Everywhere you look, business moves faster than ever. Everywhere, that is, except in Accounts Payable.
It takes 45% of AP departments anywhere between 6 to 25 days to process a single invoice (from receipt to payment approval), according to the Institute of Financial Operations.
Slow invoice approval cycles cost businesses more money than they think. For starters, slow invoice approval cycles inevitably lead to back-and-forth phone calls and e-mails from suppliers, leaving less time for staff to focus on value-added activities such as reporting and analytics. Slow invoice approval cycles also increase the chances of costly late-payment penalties and close the door to opportunities to capture lucrative early-payment discounts. And slow invoice approval cycles can strain supplier relationships, resulting in a higher cost of goods during contract renegotiations. Finally, cash flow forecasting requires a level of certainty as to when invoices will be paid.
Manual and semi-automated processes require AP department staff to manually key and physically route many, if not all, invoices. Physically routing invoices to multiple approvers also raises the chance that invoices will be lost or misplaced or sent to the wrong person. Resolving disputes in a manual or semi-automated AP environment can take days because of back-and-forth e-mails and phone calls between parties. What’s more, resolving disputes in a manual or semi-automated environment often involves innumerable escalations. And a manual or semi-automated environment typically requires staff to input data on approved invoices into a downstream ERP or GL system.
Full AP automation delivers the speed that AP departments require.
Full automation enables organizations to receive invoices in any format, from any location. Images of invoices received via paper also can be consolidated into an electronic invoicing platform, as well as data extracted from paper invoices via optical character recognition (OCR). Fully automated AP solutions automatically extract supplier, header and line-item data (such as amounts) from purchase order-based and non-purchase order based invoices that are received electronically. Invoices then are matched with purchase orders and/or goods or services receipts. Invoices that require approval (such as non- purchase order-based invoices) or exceptions are routed based on pre-defined workflows.
Faster invoice approval cycles enable businesses to:
- Reduce late-payment penalties
- Capture more early-payment discounts
- Decrease supplier inquiries
- Strengthen supplier relationships
- Reallocate staff to value-added activities
Want to learn more about how full AP automation can accelerate your invoice approval cycles? Download our complimentary white paper, “Stop Throwing Money Down the Drain: 5 Reasons to Embrace Full AP Automation.”