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Historically, accounts payable (AP) has shouldered the blame for the vast majority of late vendor payments and missed accruals. Is your AP team still at the bottom of the totem pole? Let technology help them to gain the respect they deserve!
"A proven alternative to OCR is managed AP automation. On the front end, this is the perfect blend of human-touch processing coupled with the technology of a business rules engine"
The classic line, “Well, I sent my invoices to AP!” gave way to the infamous black hole—the place where invoices go when there is no accountability in your process. New technology allows front-end customer service portals to help gain insight into the true gaps in the process. Inexpensive portals will accept scanned invoice copies and provide the sender with a confirmation and a ticket number. Once the invoice is processed and the ticket is closed, an automated response provides the sender with an update. Some applications also provide a survey to gather valuable performance feedback. Now when we hear that same old line, we ask “What was your ticket number, please?” This simple step has placed the accountability where it belongs. Technology has helped us to prove what we knew all along—that invoice wasn’t in a black hole, it was in somebody’s desk drawer!
An AP customer service call center is another excellent front-line tool to facilitate quick responses to basic inquiries. Depending upon the size of your AP team, having one or two individuals handling all of the telephone calls leaves the others free to process invoices or attend to other value added tasks. A proven system which allows calls to be answered in the order they were received, provides an option to leave a message rather than continuing to hold, accommodates useful metrics (number of calls answered, duration of the calls, time on hold among other metrics) is an investment. If a caller’s question cannot be answered immediately, logging a ticket in the customer service portal allows visible tracking, follow-up, and reporting on open items by user. You can’t manage what you don’t measure, right?
In the AP world, optical character recognition (OCR) was fashioned to be the ultimate salvation from tedious, time-consuming, manual invoice keying. This technology was purported to be able to read the invoices and pre-populate the data, reducing the work effort to more of a “validation” role. While OCR technology has proven to be quite successful in scenarios where the forms are consistently uniform and all data elements are always in the exact same form location (a bank deposit slip, for example) in the AP world, invoices come in all types, shapes, sizes, and colors. While some claim that the brains of the application can be taught where to look for specific data on certain vendor invoices, I remain unconvinced that the juice is worth the squeeze.
A proven alternative to OCR is managed AP automation. On the front end, this is the perfect blend of human-touch processing coupled with the technology of a business rules engine. In my experience, enlisting such a resource to receive our invoices from the PO Box, open and sort the documents, scan them (using excellent high-resolution scanners,) enter the key data points, and have all of this work miraculously appear online within 48 hours is a slam-dunk. We were able to design an effective workflow to ensure all required approvals were obtained electronically, with an audit trail to prove it. While the design and build took a little over six months, the results have been consistently superb. Throughout the day, the completed invoices interface into our enterprise resource planning (ERP) system for payment and reporting purposes. Using front-end technology that keeps a “Human in the Loop” has resulted in accurate, complete, and reliable invoice processing automation.
On the back end of the AP process is the vendor payment piece of the puzzle. In today’s AP world, many organizations still issue some paper checks, but others choose to outsource that task. The most effective use of technology for payments is found in automated clearing house (ACH)—like a direct deposit and card payment programs. Both require some IT assistance to get the process rolling, but, working alongside your banking partners, it does not take long to stand up these programs. While card payment programs can result in significant rebate opportunities, vendors are becoming quite savvy recognizing fees are typically tacked on to card payments. For this reason, many are now opting out of cards and requesting ACH payments instead.
All of these technology tidbits add up to a better experience for your internal and external customers. When you are able to process your invoices more quickly and pay your vendors on time, the relationship begins to blossom into better pricing and/ or the potential for discounted payment terms which you can actually meet!