The Manual AP Process and Invoice Automation
Manual AP Process
In organizations where accounts payable invoices are handled manually, the process would typically be as follows:
- Open the mail, sort the vendor invoices based on company requirements, and distribute.
- Attempt to process the invoice in the company’s business system.
- If material has been received, the company can continue the process, checking the quantities, costs, freight, tax, and any other charges the vendor may have included.
- If material has not been received, the payables employee places the invoice on the bottom of their stack and repeats the process until the material comes in.
- If the correct materials are received, the company processes the payable in their business system.
- If the materials received do not match the original order, the payables employee will have to clear the record from the business system, document the issue, and contact the buyer or salesperson for resolution. In this case, the invoice may be reviewed multiple times before the resolution is obtained.
- Once the invoice is processed, the paper document is filed on-site for some period of time (hopefully in the right place so it can be retrieved later if needed) and eventually archived to off-site storage.
Towards Invoice Automation
Companies looking to streamline their accounts payable process are rapidly adopting automated invoice processing solutions that leverage OCR (optical character recognition). To determine whether these technologies would provide the desired automation, it is important to consider several relevant factors including:
- How long does it take the company to open and distribute mail?
- Is it a common practice to circulate multiple hard copies of the same invoice amongst various departments?
- What are the costs associated with retrieving invoices to address potential disputes, audits, etc.?
- Are employees struggling to keep pace with increasing volumes?
- Does your company consistently maximize early payment discounts?
- What percentage of the company’s invoices are currently processed through electronic data interchange (EDI)? Do they import efficiently? Companies will find that while their vendors may send invoices via EDI, their accounts payable department has to consistently review and process invoices manually.
- What percentage of invoices typically have issues requiring further review? Do particular problems reoccur frequently? Companies need to remember that invoice processes are created internally. Therefore, if a company is unwilling to make changes or evolve, automation may not accomplish the desired goals. For example, if a company calls in purchase orders to a supplier but takes their time in processing the purchase orders within their business system, no amount of automation will help prevent their accounts payable employees from encountering the invoice multiple times.