation technology and used to increase accuracy - this lends to faster AP processes and less human error!
4.Provide immediate feedback to the vendor
Feedback to the vendor at appropriate stages in the AP process is crucial for improving the vendor experience, decreasing vendor queries and duplicates received, and assisting the vendor to identify issues as these arise. Feedback can be typically via SMS or e-mail. The vendor information must be maintained to ensure that the correct people or systems receive the feedback in the desired format, again lending to faster and more improved AP processes.
5.Don’t underestimate the AP process
The AP process is a little trickier than it may seem at first. Some of the curveballs that you may encounter, and which should be catered for by the AP solutions are:
Multiple PO numbers on a single invoice
“Standing” PO numbers which are to be used many times for an indefinite final amount
Partial deliveries where the PO number may, or may not, be received again from that vendor
Invoices to be paid without PO numbers such as consignment stock invoices
All of the above can and should be managed by the AP process solution, thereby ensuring integrity and speed within the AP process.
6.Don’t underestimate change management and the culture of the organisation
Culture, or “The way we do things around here” is not easily changed, and yet the human factor is often ignored - to the detriment of efforts to implement and anchor process and technology changes. Those who find security in paper are not easily convinced to give it up. NokusaEI has for example encountered a wide range of organisations from those in which the staff print and courier memos internally and do not know what scanning is, to those that insist on the use of workflow, content management, and scanning technologies. It goes without saying that the change management efforts in these organisations should be and are worlds apart. Often when an AP management solution is implemented, the important ‘people-aspect’ is ignored and the success of an AP solution is hugely dependent on whether or not the solution is used!
If you would like to find out more about the AP capture process, have any comments, or would like to discuss solutions offered by NokusaEI, please send an e-mail to Bruce.Williams@NokusaEI.com.