Category Archives: Accounts Payable

Building the Business Case for Digital Transformation of AP [Part 2]: 5 Key Points That Can Impact Project Success

Part 1 of Paul Tucker’s blog series on how to build a business case for accounts payable (AP) automation prompted me to share some trends that I’ve noticed over the last 20 years. In that time, I’ve seen leaders in finance and procurement both succeed and fail in getting projects funded, resourced and scheduled. In some cases, projects went ahead but there was a 3-7 year wait.

In Part 2, I go on to explore five key points surrounding this topic that have only grown more important over the last few years.

1) “No Brainer” Projects Still Need Bottom-Line Appeal for the C-Suite

In the book Let’s Get Real or Let’s Not Play, Mahan Khalsa illustrates the benefit of breaking down the value of initiatives into time savings, dollar savings, and getting a sense of scale of importance from the top execs on a level of 1-5.

Projects are often decided based on emotion — the Shared Services Director may be passionate about this digital transformation initiative, however they still to need to take the time to list the savings that will come. For example, how many loaded FTE savings will come from absorbing growth or new acquisitions? Or from not having to hire or replace staff as they move on? What percentage of early pay discounts can be protected or realized for the first time if invoices are accelerated and approved in 1-2 days versus 10-20? Or, as more invoices are processed in a PO-like fashion and maverick spend is reduced, what is the value of better cost control and using the AP folks to research spend and buying patterns?

I’ve worked with CIOs who have commented that the AP automation project is a “no-brainer” in their mind — that’s when I know we need to team up to quantify when the savings will come. Because while many c-level folks are keen to launch a digital transformation project and they do want to free up their staff to do less mundane work that is beneficial to the P2P operation and employee morale, they need financial numbers to help them justify the project over other projects.

2) IT Resources — as Rare as Gold

It seems like over a decade since the norm was for companies to seek to build solutions themselves as the default. Today, most IT teams are stretched thin working on ERP upgrades, migrations, transport and warehouse management projects, or e-commerce initiatives, etc. One of the top reasons projects do not move forward is a lack of IT resources to work on the project. As Ardent Partners note in its 2018 research, common barriers to automation in purchase-to-pay (P2P) include lack of internal resources, lack of IT support and lack of a compelling business case.

A compelling business case will certainly help the leadership team influence the projects the CIO sanctions; after all, there may be 50-100 other projects the CIO is being asked to launch or support. And, even if the business is moving ahead with a “shadow IT” project, IT resources are needed to help with activities such as setting up security access for the vendor, replicating data, etc., pulling them away from other projects.

There is also a risk that if IT is not invited to be part of the project until later on, they may overestimate the effort that is really needed and could become defensive about getting another project dumped on them without an upfront conversation and time to strategize. Many IT Directors I talk to are overloaded on projects already and the thought of another one can be overwhelming and lead to push back/revolt. In some cases, I have seen that the expected effort can be cut in half by simply engaging with the IT folks early on, getting them up to speed, and providing simple, yet detailed project plans and resource requirements. With IT resources being as rare as gold nowadays, make sure the PMO and CIO understand when you want to use the resources and for how long — otherwise, they might assume you are trying to raid the bank!

3) Hitching a Ride on the “C Train”

They say that organizations going through pain or significant change are the ones that are more likely to invest and launch projects. In my experience, it seems that there’s often a trend, initiative or a directive that is a little like a train running through the organization. The trick is how can you get a seat on that train?

One of the most effective approaches I have seen procurement and finance folks use is to look at the projects that are going on and identify if their AP automation project might be seen as aligning with existing key business objectives. For example, many CIOs will regard P2P automation, order-to-cash (O2C) automation or simply cleaning up EDI exceptions as necessary steps of digital transformation. Alternatively, treasurers and CFOs may be seeking to extend their liquidity in order to make acquisitions or simply improve working capital and/or lower the weighted average cost of cash. I will often ask stakeholders how this initiative aligns with other key initiatives or approaches that their peers are working on or that the c-suite is keen on. Sometimes, those dots have not been connected and, yet, when they are, it’s amazing how fast your project can travel from the “idea stop to the approved stop.”

