Chris Huff, Chief Strategy Officer, Kofax
It’s widely accepted that removing paper-based processes from accounts payable is best practice. So why is it that paper still continues to dominate in many organisations? According to Billentis Market Report for eInvoicing, 70% of all invoice processing globally is still paper-based.
Consider the consequences of a single typo as a paper invoice is processed. Working from an incorrectly entered due date, the company fails to pay the vendor early, losing out on a vendor discount. If it misses the correct due date, its supplier takes things a step further and delays delivery of essential goods. A core product is delivered late to market, thus missing its revenue targets.
A small error, yet a significant one.
But if paper is the enemy of on-time payments, AP automation is its most trusted friend. Intelligent automation offerings that include capabilities like cognitive document automation can extract, validate and classify paper and other invoice sources, resulting in up to 85% straight through processing. By taking the paper out of AP, intelligent automation increases data visibility and reduces risk, but it offers numerous other benefits as well.
Reduced costs. Few ideas are more cathartic than the promise of cost savings. According to Ardent Partners’ State of ePayables 2017 report, 63% of accounts payable leaders identified reduced processing costs as an AP top priority for their department. Automation cuts these costs in half. For instance, in its worldwide electronic invoicing survey, EY found that 52% of organisations said cost reduction was the principal advantage of paperless processing. According to the survey, the cost of an e-invoice is less than half that of paper (7 euros compared to 15 euros).
Realise discounts. Costs savings often come in the guise of reduced labour. But greater visibility into payment terms also allows companies to capture discounts from paying on-time or early. These savings can quickly add up.
Accelerate payments. Eliminating manual entry also results in more rapid processing cycles. EY found that e-invoices were handled in three days compared to 15 for paper. What’s more, survey respondents said a full-time employee was capable of processing 6,000 paper invoices a year but could check 90,000 electronic invoices. That’s a significant increase in productivity.
Be more agile. Intelligent automation removes processing complexity. Invoices arriving from multiple sources and in multiple languages and formats create numerous complex downstream processes, which take longer and cost more. Cognitive document automation, a component of Intelligent Automation, simplifies this process by extracting, validating and classifying paper invoices as well as invoices from any source or format. This includes email, scan and fax, as well as formats such as TIF, PDF, XML, CSV.
Optimise use of resources. Data entry is painfully manual, and the volume and complexity of invoices makes it difficult for organisations to keep pace at their current staffing levels. However, with intelligent automation, AP teams spend less time on low-value tasks and more time focusing on strategy.
Increase accuracy. With intelligent automation, businesses are able to take advantage of 2-way (invoice-to-purchase order) and 3-way (receipts) line matching. These options optimise validation outcomes, reduce errors, ensure timely payments and create the ability to capture early payment discounts.
Streamline invoice processing end-to-end. Companies processing invoices outside of their ERP systems experience more delays and errors. When they integrate AP automation with their ERP, however, they are able to validate against supplier and PO information as well as gain complete visibility and control over financial processes.
To keep pace with changing business demands and stay competitive, companies need to embrace more automation. Replacing outdated systems with intelligent automation allows businesses to streamline workflows and achieve better outcomes, including lower cost-per-invoice, reduced cycle times and early-payer discounts.