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A Key Challenge in Accounts Payable Process Automation: Part 4

Ted Ardelean
by Ted Ardelean
January 13, 2016
BPO Bulletin

In the past five years several technologies have converged with the P2P process from different directions including procurement, AP and e-Commerce networks. The result is more confusion and work for the buyer. All these solutions have their strong suit but none have solved the problem of invoice conversion from originating media to ERP-formatted invoice.

While companies seek to replace tedious, costly and error-prone manual data entry with electronic invoice processing, eInvoicing solutions aren’t always the answer. Contrary to expectations, the arrival of invoices in different formats, from paper to eInvoices to EDI to PDF, has actually further complicated the invoice processing job because now AP departments have to manage many incoming channels and invoice formats.

The good news is that technology in the area of invoice conversion has progressed to the point where it does not matter what the invoice looks like or what media it arrives in. What matters is having the information on the page and the ability to fix incorrect data or fill in missing data automatically.

Automated invoice conversion solutions can handle multiple invoice media types (paper, PDF, spreadsheet, fax etc.) where data needs to be converted to a standard ERP digital format. The process involves two steps: conversion from arriving media formats (such as paper, fax, and email attachments) and validation processing based on business rules.

The AP department only works the exceptions the business rules cannot resolve and require a human touch. In a fully automated PO process, assuming good vendor controls it is possible for upwards of 98% of the invoices to pass through the process hands free. We have a client receiving 12,000 paper invoices a month and only about 30 require manual intervention. The invoices are checked to ensure that they contain all the required information the buyer needs to match the invoice to the PO or relevant ERP system and efficiently process the payment. All invoices flow through the same process and are consistently checked and validated. When an invoice conversion tool is coupled with P2P, ERP or AP workflow outside the ERP system, now you truly have automated the last manual activity in the P2P value chain. The elements inside invoice conversion tools include data recognition (optical character recognition), business rules engine, data extraction, sorting and automated classification.

Today we have technology that can process an invoice without human intervention from PO placement to payment. But, we still process the majority of invoices manually at least at some point in the process. When implementing new P2P systems, we have to take into account and expect that not all suppliers will submit the invoices electronically using the tools provided to suppliers. To make the new P2P system pay off in terms of efficiency and ROI, a separate automated invoice conversion system may be need to onboard the paper invoices and make the end-to-end P2P process as efficient as it can be.

Feel free to visit the Accounts Payable Services page of our website for additional information on industry trends, case histories and more.

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