4) Efficiency & Savings Are Critical … But Execs May See Another Angle

I’ve worked on a number of AP automation projects where AP managers, directors, and finance leaders were focusing on one thing (e.g., efficiency savings, lowering invoice processing costs, duplicate prevention, etc.), yet the execs signing the project were endorsing the project for different reasons altogether. For example, we worked with a manufacturing company of doors and windows in the U.S. Its COO viewed the project as a means to scale and compete with a major competitor. While the COO was keen on efficiency savings, his goal for the project was different than that of the project team.

Sometimes, it has simply been that the CFO, after an ERP deployment or moving to your organization, may have lost the visibility of spend and cost controls they were was used to having and are willing to invest to get that control back. I’ve also seen c-suite offices move quickly when the average lead time to pay suppliers extends because they realize excellent customer experience extends through the supply chain. Organizations cannot afford to be put on credit hold or have raw materials restricted due to delays in approving supplier invoices.

5) Staying on Top of Market Trends

Last but not least, it’s my view that authorities in the market (e.g., Hackett Group, Gartner, Mckinsey, etc.) have a powerful influence on the c-suite and the direction of enterprise organizations as a whole. Currently, there is huge interest and focus in projects that will harness technology like Artificial Intelligence (AI), machine learning and Robotic Process Automation (RPA), especially if those projects can be shown to help the CFO: lower costs, prevent fraud, take advantage of early payment discounts, harness supply chain finance, or eliminate the costs of check payments. Therefore, it’s worth looking at market trends and describing your proposed P2P initiative in the right language.

One of the false assumptions in the market is that the sales rep providing AP automation can rustle up a business case that will ensure your project gets a rapid green light. Instead, I think good reps should help you identify areas that may need more research and to calculate the value that will come in terms of time, money and overall strategic value of a project. The real selling takes place when the rep has left — it is the P2P teams that need to discuss the project and effectively understand internal drives and initiatives, and carefully maneuver and sell the project to a consensus group.

At Esker, I feel our team can certainly help you generate ideas for the business case and also identify the common roadblocks and issues that often need to be onboard to ensure your project doesn’t get derailed.

Stay tuned for Part 3 of this series, where Paul Tucker will pick back up where he left off after Part 1, covering how to identify your Key Performance Indicators (KPIs) and calculate ROI.

Building the Business Case for Digital Transformation of AP [Part 1]: Why It Matters

Accounts payable (AP) and finance teams are acutely aware of the benefits of that AP automation has to offer. However, before an automated AP project can hit the ground running, there is one critical hurdle that must be cleared: getting buy-in from upper management and other key stakeholders.

Having worked with over 5,000 AP departments, capturing and processing millions of vendor invoices each month, the Esker team has gained valuable insights into what’s required for a successful digital transformation of AP. Over the past 30+ years, we have seen many well-intentioned AP automation projects stall or fail to start due the lack of a sound business case with clear and definable outcomes. Over the next few weeks, we will share some of those lessons learned in our series “Building the Business Case for Digital Transformation of AP”. These steps will include reusable tools, benchmarking data, and content that will help you build your own customized and compelling case for an AP digital transformation project.

Step 1: Defining Objectives & Assessing Current AP Process & Costs

Today’s fast-paced and ever-evolving business landscape demands that senior leadership focus on streamlining business functions as much as possible. This places greater emphasis on things like cash forecasting and spend analytics, lean growth management, integrating merger and acquisitions, and regulatory compliance.

It is, therefore, the responsibility of AP and finance managers to demonstrate how AP automation will not only modernize the AP department but also translate into quantifiable benefits for the entire organization. By building a strategic business case for AP automation reinforced with Key Performance Indicators (KPIs), AP and finance leaders will substantially increase their probability of convincing management that:

  • The benefits of AP automation are too encompassing to take a back seat to other projects
  • Their IT department will not be burdened with new infrastructure requirements or development projects
  • Any new solution will not require transformative changes on the part your AP staff or suppliers
  • Automated AP invoicing is not only a cost-savings initiative, but a potential revenue generator (more on this in Step 2) that increases productivity for all key stakeholders

It can be difficult to stick to a strategy if you fail to first identify what the project plans to accomplish. This can include defining what aspects of AP you wish to automate and what type of solution you want to pursue. For example, do you plan to automate all components of the AP process, or would a phased approach be better suited for your organization? We have seen many of our customers’ leverage this approach as it can provide value relatively quickly and serve as the foundation for the next phase, including funding and end-user support. For example, many AP teams will start out by digitizing paper based or non-EDI based invoices since the benefits of automating those manual processes is clear.

