How Transforming Invoice Processing Digitally Change Things
Upgrading and improving only selected operations without considering the others can cause hindrance in incrementing productivity. To avoid this, it is necessary that all the processes and functions operate at the same level. Unfortunately, when it comes to digital transformation, accounts payable services and procedures are often ignored, which is one of the major mistakes that many businesses make. The reason being that invoices and suppliers connect naturally to almost all business functions.
Challenges to optimize accounts payable processes
- Most of the incoming invoices are paper-based, which increases costs as a result
- Many exceptions are present, which pulls the team away from other essential tasks and makes it challenging to elevate from the manual processing mindset
- Inefficiently managed accounts payable process leads to lack of compliance
- Ad-hoc methods foster a lack of control
- Incompetent and irregular operations cause refraining early payment discounts.
However, things are improving with the passage of time. As per Smart Insights, 66% of businesses are planning to implement digital implementation. But this is only the commencement of the digital revolution for invoice capturing capabilities. With data technologies making it more essential to evolve information into action and the growing demand of continuous enhancement to competitive strength, there is no doubt that digital transformation in accounts payable is a big priority for numerous organizations.
Digital invoice processing implies that the process of handling financial documents will be automated. This means that all incoming invoices will be converted and analyzed in a digital framework. The process will be precise, enabling businesses to catch errors easily and rectify them quickly. In addition, manual operations will be eliminated or minimized entirely, making processes more efficient. For the same reason, many businesses also depend upon external firms that they can trust for invoice processing services that not only enhance accuracy and timeliness but also help cut additional costs.
Let’s look at some of the main benefits of digitally transforming the accounts payable process in detail:
Manual processing is prone to error. This makes the accounting mechanisms ineffective. In addition, punctuality and order are not commonly visible under manual AP as a massive volume of invoices requires processing. Hence, tracking paper documents itself consumes a considerable amount of time and manpower. In addition, paper documents have a sound potential of getting misplaced or lost. This can lead to unnecessary penalties emanating from missed deadlines of payments.
The presence of disorganization in manual AP is also responsible for the significant delay that can decrease the team’s overall productivity as up to 37% of AP staff spends up to 8 hours resolving AP process-related issues. As a result, payments often get late, and this deteriorates your business relationships.
All these concerns can be dealt with by furnishing the accounts department with intelligent solutions like digital invoicing, robotic process automation (RPA) for ensuring data entry, and effortless extraction and storage of data.
Automated invoicing will only take a few clicks for accounts payable professionals to process a payment accurately. Along with that, redundant checks will be eliminated, optimizing cost and time significantly. As a result, your organization acquires a good reputation for paying bills on time and being responsible financially. In addition, this helps in continuing partnering with vendors when you need more credit extended as a level of trust is now developed with them.
Automation enhances employee productivity
It is natural that employees feel intimidated by automation as they feel that it can take their place in the workflow. However, researches have shown that technology assists in increasing the productivity of employees instead of replacing them. For example, in a survey conducted by Paradigm Electronic, a Canadian electronics manufacturer, the buffing and polishing of loudspeakers were automated using robots. This led to a 50% rise in productivity. The employees that handled manual tasks still had their jobs as they were given new roles as robot programmers.
Likewise, in research done by American Productivity and Quality Center (APQC), it was found that businesses lose a significant amount of money in processing invoices. For example, organizations averagely spent $12.44 on one invoice. However, organizations that implemented better systems had only to spend an average of $4.98. In addition, APQC found that more labor expenses are encountered by the industries that utilize manual invoice processing, and companies that adopt automated systems significantly reduce their processing costs.
Efficient invoicing processes
Accounts Payable workflow consists of multiple checkpoints like approving expenses, ledger entry, approving invoices, queries, keeping records, scheduling payments, and archiving. It can be pretty frustrating to streamline the entire process as each point may require verification. However, by digitizing the invoices, verification becomes seamless.
Let’s take a case of a retail store chain that has partnered to process commodities and payments with the vendors at the end of each month. Such kind of store chain can save a considerable amount of time and resources by implementing invoice processing. Vendors only have to upload the bills on a specific website or app and receive instant feedback.
With the assistance of smart archiving, all the relevant data can be transferred to auditors and managers in real-time electronically. In addition, necessary data can be instantly extracted from digital documents. Therefore, it will only take a day or few hours to make payments and approvals. Along with that, the digital archives provide data transparency in case there is an issue regarding the invoice process.
Automated invoicing solutions make use of optical character recognition (OCR) tools that evaluate information and capture data. It is a hands-off process that dramatically decreases the chances of human error in data entry.
Importing digital invoices more easily than manual data capture
A crucial development in the transformation of accounts payable automation has been the change from technological solutions built to accommodate traditional invoicing to more forward-looking technologies.
With a majority of the invoices being delivered in a hard copy format, automation solutions integrate OCR tools. While it is a pretty advanced process, it still has scope for development, as irregularity in formatting, the complexity of invoices, and other physical artifacts may need manual intervention.
However, all of this is changing as frameworks are getting more advanced: Inspite of capturing data in a physically written form, electronic invoices have the capability to import and directly parse the information into an automated accounts payable solution. Without the requirement to convert physical information into digital, the need for manual intervention and data entry further decreases. This is a particular advantage for firms that deal with international vendors and make payments cross-border, as any kind of language barrier can be seamlessly circumvented irrespective of which language origin the invoice is.
Centralized data management
Supplier and invoice information is acquired and automatically populated for smooth processing. In addition, a cloud-based, centralized solution facilitates smoother communication and collaboration by connecting your current accounting software with your CRM system, ERP system, etc.
Complete data capturing, standardized file format, and role-restricted access to all the information via interactive dashboards make it easy to collate your organization’s data for deriving analytical information and applying it while still fresh.
Digital transformation can be complex. However, businesses still try to do it all without any assistance. This is the reason why over 70% of attempted digital changes do not effectively take place. Therefore if you want to make your digital transformation efforts successful, whether adopting a new content management system or implementing automation, you need a competent firm offering high-quality, reliable accounts payable services to help you streamline the entire process.