The accounts payable (AP) process presents a significant pain point to finance and accounting processes across many businesses and industries. Despite advances in technology, many AP processes are repetitive and time-consuming, rely on manual resource-intensive processes, and generate unnecessary paper invoices that must be stored….somewhere.
Large-scale efforts to automate the AP process has been fraught with challenges. The digital way forward has been stymied mainly due to transactions that result in non-standard invoicing and unstructured data.
Suppliers generate invoices in multiple formats. These may include a paper copy, fax, a digital document, or a PDF email attachment. As these formats are not standardized, digital or automation software are unable to apply a single process to handle these invoices efficiently.
When these non-standard invoices are submitted, the company’s AP staff or finance team is responsible for entering and verifying the data — often non-standard or incomplete— from the different formats into the company’s finance system. Any discrepancies between the bill of lading, purchase order and invoice must be reconciled. These manual efforts are time-consuming and prone to errors.
Lack of automation leads to negative outcomes
Unfortunately, AP-related errors often translate into duplicate payments, incorrect taxes and, ultimately, loss of profits. In fact, according to a 2016 Institute of Finance and Management (IOFM) Benchmark study, duplicate payments are a common challenge faced by AP departments, with approximately 80% of organizations losing up to 2% in duplicate payments annually. Another 2016 benchmarking survey conducted by APQC Open Standards on Accounts Payables and Expense Reimbursement, notes that 58% of invoices are still keyed in manually into financial or enterprise resource planning (ERP) systems, leading inevitably to a host of invoice errors that may go undetected.
A common business concept is the 1-10-100 rule. This rule-of-thumb model illustrates the hard costs to an organization chasing mistakes and that failure to take notice and correct mistakes escalate in cost the later they are realized.
It costs $1 to verify the accuracy of data at the point of entry, $10 to correct or clean up data in a batch form, and $100 (or more) per record if nothing is done – including the costs associated with low customer retention, and inefficiencies (source: totalqualitymanagement.wordpress.com).
With all this data flooding in by the terabyte, finance teams struggle to keep up using spreadsheets and manual methods. Without automation, they must spend all their hours collecting data and ensuring data quality, leaving little time left over for analysis, reporting and strategic recommendations.
Big time changes with automation
But with an automated solution, it changes everything. Automated solutions offer simplified reporting, planning, forecasting, and analytics. Meanwhile, clear dashboards give access to the data that otherwise would have taken hours to prepare and check. Finally, artificial intelligence can find patterns across complex data sets to unearth insights never before possible.
To help improve the overall AP process and maximize eligible VAT refunds, many companies choose to implement VATBox. VATBox’s automated, enterprise-wide, cloud-based VAT recovery technology helps companies streamline their financial tasks in order create enhanced efficiency and operational control. VATBox delivers unrivaled visibility, compliance, and data integrity, ultimately boosting its customers’ bottom line.The software utilizes sophisticated OCR technology to efficiently interpret and handle scans of paper invoices, reducing invoice discrepancies and paper documents with less employee involvement. VATBox alerts upon identification of duplicate invoices and provides insights on suspicious invoices or high-risk vendor payments. If you’d like to improve your organization’s manual or outdated AP processes, request a free demo here.