Common Considerations For AP Automation:

  • Front-end data capture: OCR vs. AI-driven machine learning
  • “Straight-through” processing
  • 3-way matching
  • Handling exceptions
  • Supplier self-service portal
  • Mobile capabilities
  • Real-time visibility of accrued expenses
  • Integration points
  • Approval workflows
  • Dashboards and reporting; including spend analytics
  • Archiving of tax, audit and other key business data

Keep an eye out for Part 2 of this series, where we’ll cover how to identify your Key Performance Indicators, calculate ROI and align with organizational vision/strategy. In the meantime, check out this eBook to further expand on the ideas covered in this post.

 

17 Things Companies Have Said About Esker’s AP Automation Solution

Many leaders in the finance industry are at an interesting crossroads.

They see the traditional “back office” version of accounts payable (AP) getting left behind for a more strategic, holistic business operation that’s expected to deliver greater value across the entire enterprise.

Naturally, not wanting to get left behind themselves, they begin to explore alternatives that can help them expand the boundaries of AP’s core functions. Yet, there’s a lot of new technologies to sift through … a lot of vendors  … a lot of uncertainty.

As part of Esker’s marketing crew, this is the moment I would normally start in on why AP automation is an ideal transformational solution and Esker the ideal vendor. Automated AP invoicing is a transformational tool and Esker is a pioneer in AP automation solutions. But this time, you don’t have to take from me. Instead, let’s take this opportunity to dig into what some companies, and the actual people with frontline experience, feel about Esker’s AP automation solution.

Here are 17 things companies have said about Esker’s Accounts Payable solution:

On Seamless ERP Integrations

To date, Esker can claim 70+ unique ERP or home-grown solution integrations. For our customers, that means our cloud platform can adjust to whatever IT environment already in place — from simple to complex. Take it away, customers …

We appreciate the fact that Esker’s solution seamlessly integrates with SAP, while remaining independent — which is not the case for all solutions on the market.

Project Manager | Fives

Esker’s solution integration with our ERP was absolutely key. We were able to reproduce in Esker the controls we had already set up in SAGE, such as verification of VAT codes, analytical accounts and calculation of due dates. As both systems spoke the same language, the risk of errors was zero.”

Director of Accounting | Culligan France

Across the board, Esker delivered basically everything we were looking for in terms of automated AP functionality and seamless integration with SAP.

Accounts Payable Manager | Farmland Foods

On Efficiency, Productivity & Cost Savings

It’s pretty simple: Fewer manual practices equals more productive employees equals more savings and added-revenue opportunities for the business. Here’s what some Esker customers had to say about these advantages of AP automation:

 “Esker’s solution has been extremely beneficial to the day-to-day life of our accounting teams. Responsibilities are no longer defined by tasks, but by suppliers, enabling the teams to work better together without silos.”

Assistant Accounting Director | Feu Vert

“Immediately following the launch, our users were very pleased with the productivity gains and enhanced ability to estimate budgets. In just two days, we were able to catch up on 500 invoices!”

VP & CEO | Jardiland

Esker gave us everything we needed in terms of cost reduction and better document storage. We now have a single platform helping us control multiple processes.”

Senior VP of Information Systems | Valdese Weavers

“Now, all we have to do is snap our fingers to find an archived invoice. And Esker’s mobile invoice application has made approvals so much easier for our managers. No one at CARSO will ever go back to how it used to be.”

Accounts Payable Manager | Carso Group

On Supplier Satisfaction

Efficiency isn’t everything, of course. Often, it’s the “surface level” benefits of AP automation that pave the way for far more strategic advantages down the line (e.g., improved supplier satisfaction). Many of our customer concur:

“Our supplier relationships have improved thanks to accurate and on-time payments.”

Head of Accounting | Elix Polymers

 “Our AP process has significantly improved in the past eight months since implementing Esker. Our procurement operation business no longer worries about payment delays, reduced efficiency or supplier complaints.”

Purchasing Manager | Heineken China

Esker has allowed us to streamline our document processing in AP through eliminating manual paper-based processing. We now have the ability to support our company growth with more efficient processes and help improve the way we do business with both our customers and suppliers.

