As the uncertain economic climate continues and businesses seek to optimise efficiency, they are beginning to understand the importance of accounts payable and the cost of this important but mundane process to the business. With this in mind, finance directors have been looking for ways to streamline the time-consuming manual processes that have crippled AP systems in the past.
While paper-based business processes have been around for decades, many companies have begun to explore and slowly make the transition to an automated, paperless accounts payable system.
In an interview-driven survey of CEOs and CFOs, we found that about 87% of companies have at least one or two employees who spend 40% to 67% of their time manually routing invoices for approval and then processing them. In some companies, even more valuable resources are consumed due to the volume and complexity of accounts payable (AP).
To make matters worse, our survey found that the manual AP process typically involves at least eleven steps, with some companies finding even more steps necessary.
The good news is that these eleven steps can be reduced to less than half by using an automated invoicing process that speeds up the workflow by up to 81%. This is what we know from a period of research and development that led to the release of BizBox Accounts Payable.
What are the steps involved in Invoice Processing?
Although the end result is the same; namely payment to your supplier, the process itself is very different whether you do invoice management manually or automate accounts payable.
|1. Invoice is received in the mail, or via email – in the case of paper-based invoices they may be scanned manually and emailed.
|1. Invoice data is received electronically – (a) via email (b) scanned/or photographed and the invoice data extracted using OCR & AI technology.
|2. Invoice is routed to AP staff
|2. Invoice is electronically routed to the appropriate approvers, if necessary, with a reminder sent if approval is not completed
|3. Invoice is reviewed and matched to the correct purchase order and shipping/receiving documents, if available
|3. Invoice is approved for payment and digital copy is retained for archival or compliance reasons.
|4. If discrepancies are found, AP staff contacts the supplier for verification.
|4. Invoice is tagged for appropriate cost/profit centre
|5. If a purchase order was used, the invoice data can be manually entered into an accounting software system.
|5. Invoice data is injected into excel/XML import file format that is later injected by the accounting software system.
|6. If a purchase order was not used, the invoice needs to be routed for approval to management.
|7. Once approved the invoice data is entered manually into the accounting software system.
|8. CFO/Accounts Payable manager chooses which invoices to pay
|9. Payment is processed via paper cheque or electronically
|10. Cheque are signed, put into envelopes, and mailed
|11. Cheque stubs or payment proof are attached to invoices and filed
More efficiency with automated accounts payable
An automated AP system like BizBox relies on the latest technology, including Robotic Process Automation (RPA) and Artificial Intelligence (AI), to automatically scan and decipher a supplier invoice. The added functionality to route an invoice to the right person for approval eliminates data entry, reduces approval times and, most importantly, reduces the likelihood of an invoice being misplaced or forgotten to virtually zero.
From a cost perspective, an automated AP system also improves your bottom line as savings on paper, envelopes, postage and copying and filing time are also radically reduced or eliminated.
Automated invoice processing uses two very important components: optical character recognition and intelligent data extraction.
Optical character recognition (OCR) is used to convert printed images into text in order to ‘read’ the data from the invoice and possibly automatically enter it into a form.
By using AI in this scenario, the entire invoice process can be automated as RPA can download the invoice regardless of format and the AI then translates the document into a usable format. The digitised invoice data is then forwarded by the application to the relevant approver(s). Once approved, the invoice can be forwarded to the company’s ERP system or accounting software, where it is entered into the accounts payable ledger and eventually processed for payment.
The case for automating your AP process
The 2022 State of AP Report, published by Pinnacle Financial Partners, provides interesting insights that align with what we have seen in the market.
Here are some of those insights:
- Vendor relationships are becoming increasingly important, especially for finance leaders – 71% of CFOs, up from 58.5% in 2021. So how can these relationships be protected? Vendors indicated that this can be achieved through speed of payments (84.4%), followed by accuracy of payments (67.2%).
- Persistent supply chain disruptions have become a major problem for timely invoice processing.
- Pressure to reduce operating costs is increasing. 29.6% of CFOs stated that.
- It is becoming increasingly difficult to recruit qualified AP staff – the tight labour market has exacerbated this situation and driven up costs significantly, as indicated by 54.3% of CFOs.
This is just a brief snapshot of the trends that can be observed around the world. AP Technology can provide a solution to these problems. It is precisely these trends that led iMovo to develop the BizBox Accounts Payable solution, to provide effective yet affordable automation for businesses of all sizes. What’s more, BizBox is built on the Microsoft Power Platform, which is part of Office 365. This makes the choice even easier for customers who have already invested in this direction.
If you’re interested in streamlining your accounts payable processes, we invite you to get in touch with us at iMovo. Contact our team at email@example.com and take the first step towards improving your business processes with the efficiency of BizBox automations!