While companies strive to digitize and transform their operations to boost efficiency and improve service, the reality is that the digital world has continued to grow increasingly complex. According to a recent survey from the Institute of Financial Operations (IFO), a growing diversity in the channels through which supplier invoices are submitted to a firm, as well as the diversity of ERP and other business systems related to invoice data and document handling, has led to higher complexity and greater inefficiency for accounts payable invoice processes.
To address the challenges of increasing complexity and process inefficiency, many corporations have turned to share services organizations (SSOs). However, according to IFO’s survey, most organizations perceive SSOs as one of the contributors to increased complexity for their AP processes.
To overcome the perception as well as the reality of complexity when it comes to outsourcing processes like accounts payable invoicing, Shared Services Organizations will need to rely on accounts payable automation, supported by intelligent data capture and digital transformation technology. The good news is that today’s automation solutions are far more intelligent and flexible than in the past — allowing SSOs to create models for process automation that can apply to a wide range of customer – specific requirements.
Here are four ways that accounts payable automation can help SSOs further streamline operations and add value for their clients.
According to IFO, receiving invoices from multiple channels was the biggest contributor to AP process complexity. Today, half of invoices arrive as paper. One third of invoices arrive via email, with 19% submitted via EDI, followed by XML (7%) and Fax (5%). Relying on manual processes to manage their multiple channels can only achieve a certain level of efficiency. Today, smart process platforms that rely on intelligent capture technology can automatically classify, file and index documents from any channel. These platforms, including Artsyl’s docAlpha digital transformation platform and InvoiceAction application, can identify document types, extract relevant data from scanned paper and digital invoices and automate 3-/4-way matching and exception handling based on standardized AP processes.
Increased complexity for AP invoices potentially means increased costs for shared services organizations, which either translates into lower profits or reduced price competitiveness.
To continue to increase efficiency, shared services organizations need to understand the productivity of staff, and the effectiveness all the steps in the AP invoice process, including data capture, classification, extraction, validation and the average time it takes to process an invoice.
AP Process automation optimizes the efficiency for each step in the procure-to-pay process and provides real time reporting and analysis of process cycle times, providing the ability to continually improve the process and eliminate bottlenecks.
According to research from The Hackett Group Automation, AP Automation empowers businesses to capture seven times as much in early-payment discounts (as a percentage of spend) compared to manual processes. Automated AP solutions allow firms to gain more timely visibility to general ledger accruals and cash flow, so they can optimize early pay discounts versus available cash. Timely access to this information helps businesses make better working capital decisions, gain visibility into trends related to Cash Conversion Cycles, Days Payables Outstanding and Days Sales Outstanding to gain leverage for contract negotiations.
Shared services organizations have diverse audit and compliance requirements. The ability to instantly access images and data of processed invoices makes it easier for SSOs to comply with increasingly complex and diverse compliance requirements. Automation provides visibility and insight into every stage of the accounts payable process, from receipt through validation, approval and posting.
Relying on automated AP solutions, managers have real-time visibility into the status of invoice approval and exceptions resolution, and audit reporting on each review, edit or approval function. Shared service organizations can use historical and current information to identify the source of exceptions or bottlenecks; take manual or rules-based actions, such as approval or escalation; and adjust staff functions to optimize performance.
Enhanced visibility also enables CFOs to gage the financial health of the organization, improves treasury’s decision-making, and provides sourcing teams with data on spend patterns and trends for supplier negotiations.
To learn more, contact your Artsyl account representative to learn how smart process technology can drive AP automation and boost efficiency for your SSO firm and its clients.