Production Director | Firstan

On Visibility & Approvals

Esker’s automated AP invoicing solution comes equipped with built-in dashboards that display real-time metrics, customizable by user. How do Esker customers feel about having such a high level of visibility and control over their AP process? See for yourself …

“We now have tighter constraints on what’s being put through. Everyone is paying close attention to what they’re signing and they’re far more accountable. It’s made our managers very happy as they have visibility and control of their costs.”

Financial Controller | Property Brokers

“Before Esker’s AP solution, we had no controls in place when routing invoices for approval — some routine billings were even processed without it. Now, all expenses are routed electronically with full transparency and accountability.”

Accounting Manager | Parts Town

 “Having the ability to post invoices in SAP, and see them with 100% visibility, has had a significant impact on our company’s overall success.”

Director of Global MRO Purchasing | Albemarle

 “We can accrue invoices entered into Esker and see what’s been approved and what’s still pending. The visibility it has brought to AP has made approvals easier and payments faster. It’s expedited the entire process — a major time-savings tool.”

Director of Business Applications | Pelican Product, Inc.

On Solution Delivery & Ongoing Support

When hiccups happen or are assistance is needed during or after solution implementation, companies need a vendor with a foundation in place to deliver what you need, when you need it. Here’s what some customers had to say about the Esker Solutions Support team:

“When we sought assistance from Esker they were always ready, willing and able to assist. They not only have superb knowledge of the Esker system, but in turn how it interacts and works with Maxim’s AP process.”

Worldwide AP Process Owner | Maxim Integrated

“We have been very pleased with the quick response time of Esker Solutions Support. This is critical as it means minimal interruption to our invoicing process.”

Financial Controller | Redmart

“Esker has greatly improved our daily work — invoices and information are easily accessible and well organized. We never have to worry about inquiries from within our organization, or externally, from customers or suppliers. Esker dashboards enable us to see pending invoices, monitor operations and check any outstanding invoices.″

Senior Purchase-to-Pay Administrator | Heineken China

Well, there you have it: 17 things that companies have to say about Esker’s AP automation solution. If you’re interested in learning more about how our solution works and the advantages it can bring to your business, check out the 90-second video summary below.

 

Delicato Family Vineyards Chooses Esker’s Accounts Payable Solution to Facilitate Growing Invoice Volumes in an SAP® Environment

Sydney, Australia — October 15, 2018 — Esker, a worldwide leader in AI-driven process automation solutions and pioneer in cloud computing, today announced that Delicato Family Vineyards, one of the fastest growing wine companies in the United States over the past five years, has selected Esker to automate its accounts payable (AP) invoicing process. Esker’s Accounts Payable automation solution was chosen for its easy-to-use interface, robust capabilities and direct integration with SAP® systems.

Approximately 75 percent of the invoices Delicato manages are non-purchase order invoices, with a large majority of those arriving into a centralised email address. With Esker, those invoices will now be automatically entered into an electronic workflow — eliminating virtually all of the manual printing, scanning, coding and routing activities that had previously been a part of Delicato’s AP invoicing process.

Read the full press release here.

 

How Luxasia Went from Printing Spreadsheets and Scanning Receipts to One Automated Platform

A recent study by IOFM found that while 70% of AP departments are automating their invoice processing, only 30% say that those electronic invoices can be posted straight through with no operator intervention. Most AP departments are moving away from the days of piles of paper spilling over their desks and taking up office space, but there is still lots of manual data entry and time spent on low-value tasks that could be used elsewhere.

That’s the situation that Luxasia, a luxury specialist in retail and distribution, found itself in. A rapidly growing company, Luxasia employees were still doing much of their internal accounting processes by hand. To get an invoice approved, employees had to manually create purchase requisitions and print them out. Internal expense claims were also processed by hand, with Excel spreadsheets and scanned paper receipts printed and passed to an AP specialist, who would then process and manually enter data into the SAP® system.

Not only did this create high operational costs and heavy workloads, the overall invoice process was painfully slow, which lead to increased dissatisfaction among both customers and employees. Luxasia knew it could improve on this process, so it started looking for a solution that would help:

  • Reduce operational costs
  • Increase document visibility and accessibility
  • Integrate with SAP
  • Facilitate other job functions beyond the AP department

Luxasia decided to go with Esker’s purchase-to-pay (P2P) solution to automate its purchase requisitions and supplier invoices. Today, 561 Luxasia users process documents with Esker, and Luxasia automates its 36,000 annual supplier invoices at its new shared service center. Luxasia has also seen an 80% reduction in its paper use by automating expense claims and doing away with hard copy receipts.

