Four Steps to Untangling Your Invoicing Processes

Getting Started With Finance Automation Doesn’t Need to be so Difficult

Organizations are beginning to realize that improved effectiveness and efficiency of finance and accounting processes are not only worthy goals within the finance department, but goals that have strategic benefits for the corporation as a whole. Chief financial officers must ask themselves – Are our financial processes world-class or second class, and how do this impact our overall business process transformation initiatives?

Why has this become such an important issue?

Here are four reasons:

1. There is a great deal of variation in financial process effectiveness and efficiency across companies.
2. This variation puts some companies with second class processes at a distinct competitive disadvantage.
3. A great deal of the performance variation is due to the manual processing of documents.
4. Until recently, technology to streamline accounting processes was beyond the reach of many organizations; however, this is no longer the case.

Automating the invoicing and accounts payable process is a good place to start the automation journey because the differences between top performers and bottom performers are so stark.

Consider this data from the American Productivity and Quality Center:

But where to start? Here are four key steps in any AP process.

1. Capturing invoices and matching them to other data.

The first step in an effective invoicing process is to capture incoming invoices regardless of their source or format. Invoices can originate from a network-connected scanner, a multifunction printer (MFP), mobile scan or directly from the email. Intelligent indexing allows you to extract key data such as supplier, invoice number, date and amounts to match against purchase orders or to route invoices through a workflow approval process before securely archiving.

2. Validating vendors and automatic routing.

The second step is the validation of the information that has been captured. Is the vendor valid? Are there duplicative invoices anywhere in the system? Are there mandatory fields that need to be captured? Effective automation also requires that you then extract any split-code general ledger bookings, confirm payment terms and compare all the above with your vendor database. Organizations then use a variety of approval processes before routing the invoice — this could mean a quick match, a three-way match (vendor invoice, packing slip and PO) or other criteria.

3. Collaborating during the approval process.

Exception handling is where many automation efforts bog down in a variety of manual and undocumented processes. Instant flagging of nonstandard invoices, flexible routing to the correct decision-makers, and easy annotations and notes are critical to automating the exception process.

4. Posting invoices and integrating with your financial system.

To be fully automated, invoice workflows need to be integrated directly into a financial application like QuickBooks, Sage, Microsoft Dynamics, SAP Business One. This means you need to be able to easily post invoices back to your ERP and reference them later while maintaining compliance through a complete audit trail with versioning, encryption and automatic folder filing. What is the best way to think about automating these four steps? Invoice automation is one of the most powerful ROI stories in the document space but countless financial executives often reply to proposals to automate with some variation of, “Sounds good, and we’ll get to it sometime, but for now we have other priorities and we’ll just leave things the way they are.” Many organizations continue to struggle with tangled invoice processing processes because it seems too darn complicated. In response, some executives turn to single-purpose SaaS (Software as a Service) solutions to solve this problem. SaaS solutions can be deployed quickly and with a minimum of IT assistance. That’s good news. But while a single purpose SaaS solution may eliminate short-term process pain, because the information and documents in the AP process need to be incorporated into other key processes, many short-term fixes wind up creating frustrating future information silos. A better way of looking at the issue is to focus on getting both the quick ROI of a SaaS process solution AND robust content and records functionality upon which you can build. This gives you a relatively painless place to start – and escape the “We’ll do this someday” trap – and also provide a foundation upon which to build and expand if you choose to do so.

The optimal approach is to get the single process SaaS simplicity and standardization coupled with 1) robust records and compliance functionality; 2) the ability to extend success with invoice automation to other processes; 3) the ability to connect the AP documents and processes with other business processes. The combination of accelerated invoice processes and clear data accountability allows you to prepare audits without worrying about unrecorded data or manipulation. It allows you to gain deeper control over cash flow management. And it allows you to improve relationships with key suppliers and take advantage of early-pay discounts.