What are the common challenges with a manual AP Process?

The Federation of Small Businesses recently found that 84% of Small Businesses had been paid late; providing more than a hint that the processes that businesses have in place for approving and paying supplier invoices is far from problem-free.

The challenges:

For a lot of businesses, the challenge can start before an invoice has even been received. Non-digitalised purchase order (PO) processes culminate in a lack of visibility as to what’s been purchased, and in other cases where a PO isn’t generated at all, a lack of control what spend is coming down the tracks.

This is far from the end of it. Once the invoice has been received, finance are often left scratching their heads around where precisely in the business it has been received and in what form (email or paper). It was reported that one third of invoices often end up in the wrong place within a company; an example which has stayed with me was an onsite meeting I attended. As I was signing into the guestbook at reception there was a paper invoice lying right next to it. The finance team were left red-faced as they didn’t know it was there.

Similarly, a not for profit I worked closely with found that prior to automating their AP process their invoices were not being received by head office as they should be but instead to their charitable stores. This was resulting in duplicate invoices and even instances of paying invoices more than once. They were not alone in experiencing this challenge; a Vanson Bourne study found that 41% of business have received a duplicate invoice and 33% actually paid one.

Once the invoices are located, so begins the task of moving them around the business for approval. Often the invoices will be printed out to try and help with this task; but what if those individuals are out of office? I once met a Finance Director whose team were being blamed for late payments, but he was adamant the invoices were already overdue before they reached his team! This is a common theme as 83% of finance leaders have said they pay supplier invoices late at least some of the time.

As if all this wasn’t challenge enough, the final task in the process is manually matching invoices to outstanding POs and then rekeying the information into a finance system. These tasks alone often constitute a full-time job for multiple employees within a business. One such example I encountered required a finance team spending 4-6 days a month on such tasks.

So how can these challenges be solved?

By moving away from a manual, paper AP process to one that is paper-free and automated, the benefits are clear.

Upfront, automated workflows and the ability to compare spend to relevant budgetary information gives visibility and control over purchase order raising. This is particularly important when you consider that in a non-automated world 56% of finance teams admitted they are unable to identify the exact amount of their supplier invoice liabilities at any time.

The arduous task of matching and rekeying invoice information is also removed through Optical Character Recognition (OCR) technology. An SAP Concur study found that  technology alone can reduce invoice processing times by as much as 50-75%.

One of the factors I always highlight to companies is that an automated system also acts as a central repository. Invoices can be located quickly, as can potential duplicates. Our recent case study with Atech Support highlighted how, once live, they were able to clearly see where in the process invoices were and whether they had been approved.

A big challenge that an automated system will solve is process bottlenecks. Especially when you introduce a mobile element into the equation. An IDC report found that automating AP workflows resulted in 68% less time processing invoices. Bottlenecks often develop at the approval stage of the process in a manual world. By making invoice a more mobile experience, the staff at Harrow School found this particular challenge was eliminated.

It goes without saying that the streamlining of the AP process keeps supplier’s happier. An IDC report found that those who automated made 67% fewer late payments  to suppliers. Time can also be given back to staff members to focus on more strategic tasks. As Atech Support found, their finance team saved two and a half hours per day after automating.

Imagine what your finance team could do with that extra time? Find out more about Concur Invoice or speak to a member of our team today on 01628 645 100.