A Case for Accounts Payable Process Automation

Written by: Marilynn Leonard, New Business Development Executive for Xpertek Contact 

According to the latest Accounts Payable (AP) report by Ardent Partners (Accounts Payable Metrics that Matter in 2022), the biggest challenge experienced by AP teams is that 57% of all invoices have lengthy approval times. This adds to the cost of processing an invoice and overall operational costs.

In addition, 45% of invoices have a high percentage of exceptions, 28% of departments believe they use too much paper, 22% are still processing manual B2B payments, and 20% of payments are made late.

The pandemic forced AP departments to re-invent ways of working, and these departments are becoming more strategically valuable to finance and procurement executives. Opportunities for further efficiency gains still exist, and business is looking to technology to drive this.

AP’s top agenda points include:

  1. Enabling suppliers to submit invoices electronically
  2. Eliminating paper and reducing manual tasks
  3. Improved reporting and analytics

In this article, we’ll explain how technology is an enabler in these key areas.

Why consider Accounts Payable process automation?

Most businesses have embarked on or are considering some form of process automation to gain efficiency, reduce processing costs, and eliminate errors and discrepancies. Technologies such as RPA (Robotic Process Automation), IDP (Intelligent Document Processing), and BPM (Business Process Management) can all be used on their own or collectively to address process challenges.

We at Xpertek Contact have been automating processes or tasks within processes for many different businesses over several years. What struck us is that each business has an AP department, but often this is not considered a priority for automation. In our experience, this is a logical place to start, as processes are typically well-defined and understood, volumes exist, and it is rule-based. These are all the characteristics that make a process a great candidate for automation.

Along with our RPA partner Openbots, we have created an AP accelerator to fast-track the automation of the AP function and to address the top AP agenda points:

Enabling Suppliers to Submit Invoices Electronically

Globally, 55% of invoices are submitted electronically, which has increased for 3 years in a row now – a trend that will continue. What this means is that data can be extracted digitally from these documents and compared automatically to PO (Purchase Order) and customer data in your General Ledger or ERP (Enterprise Resource Planning) system. This prevents the need for staff to do manual checks, reduces the time it takes to approve an invoice, and reduces the cost of processing an invoice. Only exceptions need to be handled manually.

I know what you are thinking, we have hundreds of invoice formats, and new suppliers get onboarded from time to time. How do you manage this? Once again, technology comes to our rescue. These days the best IDPS (Intelligent Document Processing Solutions) have intelligence to recognize the formats of most invoices. There is always the exception, however. When they occur, that invoice is sent to our smart team of tech gurus who configure the new format on the fly.

Eliminate Paper and Reduce Manual Tasks

Receiving electronic invoices means that staff doesn’t have to print invoices out before comparing them manually to the PO for approval. All this can be done online electronically. Paper consumption when printing out invoices will be reduced by between 80 and 100%. Staff will be freed up and will only have to manage exceptions. These staff can be assigned to other more value-adding tasks.

Improved Reporting and Analytics

The third agenda point for AP teams is improved reporting and analytics. Now that all AP invoices are being managed in a system, there is visibility into the process and status of each invoice. You can then start taking advantage of early payment discount options and reducing late payment penalties. Reporting will also give you insights into your outstanding liabilities at any point in time.

Start Automating Your AP Process

With increasing electronic invoices, a need for better reporting and analytics, and a desire to reduce manual tasks to improve invoice approval times, the AP process is logical to automate.

In addition to the above international drivers for AP automation, an initiative of Business for South Africa (B4SA) driven by the pandemic was and still is government and corporate SA committing to paying SMEs (Small and Medium Enterprises) within 30 days. B4SA has labeled late payments as the “assassin of small business.” Paying on time ensures that SMEs survive, thrive, and help to build our economy. Automating the AP process will help in delivering on this initiative.

Our AP solution is a hosted service to our clients with a Service Level Agreement to back it. This process has a measurable Return on Investment and will add commercial and operational benefits to your AP division.

To start a conversation please reach out to me: Marilynn.leonard@xpertek.co.za