As a sourcing advisor and group purchasing organization, we know that there is much more to procurement outside of our own business model. That's why we asked our friends at Procurify to offer their insights on how to implement a more cost-efficient invoicing system. Read on to find out how you can reduce unnecessary costs and create a better spend culture in your organization.
Reduce Labor Costs with Automation
Manual invoice processing is a labor-intensive process that requires employing workers to loop through redundant processes such as accepting invoices and paying them off. Today, AP managers have a plethora of resources and new innovations at their disposal to customize their processes for enhanced efficiencies, reduced costs, and quicker cycles. There are incredibly intuitive workflow automation solutions that reduce duplicate payments, support audit efficiency and strengthen internal controls.
Choosing an automated invoice processing solution inherently cuts costs by reducing these manual operations, improves your bottom line, and subsequently frees up funds to invest in more strategic areas of your company. It also reduces duplication errors or missing information oversights, and can be easily tracked through the entirety of the procure-to-pay process.
With an automated Procure-to-Pay (P2P) system, you can easily track and prevent fraud in accounts payable, starting right from the purchasing stage. A dependable automation technology offers these improved security and audit capabilities, as well as increased visibility and control. This all comes together to meaningfully reduce the chances of fraud ever taking place. Automating this process means you can also easily mitigate fraud in accounts payable from every single stage. A reliable technology solution improves visibility and control, which drastically reduces the chances of fraud occurring due to fraudulent invoicing by suppliers.
The answer to increase your spend visibility and isn’t actually increasing touchpoints for approvals, but in optimizing your approvals altogether. Specifically, implementing purchase approval systems focuses your company’s pre-purchase decision-making on permissions. This functions as an efficient spend control process, and can be automated to just be done in a few clicks.
Rachelle Collins, the Principal Research Lead at APQC, believes heavily in the idea of automation as human supplementation in the invoice process. “Organizations [should] focus on automating routine, recurring tasks, and leave the work for humans to what is their comparative advantage, which would be activities like customer service, exceptions, analysis, process improvement, and decision support.”
Reduce Duplicate and Manual Tasks
Automation also contributes to going paperless, which means the days of tracking down information in an endless vortex of cabinets is behind you. This actually keeps costs down and reduces the manual management in your accounts payable processes, all while still keeping maximum compliance and security. There are even mobile applications that allow you to literally tap into your permissions and access analytics from just about anywhere, such as Procurify. Having the mobility to access data is especially helpful when managing multi-locations for resorts and restaurants.
According to APQC’s Open Standards Benchmarking® data, 58 percent of invoices are still manually keyed into financial systems. Duplicate payments is not a invoice processing expense, but it does drive the cost up when it comes to handling payables. Workflow automation easily detects duplication at every stage, and is a worthwhile investment to keep your spending organized and compliant.
Focus on Process Accountability
When AP workflows rely on manual processes, typically a lack of visibility into both the invoice approval process and the purchase approval process develops and causes problems. Process delays can make you miss deadlines and be severely costly with the lack of automatic prompts keeping you on track.
Rachele Collins believes “organizations must consider whether their procurement processes are too complex. They must also evaluate whether or not employees have received adequate training on procurement procedures.” Having manual steps is one thing, but having too many steps altogether is an unnecessary headache for your team and a recipe for disaster.
Rachele continues, “If adequate training has not been provided, or if the processes are not user-friendly, employees will bypass formal procedures to get what they need. They need to take steps to address these factors so that procurement can provide value to the enterprise beyond the bottom line.”
Increase Spend Visibility at Every Level
Spend Visibility goes beyond tracking spending—it gives both a detailed and holistic picture of how money is moving through your company.
Seeing all the company’s data together, at once, categorized by supplier, buyer, date and category, offers an enormous upside for the entire company. The mistake is made when companies isolate visibility into spend data. These segmented systems are both inconsistent and inefficient.
While you might think there is a risk that departments or separate locations might exceed their budgets and settle for expensive and taxing terms and pricing with suppliers, that is a risk that comes with a lack of spend discipline, not access.
For more insights on invoice processing, check out Procurify today.