This article was first published on Business express and is reproduced here with their permission.
Despite the best of intentions, we all know that it’s very difficult to maintain 100% accuracy in our work. People are not machines. We’re affected by our environments and we make mistakes; that’s just life.
But sometimes mistakes are extremely problematic – the stakes are simply too high for errors. Other times small slips like typos can lead to problems that compound. This is where artificial intelligence (AI) can come in, with a role in many different settings supporting people to deliver the best results.
AI for faster payments
Take busy accounts payable departments, for example. Automation can transform payment processes with far-reaching and positive consequences, including faster payments, lower processing costs, and more satisfied staff and suppliers.
When working with manual processes, payment practices can be extremely inefficient and chaotic with errors leading to a high invoice exception rate, lost invoices, duplicate and fraudulent payments made, and bills consistently paid late. This adds to the cost of invoice processing and creates a poor perception of the company all around.
Falling at the first hurdle
Problems in accounts payable usually start with manual data entry. When accounts payable officers are required to retrieve invoices from an inbox or incoming mail and physically enter them into the ERP or finance system, mistakes happen. They are inevitable and commonplace – and cost time and money to rectify.
Data entry errors lead to invoice exceptions. This means that the invoice does not meet the criteria to progress through the approval workflow. It gets held up and an accounts payable officer needs to get involved, identify what the problem is, and rectify it. Quite simply, time is money: the more time an accounts payable officer needs to spend attending to a particular payment, the higher the firm’s cost of processing.
And because accounts payable officers can only achieve so much in a day, time-consuming exception management can have a knock-on effect on all invoices in the pipeline. A backlog of unprocessed invoices can build up, throughput can drop, and payments can be made late.
Late payments matter
While it is no surprise that late payments matter to the supplier, it’s important to recognise they also significantly negatively impact the buyer too. They cost the firm far more than just the extra expenditure on invoice processing.
For example, most supplier invoices are eligible for a 1-2% discount if paid within 10 days. Yet businesses capture less than 20% of these discounts, largely because of error-prone manual processes like data entry.
And it gets worse: when suppliers are not paid on time, they sometimes assume the invoice has got lost in the system and re-send it. Then the invoice accidentally gets paid twice. For many organisations the rate of duplication may be around 1%, representing a significant overspend that can be difficult and time-consuming to recoup.
Clearly this is wasteful, and the money could be put to good use elsewhere in the company. But long payment times are not nearly as significant an issue as they are for small and medium-sized businesses, many of whom rely on payments to stay afloat.
In Australia, there is increasing public scrutiny and disapproval over large companies’ accounts payable performance. Quite simply, being paid promptly is critical to many businesses’ viability. Faster payments are also proven to stimulate economic activity and create jobs, creating better outcomes all around.
As a result of this, the Government has taken action to address late payments by bringing in the Payment Times Reporting Act. This legislation forces large companies and government entities to publicly report on their payment times to small businesses. Consequently, brand damage from long payment times is now a real risk for companies that have not automated inefficient, mistake-ridden manual workflows.
Future-proof the business
With keystroke errors the root of so many exceptions, staff members typically want invoice uploads automated. Data entry is often tedious as well as inaccurate work that can undermine good service delivery.
For most accounts payable officers, fielding calls from dissatisfied suppliers, identifying errors, and doing re-work is not rewarding. Most want to leave these tasks behind to take on higher value, more strategic responsibilities, such as tracking spend, identifying savings, and advising on when to make payments.
Technology allows them to do so. And now with the rapid digitisation of the economy, there’s a growing expectation for employers to move with the times, embrace further technology solutions, and equip their people to perform at their best.
Automating accounts payable delivers for buyers as well as suppliers. It not only cuts invoice payment times and lowers processing costs, but protects the brand, reduces staff turnover, and creates a better place to work. This helps to future-proof the business, keeping it agile and competitive in changing times.
Let’s move forward by paying suppliers on time and relegating data entry to the past.
Find out more:
Go to www.efficiencyleaders.com.au/request-a-demo or call +61 2 8004 5446.