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The Accounts Payable function is this the end of the road_
Finance & Accounting, Purchase invoice automation, Accounts payable | 4 Min Read

The Accounts Payable function – is this the end of the road?

Written by:
Neil Robertson on December 4, 2017

    

The growth of cloud software applications that can capture an inbound purchase invoice, digitise it, fully automate the approval process and post it directly into your existing accounting software is heralding the end of the accounts payable role as we know it.

AI and machine learning has enabled the ability to automatically “default” the supplier invoices with the relevant general ledger codes and drop them into the appropriate workflow approval process, including multiple general ledger codes at line level within a single invoice, without any human intervention. These capabilities remove the need for accounts payable to ever touch between 60% and 80% of all purchase invoices processed. There is now no paper, no manual approval process and no filing. Faster approval processes cut both internal and external calls regarding payment and the additional time available can be focused on clearing the “exceptions” being those invoices that require AP expertise for specific department / GL codes, selection of the correct approval processes and invoice query management.

As important, the automation is incredibly simple to achieve.

Email PDF invoices are captured and processed with zero touch. Paper invoices are collated and scanned once a day with the resulting PDF also being processed without further touch.

The invoices are always delivered directly into an invoice register so nothing can ever be lost and the exact status of each invoice is instantly available to everyone that needs to know, including whether it is under query, awaiting an individual to approve it, fully approved and even whether it has been paid. On final approval, each invoice is automatically posted directly into your accounting software.

Nevertheless, some senior financial management professionals still see the automation of invoice capture as a “step too far”. The digitisation of invoices is fully proven, offered by multiple providers globally and has become “mainstream” based on the speed of adoption. Any conscientious due diligence process will confirm this beyond all reasonable doubt. The only barrier to change and the removal of all paper invoices now firmly rests with senior financial management’s unwillingness to accept reality, to the detriment of the businesses they represent.

The process is more robust than any manual paper process. It stops any duplicate invoice payments, has superior anti-fraud validations that checks the VAT number and the bank account details (etc.) match the information held in the accounting software, whilst maintaining a full audit trial of the entire approval process, available on demand.

Cash requirements reporting is delivered in real time from the moment the invoice is received, showing weekly and monthly information.

It highlights when payments are due based on the standard supplier trading terms and can even include payroll totals, mid-month PAYE/NI payments and anticipated VAT returns to keep your finger on the cash requirements pulse. The report can also be exported directly into Excel with a single click to update the corporate cashflow.

Budget holders can see every one of their suppliers, how much they are spending, the status of every current and historic invoice and even search for historic pricing at line level, on demand, from any device. The invoice approvals are much faster, as they can be done from any connected device, including dedicated mobile apps to ensure timely supplier payments, as the best prices are given to our best customers – the ones that always pay us on time. When compared to a paper-based manual process, it is impossible to credibly argue there are any benefits of the current manual process as 70% - 80% of the entire accounts payable function has been removed – permanently - simply because it adds no value to the business.

Unless, of course, someone misuses the ROI argument to protect the “status quo”. Their argument will be that whilst automation delivers up to an 80% productivity gain in the AP function, provides a more robust, more visible, faster approval process, reduces the risk of fraud, stops duplicate invoice payments, ensures the company can pay suppliers on time and gives the budget holders much better real-time information on their supplier, plus finance real-time cash requirement reporting, it will not reduce headcount so fails to deliver a cash ROI.

But is that really the case? Let me explain…

Any valid ROI calculation must include not only the definable cash ROI, but also the less tangible value it delivers. This is clearly demonstrated when applying the same ROI discipline to changing your current accounting software, as without including these less tangible values to the ROI, it means you’re going to be stuck with your existing accounting software for a very long time.

The good news everything I have described can be integrated with and extend the capabilities of your existing accounting software. You simply “plug it in” and go live in literally one to three hours. If you accept that a credible ROI is made up of cash savings and the value it delivers to the business, every business would automate their accounts payable function immediately, why wouldn’t you?  To find out how much, take look at the cost of invoice automation as we have already explained the value and make up your own mind.

 

Compleat have written a free buyers guide that explains how an effective accounts payable (AP) and purchasing automation solution can be implemented in an established business. Download via the link below to read it.

Buyers guide to AP automation and purchasing automation

    

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