How to Improve Your Accounts Payable Process

Improving the accounts payable (AP) process is a very good example where substantial efficiency improvements can be made and quantifiable bottom-line savings achieved! With global supply chains under increasing pressure to exchange more and more data, current inefficiencies can often be linked to slow, inaccurate, and poorly defined paper-based workflow and capture processes. The result is: re-work when processing duplicate invoices, lost vendor payment discounts, poor working capital management, and a poor vendor feedback and experience when querying the status of an invoice. The question is where to begin? 1. Eradicate paper Purchase orders, invoices and credit notes are often received in paper format, even though we all know that the use of electronic documents have many advantages over paper. Of course, vendors should be encouraged to send invoices in electronic format by rewarding them through speedy feedback, processing, and payment. Where organizations do not have the luxury of Electronic Data Interchange (EDI Software) systems, other, less costly solutions are available! It must be noted that it is best practice to scan and capture all received paper invoices and credit notes as early as possible in the AP process. 2. Scan, capture, and identify duplicates as early as possible Vendors often send the same invoice via multiple channels (in their enthusiasm to be paid). This can be the cause for a lot of unnecessary re-work as part of the AP process before discovering that an invoice is a duplicate and discarded. The early capture of fields that uniquely identify the invoice, such as the invoice number and vendor number, enables duplicates to be identified at a very early stage in the AP process.

3. Make use the invoice information that you have in the capture and validation process Information that you already have in the back-end accounting system such as outstanding PO numbers, and anticipated invoice amounts from a specific vendor, can be used to increase the accuracy and reliability of the captured invoice information. In the case of manual capture processes, this information can be used as default values or selection lists to minimize the impact of human error. When capture automation is used, such as Optical Character Recognition (OCR), and the automation technology is closely integrated with the back-end accounting system, this information can be made available to the automation technology and used to increase accuracy this lends to faster AP processes and less human error! 4. Provide immediate feedback to the vendor Feedback to the vendor at appropriate stages in the AP process is crucial for improving the vendor experience, decreasing vendor queries and duplicates received, and assisting the vendor to identify issues as these arise. Feedback can be typically via SMS or e-mail. The vendor information must be maintained to ensure that the correct people or systems receive the feedback in the desired format, again lending to faster and more improved AP processes. 5. Dont underestimate the AP process The AP process is a little trickier than it may seem at first. Some of the curveballs that you may encounter, and which should be catered for by the AP solutions, are: * Multiple PO numbers on a single invoice * Standing PO numbers that are to be used many times for an indefinite final amount * Partial deliveries where the PO number may, or may not, be received again from that vendor * Invoices to be paid without PO numbers such as consignment stock invoices All of the above can and should be managed by the AP process solution, thereby ensuring integrity and speed within the AP process. 6. Dont underestimate change management and the culture of the organization Culture, or the way we do things around here is not easily changed, and yet the human factor is often ignored to the detriment of efforts to implement and anchor process and technology changes. Those who find security in paper are not easily convinced to give it up. For example, there are a wide range of organizations whose staff print and courier memos internally and do not know what scanning is, to those that insist on the use of workflow, content management, and scanning technologies. It goes without saying that the change management efforts in these organizations should be and are worlds apart. Often when an AP management solution is implemented, the important people-aspect is ignored and the success of an AP solution is hugely dependent on whether or not the solution is used!