You’re constantly told that AP automation creates substantial benefits for your company. Now here’s a step-by-step description of how it all works.
Automating your invoice processing workflow drastically reduces and, in some cases, eliminates the two main obstacles that slow down your approval process. Those two obstacles are paper (POs, receipt of goods, and invoices) and manual processing. The other benefits you realize with an AP automation solution are full visibility into each invoice status and vendor history as well as faster resolution of invoices and exceptions with suppliers. To discover all of the benefits automating the invoice approval process provides, download this e-book, “The Definitive Guide to Accounts Payable Automation.”
To see how automation streamlines the workflow and approval process, you need to look at the five stages that a B2B transaction goes through, from PO to payment.
- PO Requisition, Approval & Delivery – Successful implementation of an automated solution results in a breakdown of silos and a buildup of collaboration between functions…when it comes to transactions, this collaboration is between procurement and accounts payable. Because both functions are using the same automated PO requisition system, the POs are configured and managed more efficiently. Once generated, they can be routed for approval and then sent digitally to suppliers.
- Receiving of Invoices – This is a truly holistic approach of receiving 100% of your invoices in an automated fashion that makes all invoices appear to users as “e-invoices” regardless if they were created on a piece of paper, an email, or a true electronic invoice. A key approach to automating the invoice process is to insure that a supplier can remit invoices in the formats they are capable of, physical paper, email with pfd attachments, electronic invoicing (EDI, xml, etc) and a supplier portal exists that enables suppliers to digitally submit invoices which are then automatically routed through a proscribed workflow. No chance of lost documents or mis-keys.
- Invoice Processing – When processing invoices automatically, there are a number of steps that streamline the process and ensure accuracy. For 3-way matching invoices, invoices are matched against relevant POs and receipt of good documentation within required tolerances. This validates pricing and terms as well. Straight through processing occurs when invoices that pass the matching step are automatically sent straight through to the company’s ERP or AP system for payment. Exceptions caught in the matching process are automatically re-routed for exception handling to the appropriate person, the requestor on the PO, the purchasing department, the receiving department, etc. For cases of non-PO based invoices where authorization is stipulated, the “e-invoice” is sent to those people for approval and then goes through for payment.
- ERP Integration – When you implement an AP automated workflow and invoice approval solution, the solution should be ERP-agnostic. That will connect your e-invoice processes directly to your ERP system, without disruption. This means that even if you change or upgrade your ERP system, the invoice approval and payment process will still function with no need for complex synchronization processes or intense IT involvement.
- Payment & Remittance Management – This step is too often omitted when companies adopt e-invoicing, but considering the cost of processing and mailing paper checks, it should be taken seriously. This is the last step (and for your suppliers, the most important) in your purchase-to-pay process and should be part of your electronic transaction. Electronic payments can be accomplished through ACH or virtual credit card. But not every supplier will accept e-payments, so companies should select a provider that will pay providers directly in more traditional formats, including paper checks.
Automating these stages will unlock the efficiencies that reside within your accounts payable processes, giving your staff and yourself the freedom to engage in more strategic tasks and initiatives that can help your company achieve its goals.
Download the e-book now and start your AP department on the road to greater efficiencies, reduced costs, and a larger, more strategic role in the company.