Spotlight on: Procure-to-Pay Automation
Without Procure-to-Pay (P2P) automation, most organisations’ current payment processes are inadequate. They are typically inefficient, costly, error-ridden and opaque, leaving the business exposed to fraud and compliance breaches.
The pain of paper-based processing……
It costs the average mid-sized enterprise $15 to process an invoice and takes an average of 9.7 days. This is because most businesses still use a paper-based invoice management system, which means that accounts payable staff need to re-key invoice information into the business’ Enterprise Resource Planning (ERP) or finance system for payment to be made.
Of course, such a practice is highly inefficient and error prone with mistakes on around 4% of invoices. With approvals not going through, the invoice life cycle frequently pushes out beyond the suppliers’ payment terms. Late payments cost the business in:
- Fees and interest levied
- Early-bird discounts missed
- Duplicate payments made
- Dynamic discounting savings missed
- Supplier relationships undermined
- Brands damaged
Problems for procurement
When procurement is not automated, managers typically make ad hoc requisitions via e-mail or telephone. The procurement function has limited oversight of such purchasing, undermining the business’ financial control, governance and compliance measures.
With paper-based invoice management and payment processing, the following issues are commonplace for procurement:
- Slow approval times due to inefficient systems and processes
- Lack of visibility and control of company spend
- Limited oversight of purchasing decisions in business
- Poor visibility into status of orders and payments
- Difficulties matching Purchase Orders (PO) to invoices and delivery notes
Problems for accounts payable
Without an automation solution, accounts payable staff have an arduous admin role to perform. This includes manually keying in data to the ERP, managing exceptions and following up on vendor queries. Typical pain points for accounts payable staff are:
- Data entry and re-work as a result of errors
- High number of discrepancies and exceptions to manage
- Lost invoices due to high paper volume and poor systems and processes
- Use of inadequate or outdated technology
- Lack of visibility across invoice life cycle
- Providing a poor supplier experience
Problems for c-suite
The lack of visibility arising from paper-based systems also causes real headaches for CFOs in managing cashflow and forecasting, and in ensuring compliance and strong governance in the organisation.
The solution: P2P automation
The technology is here to transform procurement and accounts payable into highly efficient functions that manage payments while simultaneously generating cost savings for the business!
With an end-to-end automation solution, approval times are slashed and throughput dramatically increased. Further, late fees are no longer owing, and the business can achieve greater savings by securing discounts and more competitive pricing from vendors.
Data capture technology
Optical Character Recognition (OCR) data capture technology extracts key information from invoices and feeds it into an invoice management system. This automates the manually intensive process of entering supplier invoices and credit notes into the ERP and safeguards against data entry errors. This technology alone can speed up the invoice approval process by three times.
However, the most time-consuming part of the payment process is managing exceptions – and standalone OCR technology does nothing to facilitate this. There are at least 25 different exceptions that your accounts payable staff need to contend with. So, this is where the time – and therefore cost – can really blow out. Here are some of the most common ones:
- PO and invoice details don’t match
- Goods/services not delivered or receipted
- Supplier claiming GST but de-registered
- ABN not registered with the ATO
- ABN details do not match vendor details
- Supplier is not active in the ERP
- Incorrect supplier code
- Data entry errors
RapidAP is a P2P automation solution that integrates OCR technology with a built-in decisioning engine to administer exception management. Finally, it exports 100% accurate data to your ERP for payment.
RapidAP is an automation solution that is configured to your business that integrates seamlessly with your ERP. It is:
- Straightforward to implement – It caters for most requirements ‘out the box’, which means that it is robust, streamlined, quick to deploy and low cost.
- Simple to work with – It is built on interactive web forms to guide the operator through the workflow in a user-friendly way.
- Flexible to your needs – As a web-based tool, RapidAP is responsive, browser independent, device agnostic, scalable, and easy to maintain and support.
Straight-through processing (STP)
RapidAP allows you to set the business rules, governance and compliance controls and thresholds that suit your organisation to facilitate streamlined approvals and enable straight-through processing. This automation significantly reduces the number of invoices staff need to get involved with.
RapidAP has client paying less than $2 per invoice in processing costs!
How RapidAP works:
- Step 1: Information capture – Collect data from paper-based or digital invoices through OCR technology
- Step 2: Information processing – Transfer data from OCR tool into the RapidAP invoice management system
- Step 3: Data validation – If data is complete and meets organisation’s compliance controls, enable straight-through payment processing
- Step 4: Approval workflow – RapidAP administers exception management by feeding specific tasks and approvals to nominated individuals
- Step 5: Data transfer – When issues are resolved and invoices approved, export to ERP for payment
- OCR tool for data capture
- Task list per user to facilitate exception management, collaborate and add notes
- Invoice library for end-to-end invoice life-cycle management and data retrieval
- Seamless data export and exchange with ERP or finance system
Transform your business
By automating your accounts payable function, you can boost efficiency, generate cost savings, and bring about culture change in your organisation.
Specifically, RapidAP will deliver the following benefits:
- Significantly less manual data entry required
- Invoice tracking and escalations mean payments are made on time, every time
- Highest possible PO matching and straight-through processing rate
- Search capabilities and ability to link images to transactions within the ERP
- Fraud detection on every invoice processed
- Visibility and transparency across the invoice lifecycle.
- 92% reduction on keystrokes
- 67% straight-through processing rate
- 3-day invoice to receipt payment ability
- 82% cost reduction on invoice processing
For more reading…
You can check our checklist to evaluate your next AP automation provider and our AP automation business case guide.