Is Your Accounts Payable Automated Enough? Let’s Find Out.

Rising inflation, regulatory hurdles, unseen compliance risks, and uncontrolled budget overspend. Think your accounts payable (AP) processes are automated enough to meet these ongoing challenges and others to come? For most businesses, the research says it’s unlikely.

According to a global survey¹, the most strategically important cost containment goal of finance and IT leaders is to increase operational efficiency & productivity.

Manual tasks—such as keying in vendor and purchase details—don’t just make invoice management less accurate and efficient. They can lead to increased operational costs, decreased employee productivity across an organisation, and lots of frustrated vendors. Equally concerning—or perhaps more so if you work in AP—any number of manual processes can hamper a finance team’s ability to add strategic value to the business.

Not sure whether your invoice management could be more streamlined? Here’s how to evaluate your accounts payable processes, identify your current level of AP automation, and learn how to level-up your visibility and control over spending.

First, evaluate your current accounts payable workflow

If you listen in on a finance team meeting, you’re likely to hear the following three questions:

• Where’s that invoice? In a manual world, it could be anywhere – on someone’s desk, in an envelope in the mailroom, or hiding in an employee’s inbox.
• When can we expect payment? More than likely, you have vendors calling with the same question. Some daily.
• What is our cash position? It’s hard to know where the dollars are at when an invoice hits your desk or inbox weeks, if not months, after an employee has made the purchase.

When you multiply those complexities by the sheer volume of invoices most companies have to deal with, the picture gets even less clear. A survey of finance and IT leaders² found that the average company:

• Processes 252 vendor invoices each month
• Spends 13 hours per week processing vendor invoices
• Takes 11 days to get sign-off approval for vendor invoice payment from time of receipt

Now imagine if those 252 invoices had to be scanned (or worse, manually entered), emailed, printed, and then scrutinised with highlighter in hand. We have just three words: no thank you.

You may instead be thinking, “We created an Excel spreadsheet that seems to work okay” or “We have this fancy ERP system, so surely that’s good enough for our AP team”. But is that spreadsheet or ERP system giving you the employee-facing automation and data connectivity needed for full visibility and control—particularly when it comes to managing the entire procure-to-pay workflow?

Here’s what we suggest for evaluating your current AP processes:

1. Ask your AP team what obstacles they face and what changes could help them overcome the issues.
2. Ask your employees who make purchases and maintain vendor relationships whether the invoice process has gaps, creates unwanted work, or causes unnecessary frustration.  
3. Examine your current process with finance requirements in mind. Does it generate a clear picture of cash flow before, during, and after those 252 invoices roll in?
4. Don’t forget to consider how you work with vendors. How and how long does it take to process and pay their invoices? Are you regularly pushing the limits of their payment terms?

Next, identify your current level of AP automation

You can think of accounts payable automation as having four levels, although keep in mind that digital transformation is an ongoing journey for all businesses. Review each level, identify where you’re at, and then consider what would be required to level-up your automation capabilities. 

LEVEL ONE: We have little to no AP automation

Remember the statistic at the start of this article? Nearly two-thirds of companies still process invoices using paper. That means hours of manual data entry for employees, managers, and finance team members around the world each day.

Now also consider that up until a few years ago, AP teams could at least physically walk paper invoices around the office to get them approved by different people and collect check signatures. With the shift to remote and hybrid working, those traditional methods have become more than just inefficient. They’ve become impossible to do.

It’s not surprising then that 46% of finance leaders worldwide say manual workflows are the biggest employee experience challenge of not automating.³

If this is your reality, the time to move to the next level was a few years ago. That said, today is a great day to start. By automating mundane tasks, such as invoice management, you can improve employee happiness and retention and create an environment in which both employees and the business can grow.

LEVEL TWO: We have some AP automation

Yes, that impressive Excel spreadsheet could qualify as automation. And yes, we’re using the term automation quite broadly here. But in our opinion, any amount of digitisation is a move in the right direction.

