This article was originally published in the Winter 2018 issue of The Record. Subscribe for FREE here to get the next issue delivered directly to your inbox.
According to recent research from the Institute of Financial Operations (IFO), it takes 45% of accounts payable (AP) departments between six and 25 days to process a single invoice (from receipt to payment approval). Invoices without a purchase order – which typically involve an approval process encompassing multiple individuals – take even longer.
For manufacturers, this lengthy manual process is a burden on valuable resources. AP employees need to match the receipt with the invoice and purchase order and then key-in data – a process that often requires staff from different departments to scan invoices and mail them to the appropriate AP individual. This manual routing of invoices for approvals is not only expensive and time-consuming, it also makes it difficult for staff to gain visibility into the status of invoices. A lack of visibility into invoice routing also opens the door to lost invoices, which can result in late payment penalties, missed opportunities to capture early-payment discounts and supplier inquiries.
This isn’t the only problem. Paper-based accounts payable processes limit visibility in several ways: key data is not captured; data is hard to access; data is not readily available; systems are fragmented; and decision-makers cannot access critical variables.
There is a solution. Best in class manufacturers recognise that they need to focus on keeping their factories going and getting products to customers on time and on budget – and that’s why they are implementing AP automation tools that work directly within Microsoft Dynamics 365. These tools come into play at the beginning of the process, when manufacturers are sourcing materials either through regular suppliers or as one-offs through purchase orders (POs) raised through a supplier.
Using optical character recognition (OCR) and machine learning technology, AP automation software can read and match data from invoices and POs. This enables organisations to accelerate workflows, automate document indexing and storage, more tightly integrate accounts payable with back-end systems, and generate timely reports tailored to stakeholders.
These powerful capabilities bring a new level of visibility and control to finance operations, easing the regulatory burden and putting decision-makers in full command of their cash, which, in turn, benefits the entire enterprise – from accounts payable and procurement to treasury and the senior management team. Most importantly, it transforms accounts payable from a tactical operational function into a key tool for strategic, business wide planning.
Andrew Scarborough is commercial product director at Bottomline Technologies
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