Creating efficiencies and reducing costs are top of mind for business owners and managers. Organizations that are looking to create efficiency with document and process automation often choose to start the initiative with a project in Accounts Payable. AP is a transactional process with consistency and typically significant volume, so it is a good place to begin with proven return on investment.
Accounts Payable is really very simple. It is the process of paying for goods and services we receive. The interesting thing is that while the essentials are the same, everyone follows a slightly different path to get there. Some companies are strict about purchase orders, while some companies allow just about anyone to purchase. Some companies have a very simple approval process, and others have multiple financial thresholds and multiple department levels. And then there is GL coding, everyone’s nemesis. Just what codes should I apply to the staples I bought last week, which are technically office supplies, but they were for a special project and that project is being billed against a grant received for some purpose, that I can’t even remember anymore? And, what about credits? And what about backfilling check information? And then there is the matching of all sorts of documents involved in the transaction.
While AP is a good place to get started, it is not without its complexities. If you are interested in automating AP, there are some simple questions to ask to understand what kind of a solution you might need and how to get started. Here are 7 Quick Questions to Ask Yourself Before Moving Forward with AP Automation:
1. What is my invoice volume per month? If you have 300 or fewer invoices per month, your need for automation is low. A good document management solution that acts as a repository to store the information once you have processed it through your accounting system will fit the need unless your approval process is complex. More on that later. If you handle more than 300 and on up into thousands of invoices monthly, you quickly become a candidate for more advanced solutions. These advanced solutions offer automatic recognition of invoices and lift the invoice information off the page to make it accessible for processing in your accounting software without having to key information.
2. Is line item detail needed to update inventory information? Extraction of line-item-detail from an invoice is a feature of more advanced capture tools. The technology applies a grid to the vendor invoice, identifies the header information and then categorizes each item and the data associated with it. It can then feed an ERP or accounting system the appropriate information for receipting the goods. Traditionally these capture tools that do automatic recognition of semi-structured data were very expensive. Back in the early 2000s this was not economical, unless your volume was very high with many people handling AP. With more recent advancement in this technology, the price has driven down to the point where it is accessible to organizations with as few as eight or ten-thousand invoices annually.
3. How complex is my approval process? In some organizations approval is very simple. Everything has a Purchase Order. If the invoice matches the PO then we pay the bill. It is only occasionally that the invoice needs to be confirmed by someone other than the AP person. In other organizations, things are a bit more complex. It may first go to a building or department manager or construction supervisor. It may then route to their supervisor. If it is over a certain amount it may have to jump through more approvals. The more complex the approval process, the more need to automate and make them all occur electronically. And yes, people still do send interoffice mail and shuffle paper between locations to get approvals, but they should not be.
4. Is there an opportunity to eliminate paper invoices? Depending on your influence with vendors, it may be that you can require that they email invoices. New capture solutions allow for a direct email reader. The email reader monitors an email address like firstname.lastname@example.org and automatically brings invoices in for automated recognition, verification, and then sends them off for approvals. The entire process end-to-end can happen without ever becoming paper.
5. Are multiple locations adding complexity? If you are in property management, construction, or just a multi-location organization, you may be sending invoices all over the place for approval. Many organizations we talk to are losing track of invoices as they move about for approvals and payment. It is often difficult to know where something is in the process. Did it get lost, or is the approver just on vacation? An electronic approval process eliminates these concerns. Invoices route electronically, and if approvals don’t happen within a timeframe, reminders are sent, escalations occur, and the invoice gets attention. All of this occurs with transparency so that the invoice and status it is always traceable in the process.
6. How accessible is my ERP or accounting solution? For real end-to-end AP automation, it is ideal to push the information extracted from invoices right into an accounting batch for payment. Most mainstream applications have an import or table creation process for doing this and the batch information can be processed. Ideally, the AP automation solution can also access the vendor information and GL coding information from the accounting system. In many cases, if the system is SQL or ODBC compliant, this gives us a green light for integration. In cases where this is not possible, there are a few more tricks. Even with old green-screen applications there, it is sometimes possible by using a screen connecting tool to feed data to the accounting or ERP solution right through the screen just as an operator would.
7. Is expense reporting important? If your organization has a significant number of people traveling and generating expenses, an automated AP system can offer great benefits by easing the process for both the expense report submitter and those processing the submissions. It is all too easy to lose receipts and delay submission due to a busy schedule. When automating this process, submission for reimbursement can be done via a variety of devices, including a tablet or cell phone. The submitter simply takes a photo of the receipt, classifies it and submits it. It can then go to a supervisor for approval and route to AP. The process is shortened and much easier for all involved.
AP automation is a great starting point for streamlining and making your organization more efficient. It provides the structured process to gain a win with automation. And, after winning in AP, others in the organization recognize the value in seeking to automate in their area as well.
For those of you who know CTaccess only as a provider of IT services, I want to make sure you are aware that we have been working in ECM and AP automation for the last 18 years. If this is something that you would like to explore, we would be glad to meet with you.