Accounts payable workflow steps often digitised first include:

• Accepting vendor invoices by email, and even passing invoices back and forth through email for review and approval.
• Automating the digitisation of invoice details instead of relying on data entry. For example, using OCR technologies to extract line items from a scanned invoice.
• Using cloud-based file-sharing technologies, such as DropBox or SharePoint, to review, organise, and store approved invoices.

Remember, the more you can replace spreadsheets and paper with AP automation, the higher the levels of accuracy, efficiency, and visibility you can achieve.

Need to build a business case? Include the following numbers reported by invoice management users of SAP Concur solutions⁴:

• 134 hours estimated saved by finance/AP teams per week
• $43K estimated saved on an annual basis
• Only 7 months to see positive ROI after implementation

LEVEL THREE: Our AP is fully automated

To move to the level of fully automated accounts payable, your business will need a scalable, connected invoice management solution that can capture and route invoices digitally from approval to payment, regardless of format.

Your chosen AP solution should also:

• Be able to analyse and extract invoice data from a PDF or scanned document and automatically generate a digital invoice
• Include a mobile app that makes it simple to review invoices and authorise vendor payments while on-the-go.
• Offer automatic two- and three-way matching so your AP team can quickly resolve discrepancies in invoices, POs, and receivables.
• Feature a centralised dashboard and predefined reports for a full, real-time view into spending.
• Integrate with a wide range of ERP and accounting systems and connect with vendors across the procure-to-pay lifecycle.

The benefits that come from the above capabilities, such as faster processing times and better cashflow visibility, are obvious. But here are some additional real-world metrics to go with them.

After implementing an automated invoice management solution⁵:

• 36% of businesses cited finance/accounting employee time savings as one of the top benefits, and
• 46% cited increased employee satisfaction.

The same finance leaders also reported a 24% reduction in late invoice payments and an 11% cost savings through supplier-negotiated rates and discounts.

If your company is already enjoying those benefits of automation, definitely give yourself a well-deserved high-five. Afterwards, keep building your business momentum by exploring how artificial intelligence (AI) and machine learning (ML) can give you even more control.

LEVEL FOUR: We’re elevating our AP automation with AI

Before you skip past this part of the article, we’d like to address the proverbial elephant in the room. Yes, adopting, let alone understanding, artificial intelligence and machine learning technologies can seem too complicated, too costly, or both. But regardless of the size of your business and resources, AI and ML are quickly becoming table stakes in an increasingly digitalised world and shouldn’t be discounted so quickly.

As Stela Koleva (VP, EMEA Services & Support and Country Director at SAP Concur) explains, it’s time to re-examine those perspectives:

“The journey to AI does not have to be complex, expensive, or chaotic because other companies may have already developed what you need.”

So, rather than putting AI into a “someday” category, here are three important reasons why AI-powered automation should be moved to the top of your ongoing optimisation plans:

1. Mitigating risk and compliance in employee spend: AI algorithms can automatically scan transactions and identify risk and compliance issues that could expose your organisation to fines and reputational risks.
2. Improving Audits: Intelligent technologies can look at every line item, cross-checking them against multiple databases, faithfully executing each step of the process. Then, they can flag exceptions to human auditors who can solve problems instead of wasting time trying to spot them.
3. Managing taxes: AI-powered spend management systems can digitalise the compliance process, automatically checking transactions against local tax regulations to find significant reclaim opportunities.

These are just a few examples, but the possibilities will be truly endless as new technologies and how businesses operate continue to evolve.

If you want to find out more about how AI can enhance your processes, take a look at our ebook on How AI and ML Automation Solutions Solve Business Problems.

It’s time to take your AP automation to the next level

Regardless of where you’re at in your accounts payable automation journey, it’s important to keep moving forward so you can stay competitive and fuel future growth. For tips and best practices, follow our 10-step guide for modern vendor invoice management.

Ready to see what Concur Invoice can do?

Talk to us today or visit concur.com.au/momentum.

^1,2,3,4,5 Analysys Mason, Business mindset for 2022 and beyond and the benefits of automating travel, expense and invoice management: Global study findings