A few years ago, most organisations were unsure if automating business processes was really worth the time and investment.
Fast forward to today and the reality is that automated processes and workflows have become an essential component in supporting operational efficiency and business growth. The benefits that accrue from a properly implemented process automation project are many and range from faster delivery, more efficient use of resources, lower overall costs, improved cashflow, and improved customers & supplier satisfaction levels.
There now seems to be little doubt that many organisations have much to gain from examining their processes, identifying and defining those that are ‘sub-optimal’ and then putting in place business process automation to deliver a more efficient and effective operation.
Whilst there are many processes that might benefit from re-engineering and automation, few stand out as much as those in the Accounts Payable (AP) department. The nature of invoice processing and management lends itself perfectly to a more automated and systematic approach to manage the following segments:
- Document recognition and intelligent extraction
- Transformation of unstructured data to structured formats
- The capture of data to one or more systems
- The initiation of processes dependant on sets of business rules
- Other subsequent financial processes
Re-engineer cumbersome procedures
Many organisations are still reliant on traditional invoice processing, which is often made up of a set of largely manual processes, which can be slow, unreliable, costly and prone human error.
Invoices must be received, date-stamped and checked by accounts payable, recorded on financial software, approved by someone in authority, matched or cross-referenced, transferred to the payments system and then stored for future reference. Such a cumbersome procedure incurs high staff costs and has considerable potential for delays and errors. If (or when!) it goes wrong and invoices go unpaid, it can damage an organisation’s reputation and may result in late-payment fees.
Indeed, the process has become increasingly complex in recent years, as invoices are received through a multitude of different platforms, in both hard copy and electronic formats, via diverse channels including post, email, EDI and fax. The vast majority are ‘semi-structured’ and have to be entered manually. As noted earlier, such manual processes can be error-prone and can lead to issues such as invoice duplication, incorrect or repeated payments, paying the wrong sum, entering incorrect PO numbers and a host of other mistakes.
When mistakes occur, it tends to be costly to put them right. Aberdeen Group, the market intelligence and analyst company, calculated that the most efficient companies spend an average of 2.8 days processing invoices at the cost of about £1.75 each, though the industry average is closer to £7.53.
The secret of the top-performing companies? Automation.
Automation is key to helping to streamline processes to improve the accuracy and efficiency of an organisation’s financial operations and ensuring that bills are paid on time and that any associated documentation is well organised.
The shift to the cloud
Its’s also apparent that as business finance software has been moving to SaaS-based platforms, so the concepts behind cloud computing are also impacting on traditional processes and departments.
The Accounts Payable function is far from immune from the move towards the cloud. Many organisations are now migrating their financial management applications to cloud-based services and are doing so at an increasing rate. In fact, a recent survey of senior finance executives found that 36 percent of organisations will use the cloud to support more than half of their transactional systems of record by 2020 (Gartner).
Automated, cloud-based invoice processing delivers a number of benefits.
Printing and postage costs are dramatically reduced, as is the time spent manually capturing and processing invoices, with all the advantages that this delivers.
Cloud-hosted systems offer dramatic reductions in the need for on-premise hardware, software and all the associated IT services, such as maintenance, configuration management, update management and deployment, as the SaaS provider takes care of such matters remotely.
Cloud-based solutions also allow organisations to flex their demand and to access the scalability they need at any given time. Costs and fees can be linked to usage and billing can be spread across the year on monthly cycles.
This scalability and relative simplicity make cloud-based invoicing appealing to many fast-growing organisations, including SMEs on rapid-growth trajectories. Many large and enterprise-scale organisations share the desire and intent to take advantage of the same technology but may be reluctant to take action as they have to contend with complexities such as dealing with legacy applications, integrating into other systems and multiple accounting procedures.
Despite these and other challenges, the switch to cloud-based invoice processing may not be as complicated as it might appear. Integration with other back-end systems can be relatively straightforward as the output from a cloud-based system can be generated to a wide variety of coding formats, be it XML, CSV, or customer-specific data formats. The analytical coding of invoices can be done directly by a cloud-based AP system and then passed to other back-end systems to automatically generate invoices.
Immediate benefits for the whole business
Once a cloud-based AP system is deployed, there are immediate benefits for staff within the accounts department and across the whole business, as defined, automated workflows will typically save a significant amount of staff time, which can be allocated to other tasks.
By designing in easy access, staff across the organisation can track the progress of an invoice and see its current status, including who is processing an invoice at any one time and how long it’s been waiting for approval.
This transparency often mitigates or eliminates bottlenecks, resulting in far fewer hold-ups than those encountered by users of traditional invoicing methods, which often requires tracking down lost documents, or chasing up busy executives. And because each document has an audit trail, it can’t get lost and it’s easier to store and retrieve. Users can retrieve invoices instantly, making invoice processing more open and transparent.
Automation is the key to an optimised invoice processing. When they start to migrate old, manual processes, organisations adopting a cloud-based AP solutions service will see immediate benefits in terms of staff productivity, lower costs and a reduction in the number of invoicing errors.