How Invoice Automation Solutions Can Accelerate Your Payment Cycles
By Brent Halverson, President and CEO of ecmarket, a cloud-based solutions developer and creator of Conexiom – an invoice automation solution for companies seeking faster payment cycles.
In today’s technology driven society, customer and vendor expectations are high. Companies are constantly faced with ever-increasing pressures to provide faster payment cycles and superior service. Meeting this demand is crucial to the future success of their companies but, in order to do so, strategic innovation and optimization of business processes is required. With the role of the accounts payable department expanding to include vital tasks, such as vendor relations and spend optimization, one key area primed for this form of improvement is AP invoice processing.
While most companies have already introduced ERP systems to automate repetitive administrative tasks, such as inventory control, many (in fact 80% globally) have yet to do the same for their invoice processing. This means that accounts payable teams must take time away from other important tasks to open mail, organize and sort invoices, re-key the information into their ERP system, review it, manually code it and verify it against their original purchase orders before receiving approvals to make the payment. In addition to being a laborious and clearly inefficient use of staff time, it is both expensive, costing on average $15 per invoice, and prone to embarrassing errors which ultimately damage the relationship with vendors as they lose faith in the reliability of the company.
Consequently, removing the need for manual entry, through automation of the invoice process, is a significant step towards real procedural efficiency. It not only reduces transactional costs by up to 80% and eliminates costly mistakes entirely, but it also enhances a company’s profitability. With faster and more predictable payment cycles, a company can better manage its cash flow and make capital available to reinvest.
Meeting the Difficulties of Automating the Invoice Process
Faced with the evident benefits of automating the invoice process, why have more companies not done so?
The answer is simple. Companies are sticking with their existing processes of manual entry as the status quo, with the misconception that implementing new automation technologies will be costly and disruptive for their vendor relationships.
Unfortunately, many of these vendors have neither the technical resources nor the inclination to help introduce these solutions into their business communications. Most already have their own long-standing internal processes in place. Some prefer to communicate via fax, others via email or others still choose to mail their invoices in. They are reluctant to invest the substantial resources and valuable time needed to apply an EDI solution. If companies want to maintain strong relationships with their vendors, it is clear that asking them to significantly change the way they do business is simply unacceptable.
Faced with the inefficiencies of having staff members manually process hundreds of invoices in different formats every day, what can be done?
The Power of the Invoice Automation Solution
Invoice automation solutions which do not rely on optical character recognition (OCR) can now bridge the difficult divide between each vendor’s unique internal processes and a company’s increasing need for automation to accelerate payment cycles.
They allow companies to treat email, fax and printed invoices like standard electronic documents, capturing critical invoice data from them with 100% accuracy. This not only eliminates the need for error-prone manual entry but also allows accounts payable departments to rapidly reconcile invoices with their original purchase orders. Using these solutions, invoice approvals can take minutes as opposed to the manual processing average of a month. So no more delayed or missed payments. No more late fees or missed opportunities for early payment discounts. No more duplicate invoice payments which cost companies on average $100,000 for every $10 million spent. Staff can refocus their time and energy away from these laborious chores and onto the more important task of building lasting relationships with their vendors.
Royal Brass & Hose is an ideal example of a company that found value in implementing an invoice automation solution that did not use OCR. A distributor of hydraulic hoses, fittings, assemblies, tube bending and fabrication, Royal Brass & Hose serves numerous sectors, including the OEM, transportation, mining, agriculture and mobile equipment industries. With a reputation for always going the extra mile to exceed customer expectations, they have expanded to ten locations across the USA. However, with such a diverse customer base, they also work with thousands of leading suppliers to stock more than 78,000 products. Before implementing an invoice automation solution, not only did their accounts payable team manage customer service and orders, but they also tackled the arduous task of keying in hundreds of invoices a day before verifying them against their original purchase orders. Faced with this colossal task, costly mistakes were inevitably made, slowing payment cycles and risking their excellent reputation for customer service.
Pairing a sales order automation solution with an invoice automation solution proved to be the perfect solution to their problem. Eliminating manual entry for both sales order and invoice processing, it reduced operational costs, improved order-to-payment cycles and helped staff reconcile purchase orders within seconds rather than hours through the ability to provide invoice line-item details. Most importantly, it allowed their accounts payable team to refocus their attention away from manual entry and onto more strategic priorities, such as spend analysis and vendor relations.
Ultimately, an invoice automation solution can make the dream of automating and accelerating payment cycles a reality. Using them, companies can eliminate the inefficiencies of human interference, moving from invoice to payment more rapidly and with 100% accuracy, strengthening their relationship with vendors and increasing their profitability.
Read the full article here: https://issuu.com/dmn.ca/docs/fo_q4winter2015_w/1