Accounts payable efficiency is essential to maintain the health of any organization’s supply chain.
Missing invoices, reconciliation issues and late payments can negatively affect supplier relationships and cause supply disruptions, leading to higher costs and operational bottlenecks.
According to Aberdeen Group, best-in-class companies that have achieved accounts payable efficiency are:
Aberdeen’s “Best-in-Class Invoice Processing Capabilities” reports on a survey of top pressures facing AP teams. The biggest pressure is difficulty in locating and managing paper-based documents. Managing AP on paper leads to inaccurate data, mistakes, and rework. It takes longer to complete tasks, leading to a backlog of work and increased costs. More significantly, the pressures that affect AP teams can cause real problems in the supply chain, including higher costs, damaged supplier relationships and the possibility that strategic vendors will look elsewhere to sell their goods.
Fortunately, premier accounts payable solutions offer capabilities that directly address these challenges. Premier AP automation platforms also integrate with ERP and accounting systems, allow these to leverage business process automation and workflow automation.
Aberdeen also notes that automated data extraction from paper invoices can greatly increase accounts payable efficiency. By removing the need for data entry, automation frees up AP staff resources and greatly reduces opportunities for costly errors. Intelligent Data Capture (IDC) can rescue AP teams from low-value, error-prone, time-consuming work. As part of an AP automation platform, IDC systems recognize, classify, and extract key information, and then automatically route the information to document workflows for review and approval. AP platforms then recognize the same data on future invoices, and initiate automated processing, reconciliation, and payments.
Aberdeen notes that AP teams can drive significant benefits that impact their bottom line. For example, the on-time payment rate among best-in-class organizations was 91%, compared to 41% among laggards. Most importantly, best-in-class organizations cut their invoice processing cost almost in half, from $6.43 to $3.37.
Capabilities such as data extraction, PO matching capabilities, and workflow automation are critical to achieving accounts payable efficiency, which reduces costs for investments in growth. Greater insight into business operations empowers business leaders to easily see how many invoices are received, how long each takes to process, which suppliers are the most compliant, and how much spend is conducted against each contract. This visibility helps business leaders better leverage their supply chains.