Save Time, Money, and Aggravation: Six Benefits of Automating Your Payables Process

Every business is familiar with the arduous process of paying bills for goods and services, not to mention the sea of paper and the information management challenges it creates. Regardless of a company’s size, nearly every enterprise must respond to invoices for utilities, rent, and goods or services in order to perform without interruption. Failure to pay promptly can result in severe penalties or worse – no lights!

The approval of invoices and resolving of billing discrepancies can require many man hours. Inefficiences may prevent organizations from taking advantage of invoice discounts and may result in late payment fees, or even damage to a company’s reputation. Invoice digital capture and automated workflow address these challenges. Together, they provide a seamless flow of accurate and timely information, expediting processing and saving precious human capital for more important projects.

Accounts payable challenges in a paper world

Bills come in all shapes and sizes, with structured and unstructured data located at varying places on each vendor’s invoice. This makes it challenging to review and relay information quickly. Considerable time is required to extract relevant data, match invoices with required backup information, and collect approvals and signatures. With paper-based processes, it is often difficult to make payments in a timely manner, and the repercussions can be staggering. Waylaid papers can result in late fees, and the cost of processing keeps staff focused on the paper chase instead of more valuable activities.

In a paper environment, large volumes of invoices are fraught with the potential for human error. Considerable time can be spent on manual data entry. This inevitably results in mistakes, as well as delays between the time an invoice is received, matched, approved and entered into the accounting system. This time lag can result in duplicate invoice payments. In addition, some invoices that are marked as paid may become misfiled, making it challenging and costly to search for information when it is needed.

Electronic capture and storage of invoicing information, coupled with automated workflow, ensures that the right information is available to the right people for action at the right time. It dramatically reduces errors and makes information accessible, while providing more security than is available in a paper-processing environment. Automation saves considerable staff resources and ensures prompt payment. In addition, it provides the details needed for easy audits, regulatory compliance, and process improvements.

There are many ways that a company can tap into automation for invoice processing improvement. Here are six benefits of improving the process with electronic capture and automated workflow.

1) Eliminate paper at the source: make information available instantly

Digital capture of invoices, including those that contain unstructured data, paves the way for easy invoice processing. The scan and OCR of invoices saves time and money. High-quality capture systems provide the ability to locate and capture data on multiple pages, regardless of location and paper size. These robust systems provide a rules-based process that goes beyond data recognition. They provide instant, thorough validation and look-ups to outside databases and ERP systems, math checks, and recognition confidence ratings, flagging items for and easing the review of items in question.

The optimal capture solution can apply a number of technologies to immediately recognize whether an invoice is one that has been previously received. If so, the system will “remember” where all the pertinent data is located. If it’s new, the system will use a number of algorithms to find and store these field locations for maximum capture speed and accuracy the next time this invoice appears.

2) Expedite approval: enable quicker decision making and greater information security

After an invoice is received, the invoice has to be approved for payment. Invoices may need to be matched to purchase orders, and written approvals or signatures may be required before payments can be made. Some invoices may result in suspension until a condition is met or proof of product receipt (or services) is given. Other payments may be denied.

With automated workflow, invoices can be matched to purchase order numbers during the capture process and then sent into a queue to export for immediate approval, suspension, or denial. Authorized parties can review, annotate, or sign the invoices appropriately from remote locations, making it possible to elicit decisions almost instantly. Not only does it remove the delay of interoffice mail, but it also removes the need to wait for authorized persons to return to the office to render needed approvals, and eliminates the possibility that the papers will be overlooked or delayed. Data on invoices can be used to set automatic alerts that notify the appropriate party when a specific action must be taken, helping accounts payable offices to avoid late penalties. In addition, organizations have an overview of the status of a particular invoice and the total payables in process.

3) Save money: take advantage of quick-pay discounts and avoid penalties

We’ve all heard the old adage that states “A penny saved is a penny earned”. Even though this is not necessarily the most important incentive for most organizations to automate, those with the cash flow to support early payments and avoid late ones may take this to heart as they scramble to take advantage of early payment discounts. In order make the most of discount opportunities, invoice information has to be entered into the payables system quickly so that payments can be made before the discount due date. In a paper world, “2/10, Net 30” can be challenging because of the time needed just to enter the invoices into the payables system. With the proper capture and automated workflow solution, large volumes of invoices and their discount and penalty information can be entered as payables within hours of their receipt, and approved and processed in time. A penny saved is truly a penny earned…and the savings can be significant.

4) Integrate with accounts payable systems: leverage data and remove errors

Too frequently, organizations have valuable information in disparate silos that can not communicate with each other, making management of this information daunting – even when it is all stored electronically. Integration of automated workflow with line-of-business applications such as a payables system makes it possible to extract and share data between applications. This helps companies to do more with the data they already have on file. By integrating automated workflow with your invoice processing system, another layer of data entry can be removed. Customer and payment data that has been captured and approved for disbursement can be entered into the payables system, making the process considerably faster. At the same time, the possibility that an approved invoice will have an error in the corresponding check or payment can be eliminated.

5) Comply and audit more easily: prove payments in a snap

Many of us have faced the dreaded moment of a creditor informing us that payment has not been made when we were sure it was paid on time. Proving this with facts can take hours in a paper system, especially if an invoice never was filed, or – even worse – was filed in the wrong location. When information is stored digitally, authorized persons can get an overview in an instant. Digital workflow makes it possible for staff to see where any invoice is in the process, to track who was responsible for which actions, and at what time. Detailed reporting assists the staff in tracking down information quickly and accurately.

In addition to internal tracking, workflow reporting leaves digital trails that show every action related to an invoice. The electronic storage system can then be queried for whatever data is needed, presenting an organized hit list with the desired information. The four ‘Ws’ relating to payables transactions – Who authorized payment, What was authorized, When it was authorized and paid, and Why the payment was made (or denied) – can be substantiated definitively. An electronic audit trail can be created in minutes instead of hours, helping a company to comply with audits and regulations, and to meet service level agreements.

6) Maximize productivity: process, analyze, evaluate, improve

Effective deployment of digital capture and automated workflow means that the time previously spent on processing invoices in a paper environment can be redirected toward more meaningful work. Instead of handling inquiries, management and staff can spend their time strategically reviewing and analyzing data related to payments made, and project future costs and trends more easily. The consistency and completeness of information facilitates thorough analysis, helping management to make informed decisions more quickly.

Workflow reporting also enables managers to gain an overview of productivity and processing in an instant, and enables them to improve procedures continually. Bottlenecks caused by extreme volumes or individual inefficiency can be discovered before they become problematic, and changes can be made to improve the routing of documents. Management can also adjust workload of individual staff members whenever volumes increase or if there is a concern about productivity or meeting deadlines.

Summary

In conclusion, invoice capture facilitates information accuracy, consistency, and completion. Workflow ensures that this information is accessible to the right people at the right time for the necessary action. A company’s work can continue without interruption regardless of the location of the workers, as long as they have access to the Internet. Less time is spent on the grand paper chase, and as a result, payments go out the door more quickly. Detailed reports and analyses contribute to continually improved processes, leaving more time for other, more meaningful pursuits.

Article by: Arthur Gehring, Datacap, Inc. and Optical Image Technology, Inc.

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