The Different Looks of AP Automation

By now you're probably familiar at least with the term, "AP Automation" and maybe how it works. You might know someone that uses it or came from a company where AP Automation had been in place for years.

The concept of AP Automation is not new and has been around for a number of years now. This idea of automating accounts payable has and is still being adopted by companies of all shapes and sizes and in host of different types of industries. You can find AP Automation being used in industries like manufacturing and healthcare, in retail and insurance, in distribution and at pharmaceutical companies. 

In today's economy, it's more about process efficiencies than it is cost reductions, most often it is the case that both go hand-in-hand. If you're more efficient at what you do, your costs naturally come down.

As a subset of this approach sometimes the main focus is on process the Non-PO related invoices as a first phase since these invoices are typically the most time consuming and in many cases reflect a higher percentage of the overall invoice volume.

When it comes to AP Automation everyone seems to have their own idea of what AP Automation means to them.  They have different ideas of ways to use AP Automation to increase efficiencies. The ideas you have may be different than the ideas that the AP Automation Vendors are recommending to you. Maybe your AP Automation Vendor is offering or recommending that you do things a certain way, or utilize their systems capabilities in a way that doesn't really provide the help you need. 

If you've been investigating AP Automation then you might realize by now that the costs for AP Automation can vary greatly which can make the decision making process to select the right partner or system a very confusing and complex decision. The last thing you want to do is pick the wrong system. 

The good news is that there are some partners out there that offer a "flexible" approach to AP Automation so that you don't feel like you're "locked-into" doing things that you're not necessarily ready for or need. 

Below are a few of the different looks of AP Automation

GETTING RID OF ALL THE PAPER APPROACH
Front-End Invoice Receipt/Capture: sometimes just getting rid of the paper invoices is all anyone wants to do. The headaches caused by all the paper can be enough to drive any AP Department crazy! Getting rid of all the paper can be accomplished a few different ways but generally involves scanning the paper invoices  and capturing the emailed invoices upon receiving them. Now not all AP Automation systems are created equal so be on the lookout for a system that can receive and process the emailed invoices electronically from the email and be aware that some systems require you to print the emailed invoices and scan them in order to get them in for processing. 

Once the paper is gone the next step is to get invoices into the correct person's hand for review and approval. This is accomplished with workflow routing, the workflow will typically auto-route invoices to the appropriate person for review. Since this process happens electronically and systematically there is no need for paper invoices ever again! 

In many cases this is where many companies begin with their quest for process improvement. Although the vast majority of companies may want to get to full end-to-end automation the overall task may seem like a daunting one that may or may not ever gain internal support.

GETTING RID OF ALL THE PAPER INCLUDING AUTO-MATCHING WITH ERP INTEGRATION
Front-End Invoice Receipt/Data Capture with ERP Integration:  many organizations not only deal with a high number of incoming supplier invoices but they are also burdened by the task of manually keying all of the invoices that need to be paid into their financial/ERP system. This process is typically prone to errors and delays due to the fact that we are relying solely on the talents of individual people to manually perform these data entry tasks. The cost of manually processing invoices is driven up significantly when factoring in the costs of manual invoice entry into the financial/ERP system.

When it comes to processing supplier invoices nothing can be more time consuming than invoices that have a purchase order assigned to them.  The time it takes to manually match these invoices against purchase orders and or receipts can take minutes to hours or in some cases days. With AP Automation these purchase order based invoices can be automatically matched systematically and only involve a person when an invoice doesn't match the purchase order.

To take AP Automation to the next level requires the capability of extracting the details from all supplier invoices at the point of receipt. This is typically achieved through a series of tools called OCR (Optical Character Recognition), data extraction and validation and software engines. With this approach data is efficiently read, extracted, converted to useable data which can now be delivered and  integrated into any third party application, financial/ERP system. 

AP AUTOMATION COMBINES WITH ELECTRONIC PAYMENTS TO ELIMINATE PAPER CHECKS
Front-End Invoice Receipt/Data Capture with ERP Integration and Electronic Payments: to many experienced with AP Automation they will tell you that electronic payments are the "icing on the cake". just imagine not only streamlining the entire accounts payable process by automating the receipt, capture, routing, coding, matching and approving of your supplier invoices while eliminating the need for manual invoice entry into the financial system, now add on that you will actually get money back each month based on paying suppliers with a virtual credit card. 

This is certainly an important decision however many CFO's, CAO's and Finance Executives find that the cash back incentives offered with virtual payments is not only a savings, but a revenue producer which can help improve the overall bottom line. 

In conclusion there are many factors when deciding to investigate AP Automation as well as determining what service or solution is right for you. Download our white paper "Taking the MYSTERY Out of AP Automation" to further help you make sense out of all the possibilities!