Accounts Payable (AP) departments often struggle with old manual processes and a lack of integration with ERP systems.
“Invoice processing may look straightforward but there are complexities and challenges that exist from a process and technology standpoint,” explained Chris Preston, senior director, digital experience strategy and business development at Oracle.
Preston and Nilay Banker, founder and CEO of Inspyrus, discussed strategies to improve the invoice processing journey during a CMSWire webinar, "Next-Generation Accounts Payable Automation and Dynamic Discounting."
What You Want
Most organizations want their AP systems to help them reduce costs for operational efficiency. They expect more effective cash management. They need strong processes for accruals, financial reporting, regulatory requirements and the ever-present need to control costs while at the same time improving relationships with suppliers, Preston said.
“AP processing is at the center of all of it,” Preston said. “It looks straightforward from a high level.”
But then there’s reality. Oracle found 60 percent of all invoices arrived in paper or email format. That requires a manual process that is costly and prone to error. Often it can take up to 20 days to process, which points to opportunities for improvement.
And too often, Preston said, ERP systems are not integrated with invoice-processing software. They continue to work in silos, which is compounded for global companies supporting multiple ERPs.
Common Missteps
AP system problems typically start where data is captured and extracted from invoices.
“We found a very high percentage of invoices end up with exceptions,” Banker said. Specifically, 55 percent end up with more than two exceptions, 15 percent have two exceptions, and 12 percent have one exception.
According to the University of Southern California, exceptions occur when:
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- An invoice requires authorization that has not been completed
- The cost of an invoice exceeds the unit cost committed on the purchase order
- The quantity of items on the invoice exceeds the quantity committed on the purchase order
- Product items appear on the invoice that were not included on the purchase order
The more exceptions, the worse off the user experience. Financial reporting becomes challenging. It’s inaccurate until exceptions are processed and invoices get approved. It lacks visibility. Users cannot track invoices as invoices get lost between four applications.
“The workflow engine is not truly integrated with the ERP systems,” Banker said.
Better Way
Combined with Oracle’s WebCenter product suite, Inspyrus uses its account payable suite of products to help enterprises:
- Use good quality data. You should not send out bad data to the ERP system. Fix the data upstream in the process.
- Use best-practice business process. All actions are included in a streamlined and unified workflow.
- Use a single, AP-focused application. A fast and integrated real-time with multiple ERPs within a single instance of the Inspyrus application.
- Automate, automate, automate. Provides automated invoice creation, purchase order payment verification, GL coding and tax matching. All exception-free.
- Complete visibility. End-to-end visibility for operational staff, executives and auditors.
- Collaborate with suppliers. Collaborate with them and provide self-service access.
Oracle’s Preston offered some questions for organizations to ask themselves as they try to shore up their AP process:
- What is your business strategy to reduce AP costs today and as your business grows?
- How are you effectively managing cash according to current business trends?
- How easy is it for your suppliers to get access to information about their invoices and payments?
- How successful are you at capturing early payment discounts from your suppliers?
- How are you managing AP audit and compliance?
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