“We are now able to track productivity and better manager our resources thanks to Esker’s dashboard and reporting capabilities,” said Jasmin Ong, Regional Finance Controller at Luxasia. “Esker has also helped us streamline our processes and ensure a consistent work standard.”

In addition to improving its AP workflow, Luxasia added additional processes to meet internal needs like GL account creation and payment advice. Through automating, the company gained enhanced visibility, cross-border support, a user-friendly interface, and improved communication leading to increased efficiency for its AP process.

For more information on Luxasia and the improvements it made, check out the full case study using the link below!

 

What Will the Future of Accounts Payable Look Like?

 

Accounts payable (AP): digital, profitable and strategic.

When we think about the future of accounts payable, those aren’t usually the first words that come to mind.

In recent IOFM surveys, AP was voted as the No. 1 most time-consuming finance function and the No. 1 most paper-intensive finance function. That’s really something when you consider other finance and accounting functions such as tax, reporting or audit. In addition, APQC has reported that labor makes up 60% of the total processing costs in AP.

Overall, AP processes cost too much, take too long, provide too little visibility and frustrate internal stakeholders too often.

The good news is, there is a way to correct that situation, and business are starting to act.

Esker recently partnered with IOFM to conduct a survey to better understand the future of AP processes:

  • What technologies will be important to AP?
  • How will AP operate?
  • How will AP’s role within the enterprise change?

From that survey, we produced a white paper which presents the results and provides a guide for AP professionals to prepare for the future.

Digital:

While AP was voted as the most time-consuming and laborious finance function, the tides are starting to turn as organizations begin to digitize. Seventy-percent of AP departments have at least started to automate their invoice processing with 25% of them having made significant progress in their path to complete automation.

When automating their AP departments, respondents identified key technologies that will make a significant impact in the next three years, including:

  • Image Capture (53%) — technology that converts paper documents to digital images
  • Intelligent Data Capture (40%) — technology that automatically classifies, extracts and validates data
  • Mobile (49%) — on-the-go technology that enables professionals to easily manage and approve purchase requisitions and supplier invoices 24/7, wherever they are, using a mobile device

Profitable:

Organizations have realized that AP has the ability to help improve profit margins, and digital transformation is what can give AP that ability. Through the digitization of AP processes, organizations improve profitability through:

  • Higher rate card rebates: 26% anticipate the total card rebates they earn will in three years will be up to 10% higher
  • More early-payment discounts: 30% anticipate that the early-payment discounts they receive will be up to 10% higher in three years
  • Longer standard payment terms: 34% believe their organisations standard payment terms will be longer in three years
  • Better spend management: 60% anticipate the importance of spend management to become more important in the next three years

Strategic:

And finally, AP is seen as becoming more strategically important to the enterprise:

  • 53% per respondents believe their AP department’s strategic importance will be higher in three years

For too long, poor visibility has made effectively managing working capital difficult, especially in a manual environment. But automated AP solutions, like Esker’s, put real-time decision making info into the CFO’s hands with personalized dashboards that give insight into Key Performance Indicators (KPIs). Senior stakeholders will be placing increased importance on KPIs in an attempt to improve efficiencies and profitability:

  • 63% anticipate that the use of AP’s data in the organization will increase in the next three years

AP is transforming and will continue to do so. The digitization of the process will allow it to become increasingly profitable and of strategic importance to the organization. Those who don’t put stock in preparing for the future of accounts payable put themselves at risk of falling behind both their peers and the competition.

Read the special report by IOFM and Esker and find out the steps needed to keep up with the changes.

accounts payable report

Bake your way to a rewarding AP process

I love baking – I find it relaxing, rewarding and of course, the best bit is the outcome! I mean, who doesn’t like cake?!

I’m no baking expert, it’s just something that I enjoy, and really, there’s not much to baking a basic cake once you get the ingredients and techniques right. For me, it’s the decorating that’s the tricky part.

Getting the balance of ingredients right is key through – the flour, butter, sugar, eggs, and flavoring need to be carefully balanced in order to achieve a good texture and flavor. This and the mixing and baking techniques are the keys to a successful and delicious cake.

