Where is the "value add" in accounts payable?

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Every accounts payable function “works”. Invoices are received, processed, approved, posted to the accounts and filed. The supplier is paid mostly on time and the management accounts and cashflow reports are accurate enough.

The “value add” in the process is the knowledge and experience of the AP team

  • What is the correct GL analysis for the invoice
  • Who needs to approve it
  • Supplier queries

Everything else just deals with the process.

Unfortunately, over 70% of the time consumed within AP is dealing with the “everything else”. These are the mundane, boring and time consuming activities that are required to deal with paper invoices.

They include opening the post or downloading / printing emailed invoices. Registering the invoice, batching / dispatching them for approval. Chasing those approvals, scanning the invoices, posting them to accounts and then filing them.

Yes, the current process works, but only 30% of the time and cost is actually adding value, the rest has become a complete waste of time and resource.

Almost all of your suppliers can send you their invoices via email and the reducing rump of paper invoices are scanned on arrival. We now have a 100% paperless process. All the emailed invoices are automatically captured and electronically processed to deliver the key information in electronic format without any intervention by your staff.

All invoices and the attached PDF image arrive in the AP work trays. The GL analysis and appropriate workflow are selected and submitted for approval. On electronic approval, the transaction is posted to your accounts / ERP software.

The invoice is electronically filed for simple and immediate access on demand. The current status of every transaction is available on demand and all processed invoices can be found and reviewed through comprehensive document management.

It currently costs you between £1 - £2 to process a single invoice. By automating the “zero value add” aspects of the process, the cost is reduced to between £0.20p - £0.40p per invoice.

As important, you have released up to 70% of your AP resource from boring and now completely pointless tasks so they can undertake more valuable “added value” activities.

The benefits of Invoice Automation are so compelling, it is amazing that so many organisations have stuck with their current processes.

A manual typewriter also works, but we all moved to better, more automated tools. It is time to do the same with accounts payable.