Businesses have long endured paper-based processes when transacting with suppliers, but this approach can be full of frictions.
Many accounts payable (AP) departments must wait for bills and invoices to arrive in the mail and then have staff manually type up details before payments can be issued. The pandemic has exacerbated the existing aggravations inherent in such legacy processes, as having employees work from home can make it more challenging to collect physical invoices. Suppliers are less able to survive late payments due to the economic downturn as well, putting the onus on buyers to quickly complete all their AP processes and deliver funds on time.
Time-consuming, manual invoice processing is an impediment to smooth transactions and could even present obstacles to business growth. Companies that want to buy more materials or services to fuel expansion plans and prepare for holiday-related rises in consumer demands need to ramp up their purchasing, which will lead to more paper invoices and heavier demands on staff. Businesses cannot afford to rush their invoice processing work, either, or they will increase the likelihood of manual errors slipping through or duplicate invoices going uncaught, which can all result in added expenses and delays.
Corporate buyers are therefore looking for ways to conduct invoice management more swiftly while maintaining a high degree of accuracy. Failures to ensure that vendors receive their funds by agreed-upon dates can seriously sour vendor relationships — a problem that buyers cannot afford.
This month’s Deep Dive examines how businesses can tap powerful digital offerings to improve their invoice processing and keep AP operations running smoothly and on schedule.
Time And Accuracy Concerns
Companies receiving paper invoices may struggle to keep track of these documents. They must carefully review data and flow relevant information into their AP systems, especially when dealing with higher volumes.
Employees also have to spend considerable amounts of time on these responsibilities, which can be particularly concerning for firms that anticipate AP staffing reductions. This is a pressing problem. One professional social networking app surveyed 17,000 of its users March 13 to March 16 and found that 44 percent of respondents from the financial sector expected their companies would conduct layoffs. Businesses therefore need to be able to supply technological supports that make tasks manageable for the remaining teammates. The question of how to manage similar AP workloads with smaller teams are likely on many executives’ minds.
Businesses are looking to boost performance by adopting technologies that can quickly extract pertinent details from invoices and feed them into AP systems. Time-pressed employees would prize such a move, with 70 percent of U.S. workers saying in a 2019 study that they would like to automate basic tasks, such as data entry. Automation could not just save time by extracting details faster but also help firms avoid human errors that can lead to lengthy disputes with vendors to correct issues. Staff members can also struggle to recognize when they are receiving an accidental second invoice for a bill that has already been paid, with a 2020 study finding that 25 percent of respondents listed duplicate invoices or payments as pain points manual AP operations cause. Handing invoice processing over to AI-powered systems that can better detect duplicates could help reduce this problem.
AP teams can employ various technologies to help modernize their invoice processing. Optical character recognition (OCR) tools can recognize key details in paper or PDF invoices and extract that data, for example. Various artificial intelligence (AI)-powered supports can help firms code and flow extracted invoice information through company systems according to firms’ policies as well as detect and send alerts when instances of duplicate invoices are found.
Robotic process automation (RPA) is emerging as another effective support, as well. This software takes over repetitive tasks while using the same programs employees had. RPA tools instruct bots to automatically navigate AP software and perform the same steps as staff members but at a more rapid rate. RPA bots can also be designed to follow rules, such as caps on how much an invoice can be worth, to help prevent fraud or other costly issues. This technology can spare companies considerable amounts of time, as RPA is reportedly able to enter data from payment files containing 200 or more invoices in roughly five minutes, while human employees take two hours to do the same.
AP teams are well aware that legacy invoice processing methods are not always well-suited to helping them cope with modern realities or respond quickly to changes in the business landscape. Advanced technologies that can automate invoice management as well as accelerate and error-check processes while letting staff attend to more complicated tasks could therefore ultimately help fuel business growth and expansion.