Payable Automation Pays Dividends
- Labor-intensive manual accounting systems and paper-based
invoices have been plaguing accounts payable departments for
decades. Departments relying on manual systems are finding
that adding staff does not solve the inherent problems of
unrecorded liabilities; duplicate, inaccurate, or unauthorized
payments; and misappropriated cost allocations. These departments
are struggling to meet their organizations’ basic need
for visible, timely, and accurate financial reporting and
control. And compounding the problem, their manual systems
make it difficult, if not impossible, to address the critical
issues at the heart of compliance with the Sarbanes-Oxley
with pressure to reduce costs, comply with strict process
controls, and provide accurate and timely financial reports,
best-in-class organizations have streamlined the invoice
capture, review, coding, and approval process. They have
also leveraged effective technology solutions that not only
support process improvement but also deliver detailed analysis
they automate invoice processing, companies realize many
benefits throughout the accounts payable and finance department,
including the following:
Significant cost savings driven by more-efficient processes;
with the latest regulatory requirements mandating visibility,
timeliness, and accuracy of financial reports, due to
the implementation of proper controls;
Increased visibility throughout the process, due to robust
Improved supplier relationships by effectively managing
the payables process;
cash control and management; and
Ability to track the unrecorded liabilities typically
associated with non–purchase order–based purchases.
Cost Savings/Validating Compliance
a study by the Aberdeen Group, organizations reported between
40% and 60% savings by implementing the right invoice automation
solution. Although results can vary based upon the package,
in many cases the investment pays for itself in a matter
concerned about the ongoing costs of SOA compliance recognize
that automation is a cost-effective way of accomplishing
their goals, enabling them to document internal controls
and compliance processes. The absence of documentation for
internal controls has become a major issue for many companies,
as is evidenced by audit results. Using technology, companies
can review and streamline processes, and build the rules
into the system to ensure that they are maintained.
in Implementing an Automated System
technology can provide substantial benefits, it’s
important for companies to accurately assess what they need
before they automate. Evaluate the processes that are currently
in place. Are there better or more-efficient ways to accomplish
tasks? Are there other systems, such as enterprise resource
planning systems, that should be integrated with the invoice-processing
interested in improving invoice processes through automation
should evaluate three main functions:
Capture: How does the information get into the system?
Can it handle both paper-based and electronic invoices?
Business process: How is the process supported and controlled?
How much effort is involved in supporting the company’s
Reporting: How can the information be accessed, and by
whom? Do reports need to be built for each query?
goal of the capture function is to eliminate as much manual
data entry as possible. Organizations need to pull information
not only from invoices, but also from the ERP/financial
system’s vendor master file. Invoice capture can be
handled through a combination of imaging/OCR technology
and electronic invoice integration.
invoice data have been captured and confirmed, invoices
must be routed for review, approval, and coding. Coding
information should be validated against the general ledger
chart of accounts, and each person should be shown only
the codes that she can access. To control the approval process,
the automated solution should allow invoice routing only
to those with the authority to approve invoices.
automated solution should also provide access to all invoice-related
information so activities can be monitored and data can
be analyzed. Where necessary, users should be able to see
the original invoice in question. It is important to know
when actions were taken, and by whom. This will allow organizations
to troubleshoot issues and allow auditors to verify that
policies and procedures are followed.
raises awareness about current performance and facilitates
proactive planning and decision-making. For example, to
more effectively manage finances, companies should be able
to monitor productivity levels, quantify unrecorded liabilities,
and accurately forecast cash flow requirements. Reporting
enables better visibility, and will reduce customer service
time with vendors. Because vendors will be able to answer
many of their own questions, AP staff will have more time
to address the exceptions and focus on value-added activities.
considering an out-of-the-box application, make sure it
automates the full scope of accounts payable tasks. Some
other types of solutions require extensive customization,
which is costly and time-consuming.
enables organizations to streamline and improve sometimes
archaic processes. To keep up with financial pressures and
regulatory requirements, savvy organizations are implementing
fully automated technology solutions and reaping the benefits.
Furth is general manager, North America, for BasWare,
Inc., a leading provider of software solutions that automate
the purchase-to-pay process. He can be reached at 203.487.7910