A New Approach to AP Automation – Fixing Problems at the Source

A New Approach to AP Automation – Fixing Problems at the Source

SourceDay

Have you ever stopped to think how much inaccurate invoices cost your company? When the PO in the ERP and the vendor invoice match, everything is good. Vouchering is straightforward and payments are quickly processed. If an invoice doesn’t exactly match, and the price and quantity differ from the PO, your company is likely spending hundreds of thousands of dollars to manage these discrepancies. From overpaying invoices to spending extra man-hours conducting the forensics to remediate the problem.

This happens more than you think. According to CFO Magazine “Why Firms Don’t Pay Their Invoices”, 49% of respondents cited invalid and missing information as reasons invoices were not paid. This causes accounts payable teams to jump through hoops daily in order to process vendor invoices. More alarming is that often AP can’t solve the problem directly. Instead, they must pull other members of their organization into the discussion i.e. procurement along with the vendor to actually solve the problem.

When you think about it, AP is where the problem is discovered, not where it started. To solve the AP problem, you have to solve it at the source. After POs are issued, they are submitted to vendors via email. Much of what occurs from this point forward is either manually recorded or not tracked at all, so it’s no wonder that ERP systems and supplier invoices don’t match. The data is wrong! If the ERP is not updated the end result will be a mismatched invoice. By the time the two documents reconnect in AP, to a group of people who have not been in the loop, you will have a problem. Times that by hundreds or thousands of invoices that AP processes each year and you will have a major problem that will add up to real revenue loss, a major time sink and unnecessary expenses in AP.

So, you say the obvious solution is to implement an AP automation tool? You could but that only addresses part of the problem. Sure, there are many AP automation tools on the market promising to solve all your AP issues, but if there’s no way to correct the original problem of mismatched POs to invoices then you might just be solving an insignificant smaller issue.

To solve the bottleneck in AP, you need to solve the problem at the source. It’s simple…the PO and invoice need to match which accounts payable members and AP automation systems can’t address. Fix the source by adopting a PO automation solution that expands the capabilities of your ERP. By integrating with the ERP, a PO automation solution automates the process of fulfilling PO requests more easily, quickly and accurately. Plus, and most importantly, the data is accurate putting the buyer and vendor on the same page as shown in the ERP. Everything you need to manage, POs and buyer-supplier relationships, is in one place.

So, if adopting AP automation is on your agenda consider going one step further and adopt a system that automates the PO process along with AP Automation. This will allow your organization to finally bridge the gap of communication between Procurement, AP, and vendors. POs and invoices will be accurate removing the resource strains in AP.