3 min read

The Worst Advice We've Ever Heard On 'Improving' The Accounts Payable Process

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Ever have one of those friends who has the best intentions, but gives absolutely terrible advice?  

Like, Godzilla proportions of catastrophe...exactly, that’s what we’re talking about here.

Now, granted, we don’t cover an area of technology or life that’s at the forefront of societal consciousness in terms of personal interest, but our contribution towards bettering horizontal business process shouldn’t be overlooked, because, for most mid to large-sized businesses, the areas we deal with are altogether a difficult reality to deal with, especially when it comes to the accounts payable process.

In our travels, we’ve heard some doozies in terms of near-genius attempts at improving transactional document processes, and while some are harmlessly laughable others are shockingly stupid, almost painfully so.  

Well, we wanted to expose these grandiose thought gems:

 

1.  Scanning at the end of the process

I mean, c’mon what’s the point is our essential perspective on this.  This is kind of like drinking Diet Coke or asking for a no-whip hot chocolate at Starbucks.  Some things just ain’t right.  Certainly putting the scanning at the back end of the accounts payable process adds a cumbersome step, whereby the invoice processing has occurred and now the image has to be archived.  Sure, that’s a noble goal, and I think many companies stop at this junction because some of the loftier aspects of AP automation are costly and so there is some kind of a justification mentally akin to ‘at least we’re doing something.  In this case, perhaps doing nothing is a better option because the only true benefit you get from doing this is strictly from an archival standpoint.  Granted that will save your AP staff some time from having to get up and dig out boxes or file cabinets to produce an invoice, but it provides little benefit.

If you’re falling into this camp, we really want to challenge you to consider what you’re doing and why you’re doing it.  Beyond that, we want to encourage you to move the right process levers that will actually yield a return for you that is sizable and sustainable.  For the love of God, please, please consider converting your invoices and related Accounts Payable process documents (credit memos, check requests, etc.) at the process outset using your own OCR technology or by offloading it to someone to do on your behalf.  It is an investment that will actually enable you to improve all the ensuing process components from data matching and validation, approvals, and GL coding.

 

2.  Shipping batched invoices between outlying and central processing locations

Now, this may seem like a reasonably good option for a business with a broad geographic footprint, but in today’s day and age, it’s kind of wasteful in our opinion.  Sure, documents may need to be received in outlying locations for practical business reasons and we understand that, but having to pay $15-20 per UPS or FedEx package once a week per location adds up.  At $20 an overnight package, over the course of the year, you get about $1000 spent.  That would more than cover the cost of a decent scanner, whereby you could eliminate that cost and get the documents into the Accounts Payable process faster than through a bundling and courier process.  Alternatively, organizations can be more nimble and leverage camera technology in phones or tablets and create PDFs dynamically.  Sure, there could be some IT workaround, but it would be minimal, and a one-off investment that kept dollars in the organization.  Shockingly, we’ve seen this in numerous retail scenarios, especially when there is regional control of franchises as back-office processes tend to get the shaft rather than reinvestment as the glitzier money-making areas of the business.

If you’re doing this, it’s time to rethink the approach through invoice centralization or via the other means we outlined above.

 

3.  Leveraging headcount for scale.

This being the kicker, we thought it beneficial to address just how ridiculous this really is.  First, any time you leverage human capital to do a job that can be automated by a machine, you’re going to incur human error... which is inevitable.  That being said, we don’t make the case for divesting human labor positions, but we do make the case for elevating the focus of work to higher-order opportunities because data entry is for the birds...or the bots as it turns out.  Seriously, if you’re staff is not benefitting from OCR or a capture and validation process then you’re essentially married to an unscalable, inefficient, error-prone, antiquated mechanism for conveying invoice information through the accounts payable process.  

Until and unless you get this portion of your people’s daily workload, you’re going to be behind the schedule as they toil and sweat under the burden of data entry.  However, the other side of the coin is that once this is gone, you can delve into more strategic opportunities.  Through analysis of your vendor master file, you can identify opportunities to pursue early payment discounts or strategic payments.  What’s that you say...don’t know what that means...well check this out!

So, don’t follow the advice that we’ve exposed and dispelled that some unfortunate souls have preferred.  If you want to have your accounts payable process move like a Swiss watch, then shake it up and do the things that are going to provide you the most bang for your buck!  

If you would like to see Accounts Payable Automation in action, click here to schedule a free demo of our powerful AP Automation Software, APSmart.

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