It’s a bit like automating AP processing with Esker; once you get the ingredients and process right, it too can become successful, rewarding and indeed more relaxing for your AP team!

Think of the flour as being the basic process – the electronic invoices and archiving capabilities; the eggs – the controlled and electronic workflow that holds the whole thing together; the sugar – the sweet automatic reminders for effortless approval and automatic invoice matching; and the butter – the binding integration with ERP and other business systems.

And the extra sweet stuff on top?…payment approval from mobile devices and readily available audits, KPIs, and analytics.

Fancy a piece of the Esker cake?

Sweet.

Happy baking.

Written by Amy Rees – Esker Marketing Administrator

Accounts Payable Analytics: How Companies Measure & Report on KPIs

 

In the 2011 movie Moneyball, Brad Pitt plays Billy Beane, real-life General Manager of the Oakland Athletics, a small-market Major League Baseball (MLB) franchise.

The movie — based on the book of the same name — follows Beane’s revolutionary use of “sabermetrics” to assemble a team that could compete with richer ball clubs, despite operating with a significantly lower payroll.

Call it David’s plan to topple Goliath.

Rather than rely on the handful of archaic statistics used by baseball traditionalists for decades, Beane took a more nuanced and analytical approach to gauging player performance — finding value where no one before him had thought to look.

What does all this have to do with accounts payable (AP), you ask?

Based on recent survey results, it seems that the world of AP invoicing could learn some valuable lessons on analytics from the world of sports.

The Current State of Accounts Payable Analytics

Undoubtedly, a lot of cash-strapped companies already feel as though they’ve done everything in their power to minimize costs and maximize efficiency (e.g., reducing staff, adopting lean practices, implementing e-invoicing tools, etc.).

This may be true to some extent, but results from a study by the Institute of Finance & Management, Visibility Into the Accounts Payable Process, indicate there’s still value being left on the table. The survey, which received 129 respondents, found that most AP departments continue to use antiquated tools and techniques to track their key performance indicators (KPIs).

Some of the more eyebrow-raising results of the study include:

  • Out of the AP professionals who responded, a whopping 66% said they track KPIs using Excel spreadsheets, while more than one-quarter rely on whiteboards, checklists and email trails.
  • Over 41% of respondents have no plans to implement a dashboard tool at this time.
  • Nearly 18% of respondents cited resistance to changing established processes as one of the main barriers to deploying new software solutions, while 14% cited cultural unwillingness to test new software.

Outdated strategies. Lack of forward thinking. Resistance to change. Sound familiar?

Much like the pre-Billy Bean era of MLB, a lot of AP decision-makers are clinging to intuition and old-school ways of thinking. In other words, they simply don’t know what they don’t know — and it’s dulling their competitive edge.

Why AP Dashboards Are a Game-Changer

Just like the use of statistics in baseball, the use of KPIs in AP is an effective way to measure performance and take “gut feeling” out of important decision-making processes. But doing it right means using the right tools.

Increasingly, it’s becoming clear that AP dashboards might just be the ideal, complementary tool to make every action smarter and more strategic.

Dashboards allow users to view, organize and manage actionable metrics directly from an easy-to-use interface. Not only do they provide visibility into what’s happening, they also answer the ever-important question, “What’s going to happen?”

Here are just a few examples of the valuable insight each user has access to:

  • accounts-payable-analytics-dashboardCFO
    • Organization spend overview
    • AP cash flow
    • AP process metrics
    • DPO
  • AP Managers
    • Visibility over spend
    • Spend by category, volume and supplier
    • Accrual reporting
    • Payment KPIs
    • Process efficiency
  • Cost center owner/LOB manager
    • Requests pending approval
    • Budget control and forecasts
    • Spend analysis and trend

Let’s face it. Your AP department isn’t as exciting as a MLB team, and no one is ever going to make a movie about AP analytics. But if Billy Beane’s story teaches us anything, it’s that it pays challenge the status quo and re-examine established practices. After all, gaining a competitive edge has never been a spectator sport.

Want to learn more about measuring and reporting on accounts payable analytics? Download the eBook, 5 Accounts Payable KPIs Worth Tracking, and discover how to maximize results with real-time analytics and dashboards.

