It’s often hard to compare accounts payable (AP) automation solutions, particularly if you’re not entirely sure what features you want. Here are six things to look for in your solution in 2021 – as well as points of difference for AP automation vendors:
1. Data capture and validation
The solution should include Optical Character Recognition (OCR) technology to auto-extract data from invoices that suppliers have emailed through. This means AP officers don’t need to manually enter these details into the finance system.
The most sophisticated AI-backed OCRs will be able to capture invoice information from all file types (pdf, doc, xls, jpg and more). They will also have machine-learning capabilities for continuous improvement. With training, some OCRs may be able to achieve an extraction rate of 90% while others may only manage 60%; it’s worth finding out what your prospective vendor can offer.
Your solution should also be able to validate the invoice data before processing it. This includes checking for duplicates already in the system, confirming that the supplier and payment details are legitimate, and matching the invoice to the relevant purchase order, if applicable. If any discrepancies are found, the solution should alert the AP team to investigate before payment can progress through the workflow.
2. Connection to the PEPPOL network
Having a connection to a PEPPOL access point will allow a buyer to receive an e-invoice straight to their AP automation solution. Digital data exchange is quicker, cheaper, and more accurate than both manual processing and OCR technology, so it’s the future of accounts payable.
However, it’s likely that system-to-system data exchange will still take some time to roll out across the economy. In the meantime, businesses will continue to receive non-PEPPOL invoices. Therefore, an AP automation solution that is both connected to the PEPPOL network and offers an integrated OCR will ensure you’re fully covered. Regardless of how data enters your solution, you’ll be able to apply the same business rules and approval workflows to get consistency across your accounts payable.
3. Automated workflows
While the PEPPOL communications network delivers e-invoices, buyers still need to satisfy their own compliance requirements in approving payments. An automated invoice processing workflow is available either through an AP automation solution or through an Enterprise Resource Planning (ERP) system.
The benefit of an AP automation solution is that it’s specialist software that is highly flexible and configurable to a company’s structure. This means it may be able to provide additional and more advanced automated workflows for businesses with complex requirements than an ERP can achieve. This ensures there are no gaps left for AP to manage.
Your vendor should work with you to determine your business requirements and to optimise your existing workflows. Together, you can set your thresholds for straight-through processing and configure the specific workflows required for each invoice type (purchase order invoice, non-purchase order invoice, credit note) and for the amount payable.
With an effective automated solution, there should be minimal manual intervention required to ensure all processing and compliance needs are met.
4. Integration with your finance system
Integration between your AP automation solution (which captures and processes your invoices) and your finance system (which pays them) is essential to achieving real efficiency gains, cost savings, and a quick return on investment. Minimising human intervention through connecting systems and automating workflows reduces the potential for errors and speeds up the flow of information, empowering quick and informed decision making.
Your AP automation vendor should be able to offer several integration methods as not all finance systems are built the same way. An experienced AP automation vendor should be able to integrate their solution with legacy systems as well as modern, cloud-orientated enterprise software. Look for prior experience integrating with your finance system and be sure your vendor can provide a full integration specification, detailing exactly what is required and how long integration will take.
5. Integrated reporting
Digitising accounts payable means reports can be generated from the payment data, unlocking insights into company spend and accounts payable performance. An AP solution should include a searchable database that contains every invoice, enabling quick and easy information retrieval.
Reports may allow AP to take better control over cashflow management, bringing to light supplier spend, monthly accruals, aging reports, payment histories, cashflow requirement forecasts and more. With the Payment Times Reporting Scheme coming into effect this year, solutions should also offer a facility for large organisations to capture and report on their payment times to small businesses.
Other useful reports may cover accounts payable performance, such as the invoice exception rate, percentage of invoices linked to a purchase order, count of all invoices, cost to process a single invoice, and more. Find out what reporting your prospective vendor can offer.
Your solution should be configurable to your requirements, providing everything that you need and nothing that you don’t. An overly complex user interface – or a visually unappealing look and feel – may deter user adoption. In turn, this may limit usage, efficiency gains, and return on investment.
The solution should be well designed, clear and easy to use. It should meet all current needs, while being flexible and robust enough to add on capabilities for future requirements. This supports long-term utility and value for money.
Naturally, the solution should be web-enabled, so users can communicate, collaborate and be productive anywhere they have a device and an internet connection. This is key to great results in AP and across an increasingly digital workplace.
With these six features covered off, the solution should be capable of delivering great results for your organisation. Then it’s just about choosing the right vendor and getting real and sustainable value from the partnership.