Accounts payable automation can cut costs, improve invoice throughput, and transform your business, but what exactly is it? Here is what you need to...
5 Ways to Cut Your AP Processing Time in Half
You would never want to spend twice as long doing anything if you didn’t need to, especially paying your bills. Here's how to cut your AP processing time in half.
It makes sense that you would never want to spend twice as long doing anything if you didn’t need to, but when it comes to paying your bills, it may not be crystal clear why you would want to be in a hurry to part with your cash. Why then are so many organizations looking to reduce their processing time? Not surprisingly, it’s about money – and not just soft costs but hard tangible spendable cash. I spoke with a nonprofit recently that has been able to reclaim a half million dollars annually in vendor discounts alone. That’s serious money and worth taking a closer look at what it takes to reduce the payment cycle. Here are 5 steps to slash your AP processing time in half.
- AP Invoice Automation Software
I heard a premarital counselor once say that the most important thing you can do to ensure the success of your marriage is pick the right spouse. The same concept applies here. It may seem obvious, but it’s difficult for large organizations to hit the deadlines for early pay discounts unless AP Invoice automation software for approval routing is part of the process. You just can’t compare the speed of manila enveloping invoices between buildings to software accomplishing the same task in milliseconds. That being said, not all software is created equal and you’ll need specific capabilities to consistently hit early pay deadlines. Among these, you should look for real-time integration for adding the invoice into the ERP. Real-time integration means that the invoice is added into the ERP faster and if it isn’t, because of some error on the invoice, you have immediate on-screen feedback telling you why.
- Cycle-Time Monitoring of Approver Responsiveness
Cycle-time monitoring is simply looking to see how long an invoice sits waiting for someone to take action, such as approve or route the invoice. Establishing a target turn-around time is good, but unless your organization is exceedingly unique, it probably won’t be enough. There’s an interesting, albeit not surprising, phenomenon that occurs when people know you’re looking for bottlenecks. No one wants to be the bottleneck and the desire to stay off the slow-poke list will drive even the most alpha C-Level executive to comply.
- Imaging as a Service
If you’re using automation software, you undoubtedly have imaging software in place, but not all imaging software is equal. The simplest systems don’t do any recognition, some recognize a little more than half the information with a lot of work, and the very best of breed software can reach as much as 90% recognition. While that’s excellent, it doesn’t compare to the guaranteed error free rate of 98% that Imaging as a Service customers enjoy. Better recognition translates directly into data entry time savings. Most of the time, the superior recognition and turnaround time comes at a price that is less than doing it in-house.
- Reduce Touches
Reducing touches is really about eliminating as much human interaction as possible. Why? Because quite frankly, we humans are the bottleneck. There are three areas where we have a tremendous opportunity to reduce touches, but this is where the capabilities of the AP Invoice Automation software become critically important:
- Auto-Route Invoices to approvers where possible. You probably can’t do it all the time, but you may find that certain vendors always route to a particular department. The automation software should be robust enough to automatically route those invoices without requiring that an AP clerk intervene. For this to work, your imaging solution (IaaS or in-house) needs to be able to automatically and reliably recognize the vendor.
- Go straight from the approver to the financial system. Most organizations route invoices back to accounts payable after an invoice has been approved. If the solution has real-time integration with the ERP, then you have the opportunity to eliminate this touch and still have confidence that if there is a problem the real-time integration will give the approver the feedback they need to correct it.
- Eliminate multiple approvers for the same invoice. About half the organizations will have low level approvers give the okay on an invoice before it gets routed to the person with spending authority to approve it. These high dollar invoices represent our best opportunity to recover big dollars through discounts, but these extra stops in the approval chain can slow down the process to the point where discounts are lost.
- Automated PO Line Pairing with 3-Way Matching
Material PO invoices generally don’t need approval, but there is still an opportunity to recover a significant amount of time. Matching a small invoice against a PO is a piece of cake. Change it to a large multi-page invoice where the invoiced quantities don’t match the PO and the job just got a lot more tedious, a lot more error prone, and substantially slower. Best of breed imaging solutions, such as SmartTouch AIR, can automatically match up the lines on the invoice with the information on the PO. They can even make sure that you aren’t being invoiced for the same items twice. The clincher is that it does it in just a matter of seconds.
Ascend Software offers a comprehensive financial automation suite designed to drastically reduce AP efforts. Contact us today and discover how our SmartTouch solutions can help your organization reduce costs and create efficiencies through AP automation!