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Automate your accounts payable with a realistic start

Mon 16 Nov 2015
FYI, this story is more than a year old

Although many organisations have been successful in achieving paperless initiatives within certain departments, statistically, most accounts payable (AP) departments still process their invoices manually.

Some of the reasons commonly given for keeping a manual process include budget restraints, lack of executive buy-in and lack of staff resources to lead the initiative.

The best first step to drive automation is an advanced capture technology to capture invoices electronically – whether originating via fax, mail, email, or electronic data interchange – and deliver them to appropriate people for reviews, approvals and coding.

The process is different depending on how documents such as invoices arrive at your office.

For example, in the paper format, scanned documents and forms are automatically indexed. Documents become immediately accessible to users thereby accelerating business processes.

When it comes to electronic document, these can be imported directly into an enterprise content management system and managed in combination with related business content.

When documents are imported, capture technology translates the relevant printed and handwritten characters on the page into words. It then digitally verifies that the information is correct and instantly updates all your other systems.

AP quality assurance

One major consideration regarding changing to an automated system must be quality assurance.

Automatically captured data can be validated against the user’s own accounting rules to ensure data accuracy. Most user-friendly solutions allow hundreds of rules to be applied. This ensures that the user organisation does not need to change the way it does business to accommodate an automated accounting solution. Rather, the automated solution should be easily customisable to match the existing processes.

The most effective solutions also include the ability to look up data already contained in a company’s existing databases, including those contained within the existing enterprise resource planning system.

This includes being able to automatically perform two-way matching of PO information to a specific invoice during the data capture phase of processing, or using captured magnetic ink character recognition code data from a check to verify customer account information.

Using this detailed database information to auto-populate and verify data fields pertaining to a specific invoice, remittance, or cheque - or to flag problems for review - creates a more complete and accurate data record that is available downstream. This increase in data accuracy also eliminates the bottlenecks previously caused by missing or inaccurate data.

At this point, once any accounting rules or automatic lookups have been applied, many invoices, remittances, and cheques are 100% accurate and can optionally bypass human verification, going straight to being posted for payment .

Beyond capture: Workflow automation

For some companies, one of the major steps is to automate the invoice approval process with workflow technology. 

Workflow management automates business processes, allowing work to be shared efficiently. It matches work tasks with the appropriate employee. Employees at every level work more efficiently because they spend more time on tasks best suited to their individual skills.

Employees won’t waste work time searching for documents or supporting documentation. Automating workflows helps put an end to low-value tasks.

The right workflow solution will integrate with current applications to foster further automation by reducing manual work effort, improving process controls, and increasing visibility into process management.

After automatically capturing information, workflow ensures the invoice gets to the right person at the right time, speeding up the approval process. As an example, automated notifications can be created so that users are reminded when an invoice is ready to be reviewed so that the invoice will not become lost or sent to the wrong person, causing delays.

The easiest processes to automate are those that are well-defined and consistent.

Companies should evaluate which processes in their organisation need systematic control and implement workflow in those cases. By using electronic queues, managers can access, prioritise, and distribute work so that projects are completed on time or ahead of schedule. Three benefits of AP workflow automation

Increased visibility using an online dashboard Dashboards provide detailed summaries for managers to assess the status of people and processes, including tracking AP specialist workload, invoices processed, approver response times, the number of invoices processed during a specific timeframe, time spent on exceptions, and invoice ageing.

The entire process is tracked and monitored, giving more visibility than paper could ever provide.

Increased collaboration In AP, exceptions are common. Manual workarounds are necessary if there’s an exception (a new vendor, non-PO based invoices, etc.). When an exception occurs, someone needs to manually determine what the exception is and how to resolve it.

By utilising technology to automate the manual, predictable parts of your processes, you have more time to focus on exceptions when they occur. Electronic notes and markup tools allow the user to ask questions or note issues when they arise.

Improve support for audits With an automated invoice approval solution, you can easily access invoices and supporting documents, demonstrate documented process controls and procedures, and show full audit tracking details for each invoice, ensuring that your next audit is completed without any problems. Challenges of implementation

As with any new technology implementation, employees must understand why changes are being made and how they’ll impact their jobs. Clearly identifying and communicating those changes before they happen, as well as during and after implementation, is essential for effective user onboarding. Operationally, you have to determine how invoices arrive and develop a plan for how you’ll import them into a business system. You’ll also need to determine what type of capture solution you’re seeking. If you work with only a select number of vendors, a template solution, which is cheaper, would be your best option. The organisation creates a template for each vendor sending invoices.

Once a template has been created, when documents are imported, the technology lifts the data off the page in those specified areas. However, if you deal with thousands of vendors regularly, a capture solution that’s template-free would be ideal. But it all depends on cost and priorities.

Budgets and priorities are other factors to consider when it comes to choosing the right solution. That means assessing immediate business needs knowing where the biggest bottlenecks lie and determining what improvements will yield the quickest ROI on time and within budget. Choosing a technology solution that can address your budget, solve your biggest pain points, and expand in the future to meet your organisation’s needs, will help you to continually gain efficiencies in your AP department for years to come.

The benefits of an end-to-end invoice automation solution are greater than creating a paperless environment. An AP department will gain an improved awareness of its work and eliminate duplicate payments while also improving vendor relationships.

By Katie Alberti, marketing specialist for Back Office Solutions at Hyland Software

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