Outsourcing key functions of the enterprise may allow professionals to finally turn their attention away from the minutiae of manual processes and toward more strategic, value-added activities. But when it comes to money, businesses may be reluctant to hand the reins to a third party.
With pressure mounting for the enterprise to digitize, accounts payable automation is seen as a crucial part of achieving greater efficiency, cost savings, visibility into spend and strengthening of vendor relationships, to name a few benefits. But going it alone can quickly overwhelm a business.
It may be that the costs and labor associated with choosing and integrating AP automation tools is too great. Or, it could be a lack of familiarity with these technologies that leads to mistakes in deployment or a lower ROI.
Larry Bennett, executive manager at document and information management technology company Accu-Image, said he often sees accounts payable professionals thwarting the progress of automation in ways that can’t always be explained.
“With the proliferation of the PDF, most vendors will send you not a paper invoice, but email a PDF,” he recently said in an interview. “It’s born digital. But AP processors will, believe it or not, print it out. They index the information into their ERP systems, and then scan it back in again.
“We see that a lot,” he added. “It’s crazy.”
The anecdote seems to reflect a rising concern in accounts payable: There may be a lack of understanding and consensus of the value of automation, or what automation even means. That was the conclusion of an earlier report published by Hyland; its 2018 State of Accounts Payable Report found a “lack of understanding” of what fully automated accounts payable is, according to Hyland’s Solution Marketing Manager Danielle Simer in a previous interview with PYMNTS.
At the same time, corporates are at risk of significant losses – in money and productivity – by failing to fully embrace AP automation.
One rising threat to accounts payable is fraud, recently highlighted in a press release by Accu-Image earlier this month. Citing Association for Financial Professionals research, which found that 78 percent of treasury and finance executives had been hit by fraud last year, Accu-Image warned that issues like fake invoices, combined with human errors in bookkeeping or invoice management, can all create losses as a result of having manual, outdated AP processes in place.
Outsourcing accounts payable can provide a business with the fully automated technologies they need to address issues like AP fraud and errors, and provide a way to safeguard the business against various changes in AP processes without forfeiting any of that automation.
High vendor volume and supplier turnover rates, for instance, are among the biggest challenges to AP automation. Solutions like Accu-Image can automatically verify invoices being sent in from vendors that are already added in a company’s ERP system, but even simple mistakes in the way a vendor lists its name on an invoice, or the failure of a manager to keep master vendor lists updated, can increase the rate of invoice exceptions.
Those exceptions remain a key area where human intervention is necessary. According to Bennett, even with an automated AP solution in place, rarely does an invoice come in and move through payment and reconciliation without needing to be looked at by an actual human. Whether it’s an invoice that needs a final stamp of approval from a manager or payment – or an exception that needs to be verified or looked into further – true, full automation remains largely elusive for accounts payable.
“The only times [an AP professional] has to touch an invoice is when it goes in for approval, and exceptions,” he explained. “It’s an invoice without a valid vendor, or valid invoice number, or it doesn’t match the PO information.”
While AP solutions can automatically alert the vendor if something is wrong with an invoice, AP professionals will want to look at that document as well. It’s part of the checks-and-balances system that companies have to have, even when AP is outsourced, to mitigate risks like payment errors or fraud.
Working to lessen the burden of having to manually approve invoices and exceptions is one of the key focuses for Accu-Image, and the AP automation space, going forward, Bennett said. Yet while full AP automation can, in theory, be achieved, it’s the personal habits of AP professionals that stand in the way of that progress.
Those habits are why some professionals may print out PDF documents, and why corporates still struggle to manage accounts payable automation by themselves. In Bennett’s experience, there’s actually more paper in AP today than there was 15 years ago – another trend he considers a bit outlandish.
“People are just used to it,” he said. “They don’t like changing their ways. Change is hard sometimes, and that’s the biggest challenge.”