Because nothing says ideal like King Zor!
So you’re thinking about jacking up your processes to the next level, but maybe you’re unsure of where to start. For many Finance and Accounting leaders, the choice is obvious...Accounts Payable invoice processing. Specifically, we’re talking about the ugly Accounts Payable process that is the front-end invoice processing function that takes place from invoice presentment up until posting. While there are many opportunities to improve the entire AP invoice processing cycle, including the payment component, we will deal with the front end in this post. (We’ll be back in a few weeks to discuss the payment piece in greater detail and layout alternatives for making that smoother and more profitable to you.)
HERE ARE a few reasons you want to consider Document Process Outsourcing, specifically in this process area.
AP is inundated with paper, and for most companies, this means manual processing, manual data entry, and manual workflows. That can include data errors, incorrect payment amounts, payments to errant vendors, duplicate payments, process bottlenecks, late payment fees, missed discounts, no audit trails, lost invoices, expensive manual document routing, and zero visibility into the process. In short, without some solid Accounts Payable process and robust Accounts Payable software...which brings up point #2.
Pardon my French, but Accounts Payable software ain’t cheap, especially if you choose to deploy it in-house. That’s largely due to the fact that it’s more like a DTP vaccine than an individual single-strain shot in the arm. By this, I mean that you need a variety of technologies to impact the process meaningfully. Things like OCR, business intelligence engine (to mimic business rules), electronic document management & workflow technology, and integration technology all equate to different technical ingredients required to make the secret sauce. Now, if you prefer to deploy locally instead of going with a SaaS model, then prepare to cut some big checks, usually to the tune of mid-six figures. And with that sentence, so dies the aspirations of many finance leaders to improve their process because for them, it is simply unjustifiable, but hold fast because we’re on to #3.
The prescription, at least for most companies, sub a couple billion dollars in revenue is the document process outsourcing approach in our opinion. It offers a blend of the technologies above overlaid with affordable resources to supplement the base efforts of document conversion. The net effect is that process stakeholders don’t have to be buried under the mundane and monotonous but can transform their job functions to take on more strategic and higher-order items. If AP processors don’t have to bang in invoices to an ERP interface all day, they can pursue more valuable things like improving vendor payment terms or conducting other analyses for their Finance leaders. In short, they can achieve better levels of insight through a system that can spit out real-time reporting and dashboarding, and in so doing, they can better manage their process more intelligently and effectively. The nice thing as well about document process outsourcing is that the function itself isn’t turned over to a 3rd party from a process ownership perspective...meaning that the actual invoice processing, matching, reconciliation, and payment still resides within the safe hands of the company that is improving their process, thus decreasing additional risk points.
Now there are other means to consider in terms of improving invoice processing, and for many folks, that means giving a strong look to E-Invoicing. However, this begets another slew of issues, primarily around vendor enrollment. While we’re not opposed to that, as each organization has to make its own decisions on what’s best in its unique situation, we’ll say that anytime you have to influence vendor behavior, prepare for resistance. So, if you have patience, that may be a good approach, but if the bleeding is bad enough, sometimes a band-aid won’t cut it, so to speak...you may need triage, and therefore the remedy above should be a viable consideration.