For enterprise organizations with hundreds or thousands of suppliers, slow invoice processing can result in missed early payment discounts and erroneous duplicated payments. Furthermore, slow processing times strain supplier relationships, negatively impact the company’s reputation, and often disrupt the supply chain.
Now, more than ever, enterprise organizations need to invest in technology to improve their invoice processing efforts. COVID has highlighted the need for fast, automated AP processing to stabilize the supply chain, streamline business operations, and cut costs. Below we examine four strategies to optimize invoice processing and speed the payment cycle that you can apply to your own AP workflows.
Enterprise AP departments waste enormous amounts of time managing fragmented, inaccurate supplier data, and responding to inquiries from suppliers. Moreover, manually contacting suppliers to gather missing information is a burden for both parties. AP departments need self-service solutions that enable suppliers to provide key data like contact information, W9s, transaction history, and banking details, and enable them to find answers about transactions without picking up the phone or sending an email.
Building a digital network of suppliers streamlines the process of finding supplier information and improves supplier relationships. By giving suppliers the ability to update their information and check on transactions in an easy-to-use portal, AP departments stay up-to-date with a fraction of the effort. This facilitates a friendly, low friction interaction between AP staff and suppliers to ensure that payments are processed without delays or disruptions.
Invoice exceptions occur for a number of reasons, including data entry mistakes, incorrect supplier information, or missing PO information. Exceptions are often resolved individually by hand and cost AP departments considerable time and energy. In fact, invoice exceptions are one of the most expensive challenges that most enterprise AP departments face.
Further Reading: The Top 7 Causes of Invoice Exceptions
Modern technology platforms enable AP departments to eliminate invoice exceptions through the use of AI, machine learning, and advanced algorithms. Incoming invoices containing incorrect information, or that cannot be matched to a PO are automatically returned to the supplier or “fixed” by the platform. In rare cases where the technology alone cannot resolve the issue, the platform removes the heavy lifting from the AP department by automating resolution through smart workflows. Ultimately, businesses can achieve 100% straight-through processing which cuts costs and frees up staff for other critical tasks.
Many enterprise organizations process hundreds-of-thousands, if not millions of invoices each year. The sheer amount of time and resources it takes to manage the communication, routing, and approval of the many separate transactions is astounding.
Today, best-in-class AP departments are using predictive algorithms to process massive amounts of incoming invoice and supplier data to uncover trends that would otherwise be unintelligible. Real-time dashboards provide visibility into every aspect of the supply chain and monitor transaction cycle times, as well as exceptions broken down by supplier. By relying on technology to do the heavy data analysis, AP and Procurement leaders can uncover potential supply chain bottlenecks and opportunities for growth.
Most large companies have a diverse range of suppliers submitting invoices in varying formats to different people and delivery points. Enterprise AP departments need to receive invoices in a consistent digital format to realize any of the promised benefits from AP automation. However, companies that force their suppliers to conform to a specific billing format have limited success with complete adoption across their supply base.
Modern procure-to-pay platforms with supplier networks create a true digital connection with suppliers of any size, sophistication, or billing system. The benefits of speed and accuracy, without the complexity and cost of EDI, facilitates fast and efficient invoice processing and payments. Through universal document translation or direct API connectivity, suppliers can continue operating without changes, while still gaining access to their data in real-time. This keeps suppliers happy and leads to stronger vendor relationships that further the business.
Optimizing invoice and payment processing can bring enormous cost savings, improve company cash flow, and increase margins. That’s because an optimal AP strategy reduces staffing requirements, strengthens supplier relationships, and allows businesses to capitalize on early payment discounts, or hold cash until the invoice is due. Moreover, efficient invoice processing gives business leaders a more accurate and up-to-date understanding of the company’s financial situation, which facilitates better decision-making.
If you would like to learn more about how to improve your invoice processing and payment strategy, download our whitepaper: How to Achieve Straight-Through AP Invoice Processing.