CloudX Blog

Why AP Processing Sucks For Most Companies

Posted by Chris Cosgrove

Sep 18, 2015 11:24:00 PM

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Perception is reality...or is it?

 

In today’s market, it’s critical for companies to create sharp external appearances which entice customers, investors, and generates social momentum.  This is done via all manner of media including digital appearance online, social media, advertising, and marketing collaterals.  All of this creates an edifice that is appealing to the company’s following and necessary for positioning in increasingly competitive corporate landscapes.  Now despite the bells and whistles of modern marketing technologies, many companies have ugly underbellies, particularly in their back office processes.  Most companies put the least amount of resources in these areas because they are not revenue generators.  This is an unfortunate, but not uncommon storyline.


With that said, it’s a reasonable conclusion that many processes that require modernizing go languishing, and instead of being improved, stagnate.  If you haven’t been paying attention to ponds across the US right about now, that is never a good thing, as evidenced by the scum that festers on the surface. (Hopefully you haven’t eaten recently, as it’s not a pretty picture and we’re not to be blamed for any stomach turning.)  As other wiser, better looking folks have said in bygone days, if you’re not moving forward you’re moving backwards.  The same is true of Accounts Payable invoice processing.


AP invoice processing is a total cluster-cuss for the following reasons:

 

  1. Invoices are paper centric.  - Lack of integration between supplier and customer systems equal paper with data to convey transactional details between the parties.  This means data entry. Data entry means increased labor, errors, and time lost to the process.  All in all, no bueno.

  2. Invoices come in myriad formats. - Ironically, individual vendors may have the dozens of versions of them, which create processing challenges of their own.  While this is the exception and not the rule, it is true horizontally across a pool of vendor invoices within a vendor master file.  No two invoices are identical from vendor to vendor, and varying types of paper stock or layout create complexity when trying to capture quality images. (This obviously assumes the effort of actual capture and OCR, which most business dare not take on due to cost and proficiency constraints...this is an optimal plug then for a different flavor of OCR aka document process outsourcing...read on here if you dare!).

  3. Approval, coding, & workflow process are manual. - It’s rare, though becoming more common to have highly intelligent, adaptive workflows that are customized to cause invoice subsets to reach the appropriate parties right out of the chute.  Au contraire, most businesses have to manually move these suckers through their company through interoffice envelopes, the mail, and express couriers.  All of these are anathema a healthy, functional, agile AP process.

  4. Reporting is non-existent.  - Sure, someone can run retroactive reports through their accounting system, but most finance leaders have an itch to peer inside the crystal ball so they can glean out what’s coming down the road, not just the plates on the truck that just hit them.  Poor reporting means poor benchmarking and ultimately poor process management.

  5. Manual process trumps higher order work.  - This is only the case where the act of manual labor necessitates greater time and thought investment than is able to be rendered in higher value activities.  Take the value of early payment discounts, or strategic payment initiatives, a la virtual payments variety...these can not be actioned easily without divesting some manual processes, which are nearly impossible to do without embracing automation technologies and approaches.


The Good News:

While those are five legitimate issues that impede optimal invoice processing, they are by no means permanent show-stoppers.  In fact, many companies are challenging the status quo to create new value and better processing environments for their organization.  However, the trick is how do you do that without breaking the bank or the expertise to do so...and that, right there, is the rub!


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Topics: AP Process, document process outsourcing, Invoice Processing, ap processing

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