Did you ever stop to think how much manual work is involved in processing an invoice? If you haven’t, take a few minutes to ponder how many times the average invoice in your organization is touched by a human being.
Processing invoices by hand slows down the invoice approval process. But it also affects your ability to manage cash flow, decreases your ability to take advantage of payment discounts and can adversely affect relationships with your suppliers (especially if you are late with payments because of invoice processing problems).
That is why many fleets are turning to accounts payable automation as the first step in their back office automation process. In fact, an Aberdeen Group study found that best in class organizations that have automated the payable process will see between 70% and 80% of their invoices approved with no human touch.
An invoice usually goes through five steps from the time it is received until it is paid. That means there are at least five times when human error can derail the payment process. Automation eliminates the chance for those errors to occur and keeps the process flowing smoothly and quickly.
Here’s how it works:
- E-Invoicing — Invoices from suppliers that have signed on to your AP automation solution are entered into the system where all data is standardized. No one has to open an envelope or download a PDF. If a supplier is still using a paper invoice, it can be scanned and converted into an e-invoice.
- Routing — Smart routing sends each invoice directly to the appropriate place for approval.
- Approval — If more than one approval is needed, the system continues to flow the invoice through the process until all approvals have been completed. Pre-determining and configuring the approval process means no one has to touch an invoice once it enters the system.
- 3-Way Matching — Invoices are matched against original purchase orders and receipt of goods. Make sure you have set up “workable tolerances” when configuring the system. If the match falls within your pre-set tolerances, it will move through to your AP or ERP system for payment. If there is a problem, the e-invoice will be routed to the authorized person for further action. The invoice will ether be approved and re-sent for payment or marked for further action. If this occurs, then human intervention will be needed.
- E-payments — ACH or virtual card payments can be sent directly into suppliers’ accounts receivables system. There are no paper checks to process, envelopes to address or postage to pay.
While no system is 100% perfect and there will be some suppliers who insist on paper checks, automating the accounts payable process means fewer errors, improved efficiency and faster payments.