Automated Delivery of Customer Invoices to AP Portals

Options for customer invoice delivery continue to modernize as companies experience the fruits of digital transformation. We have come a long way with invoice delivery methods — things are faster, easier and more cost-effective than ever before. In recent years, companies have been seeking efficiencies within accounts payable (AP) for the buyer, which led to the introduction of AP portals. Accounts payable portals continue to grow in popularity, so much that the U.S. Government, the largest buyer in North America, mandated that vendors must electronically submit invoices within one of their recognized portals by end of 2018. As more and more buyers transition to using AP networks to ease their own technology burdens, it shifts the problem squarely onto the supplier’s accounts receivable (AR) team.

Accommodating customers has been the key to many organization’s success, however, it can come at a cost and may not be an easy task. There are more than 250 complex AP networks used globally. New AP technology means that suppliers increasingly need to submit invoices directly into customers’ AP systems.  To manage this method, AR departments are often:

  • Manually entering each invoice using an online AP portal, one at a time — which is time consuming and resource draining
  • Hogging up already limited IT resources to build custom AP integrations with each system and provide ongoing support
  • Turning away business refusing to accommodate, impacting growth
  • Managing multiple invoice delivery channels, including delivery of statements and invoices via portal, postal mail, EDI, fax and email

Accounts payable networks and private corporate portals are not going away. There are real benefits to submitting invoices online, such as: visibility on payment status, cost savings by lowering or eliminating postal mailings and time savings of sending an email versus postal mail.

With the aid of Artificial Intelligence (AI)-driven technology, suppliers now have the option to automatically deliver invoices to portals — no longer requiring manual data entry or taxing the resources of AR staff. The repetitive processes of data entry and invoicing naturally lend themselves to automation. Artificial intelligence can help companies timely and efficiently post invoices to AP portals, without input from humans. Automation of invoice delivery into AP portals eliminates the burden, giving both parties the efficiencies they want and need.

The Benefits of Document Processing Automation in the Food Industry

The exchange of documents is essential to how daily business activities are conducted, especially in manufacturing and distribution. In fact, how well an organisation optimises document processes directly impacts profitability. This is especially true in the food and beverage industry, where FDA regulations and product shelf life make efficiency and accuracy particularly important. It is also true then that the promised gains from automation are often amplified in this space.

The Pitfalls of Manual Processes

Each and every day, warehouse distributors and manufacturers handle faxes, emails and other paper-based supply chain management documents that cause problems such as:

  • Data entry errors associated with the manual rekeying of data, resulting in delayed/incorrect shipments
  • Inefficiency in getting fax/email data into a back-office system, resulting in production delays and overstocks
  • Concerns about the cost for increasing staff and infrastructure to handle high volumes and peak periods

Management Concerns

The struggles associated with manual processing affect a business at multiple levels —, particularly at the managerial level. When document entry cycle times are long, managers cannot grow the business without adding staff. Additionally, there is no easy way to prioritise and monitor document entry, meaning high-priority and time-sensitive processing can be delayed. Document processing errors are also a common problem that causes a domino effect of issues for managers. Errors can lead to delays in fulfillment and cash collection, additional shipping costs, waste (especially with perishables) and repetition. Furthermore, processing errors can cause returns, which a business must pay off in credit notes, restocking or write-offs. Finally, archiving poses a major concern for management. The cost of printing and the space to store documents, combined with the time it takes to file and retrieve records, can hold a company back. Customer Service Representatives (CSRs) are often unable to find documents to answer customer questions, and information is not readily accessible for auditing purposes.

The Promise of Document Management Automation

The more efficient a company’s billing and cash collection methods are, the faster documents are handled, processed and tracked, which accelerates the flow of business cycles. There are then four main expected outcomes from replacing traditional, paper-based processes with document management automation:

  • Cost-effective integration of incoming documents into business processes so they get to the right places/people as quickly and efficiently as possible.
  • Removal of human intervention and manual paper handling from document processes, increasing efficiency and reducing errors from manual touch points.
  • Increase in the efficiency of back-office operations frees staff to focus on higher value, strategic activities.
  • Improvement of supplier and customer relationships by creating a superior, more efficient experience receiving payment or products.

