Where’s the real win in AP Invoice Automation?

Where’s the real win in AP Invoice Automation?

February 1, 2021

To many, AP Invoice Processing seems futile.

There’s no doubt, it’s an essential process to reconcile yours and your suppliers view of a transaction. Invoicing triggers the final steps in the purchase process namely to ensure the goods delivered are satisfactory quality, and at the agreed terms before you pay for them.

As you’re aware, the process consumes considerable time and effort and introduces greater complexity and opportunity for errors.  Organisations spend time, effort and money processing inbound invoices.  Unless you’ve invested in EDI or e-Invoicing and have convinced your suppliers to submit e-Invoices in your adopted standard, each line of every invoice will need to be checked against corresponding records in your purchase ledger and GRN system.  For most organisations, the work involved is proportional to the number of invoices multiplied by the average number of lines per invoice.

Thus, an average SMEs that receives c 150 invoices per week could potentially face the prospect of having to check over 4,000 data-points per week.  Peak times can easily increase this workload by thirty percent.

Little wonder that invoice processing is considered of the least popular jobs for the AP team and a focus-area for improving user productivity.

 

Fortunately, the Readsoft Online (RSO) solution from Kofax can reduce the manual time and effort by between 65% – 80%.  The efficiency of the solution is predicated on the quality of submitted invoices and the supporting supplier and purchase order data held in your finance system that can be used for verification. The solution handles paper and electronic versions (e.g. PDF and HTML) as well as ubiquitous e-Invoice formats too.

 

Solutions such as Kofax Readsoft Online provides “at a glance” dashboards enabling AP Managers to resolve bottlenecks and potential problems quickly.

The solution benefits are relatively straight forward to assess and quantify.

Problem Capability and benefit Typical Outcomes
1 Manual Invoice Processing involves checking and matching against purchase order information.  This is a time consuming, tedious and error prone process.

 

Automation supported by machine learning performs these extraction and verification tasks on a server. Errors and omissions get flagged to an AP user for intervention. AP departments can process between 3-4X more invoices with the same amount of human input. Permits much better utilisation of skilled Accelerates process eliminating backlogs and delays.  AP users who are free to perform more valuable tasks.

AP team has improved visibility of inbound invoices.

2 Invoices are cleared for payment even though the goods or services haven’t been delivered or receipted. Kofax RSO checks the goods receipt status for each line of the invoice and will hold the invoice in the system until received.

These “held” invoices are flagged on the dashboard for the AP Manager to review.

Paying for goods not yet received is a classic “process error” that will be largely eliminated.  Ditto for duplicate invoices that are often paid in error in a manual system.
3 Manual Invoice processing is often ad hoc, reliant on tacit knowledge and is difficult to report on – problems are typically buried away and difficult to assess accurately. Inefficiencies build over time and alas, become accepted as a part of the process. Solutions such as Kofax RSO automates error-prone tasks which eliminates these problems.  Human resources are involved only when needed to make decisions or rectify an error or omission. Kofax RSO provides excellent analytics via a dashboard.  This allows AP management to focus on process bottlenecks and miscreant suppliers.  Focusing on the areas for improvement allows the process to be quickly addressed and automation rates further improved.
4. Invoices arrive on disparate channels and formats which are a challenge to manage. Kofax RSO handles multiple channels and types, processes them consistently and presents them on a single, consistent Validation screen. Reduces the complexity of invoice processing permitting AP teams to focus on errors and omissions rather than trying to handle different input channels for invoices.
5. Some suppliers require that we accept e-Invoice format invoices which involves additional work and costs. See above. Organisations can embrace the change to e-Invoice format invoices without the need to treat these invoices differently or install additional software.

Little wonder that invoice processing is considered of the least popular jobs for the AP team and a focus-area for improving user productivity.

Fortunately, the Readsoft Online (RSO) solution from Kofax can reduce the manual time and effort by between 65% – 80%.  The efficiency of the solution is predicated on the quality of submitted invoices and the supporting supplier and purchase order data held in your finance system that can be used for verification. The solution handles paper and electronic versions (e.g. PDF and HTML) as well as ubiquitous e-Invoice formats too.

Solutions such as Kofax Readsoft Online provides “at a glance” dashboards enabling AP Managers to resolve bottlenecks and potential problems quickly.

The solution benefits are relatively straight forward to assess and quantify.

“Automation supported by machine learning performs extraction and verification tasks on a server. Errors and omissions get flagged to an AP user to quickly intervene and resolve.”

 

Unlike the original “OCR-based” invoice processing systems of a decade ago, contemporary AP Invoice Automation systems such as Readsoft Online has neither the high maintenance overhead nor the need for an AP user having to correct spurious results or key missed fields.

The process improvement results from the use of machine learning that ensures new invoice layouts are automatically added into the solution’s knowledge base.  The more sophisticated verification process results in realistic AP user productivity gains of three to four times over manual systems.

These results combined with the SaaS benefits of fast deployment in a typical three-to-four-day timeframe instead of 3-4 weeks for on-premise solutions; this means that the business justification is significantly more viable.

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