Success Story: Sales Order Processing and Bel Group

If a manufacturer or distributor in any industry makes a mistake with an order, it incurs costs associated with bringing the product back to the warehouse, repackaging it and redistributing it. There are the shipping costs, the time wasted on duplicate processes and the incurred risk to reputation to think of. But when it comes to the food and beverage industry, order processing takes on an even greater importance because in many cases, product cannot simply be reshipped in case of error. Perishable product must be disposed of, which can lead to a total loss of revenue on inventory. That’s a cost no company wants to pay.

The Bel Group is a worldwide leader in branded cheeses with operations in 36 countries and more than 12,000 employees. Its Spanish operations were hamstrung by inefficient, manual processing of customer orders and invoices. Prior to implementation of an automated order processing system, two-thirds of the approximately 25,000 customer orders the division received annually came in via fax, email, and telephone. Processing those orders manually was slow, labor-intensive and much more susceptible to error.

Like many companies with traditional systems and long-standing customer relationships, Bel Spain worried that their customers would balk at submitting orders electronically. Since solution implementation, Bel has taken an active role in helping customers change the way they send documents, moving from telephone and paper to electronic format (fax or email). Within a year, two-thirds of Bel’s orders were being received electronically. Thirty percent of those were processed using optical character recognition (OCR) technology, drastically reducing the number of manual touch points—and opportunities for error—associated with their traditional system. Today, 100 percent of Bel Spain’s document exchange with customers using non-electronic formats is automated and seamlessly integrated with SAP. Orders are now more accurate, and the company has seen significant improvements in the quality of managing order-to-cash and procure-to-pay cycles.

Sales Order Processing Benefits:

  • Achieved significant financial savings by eliminating the costs involved with printing and mailing invoices and manual reception and processing of customer orders.
  • Decreased order and invoice processing time.
  • Eliminated processing errors associated with manual handling.
  • Streamlined relationships with vendors and customers by making communication with both more reliable, resulting in faster sales cycles and increased customer loyalty.
  • Eliminated physical archiving by using 115 fewer filing cabinets every year, resulting in an estimated savings of €4,500 per year based on the average price per square meter.

Bel Spain also automated the sending and archiving of electronic customer invoices. Invoices are now received quicker and easier, and never get lost. Duplicate copies can easily be printed if needed, there is greater invoice traceability and Bel Spain benefits from decreased days sales outstanding (DSO).

Accounts Receivable Benefits:

  • Invoices with electronic signatures are automatically generated from SAP.
  • Signed PDF invoices are automatically sent by email via Lotus Notes.
  • Electronic invoices are archived online, freeing-up physical space and decreasing associated costs.

Success Story: Accounts Payable and Farmland Foods

Increasing industry pressures have many food and beverage companies looking for ways to lower operational costs and gain leverage with suppliers. The expense and inefficiency of keying in, verifying and approving vendor invoices manually make accounts payable automation a popular way to modernise AP processing, reduce costs and improve vendor relations.

International pork processing company Farmland Foods processes about 30,000 invoices every month. That’s an awful lot of paper to push via outdated manual processes. AP operations were frustratingly slow, and the accuracy rate wasn’t where it should have been for a company of Farmland’s standing. Invoices were stored in paper files in an inconvenient storage room, and employees were wasting too many hours printing invoices and manually re-entering them into SAP.

In 2014, the company decided to implement an automated AP system that integrates with SAP. As a result, the Farmland experienced tangible cost-savings.

Benefits:

  • Improved visibility. Managers now have access to key metrics, such as number of invoices to process, how far out they are, payment terms for discounts, etc.
  • Easier access to invoices. Instead of tracking down invoices in a file room, Esker allows users to access them via document numbers to easily email/print a copy online.
  • Faster freight processing. Esker helped Farmland reduce its “out period” for freight invoices from a deadline-pushing 14 days to just two days.
  • Cost savings. Fewer manual processing tasks allowed Farmland to save on costs equal to three FTEs, and reallocate current staff to projects offering greater value.
  • Faster invoice entry time. Where the invoice entry goal for Farmland’s AP staff used to be 150-200 invoices per day, they are now achieving over 400 invoices per day.
  • Fewer outstanding accruals. Faster invoice entry times have enabled Farmland to reduce the number of outstanding AP accruals by $8 million.
  • Increased discounts. When comparing the last six months to the six months prior to automation, Farmland estimates it has gained an additional $29,815 in discounts.