Accounts Payable Invoice Automation
One of the biggest challenges for most organizations today is maximizing cost efficiencies and bringing down costs across its supply chain. Procurement and finance divisions of organizations are increasingly making strategic decisions relating to vendor management resulting from insights into their procure to pay process, thus resulting in negotiating better discounts, better vendor relationships and quicker payment cycles. There is increasingly more focus on leveraging technology to streamline and make this process more efficient than ever. Avaali Solutions supports enterprises to help them maximize cost efficiencies and enhance productivity.
Procurement costs typically represent 25% to 65% of the total costs for any organization depending on the industry segment they’re in. Yet, this function does not get commensurate investments as much as some other functions get. Given that procurement plays a very important part in achieving cost reduction objectives of organizations, this division has increasingly started to re-look at various ways of identifying areas of process improvement, gather insights from historical data, and arrive at ways to engage better with suppliers with the single objective of lowering procurement costs.
In most organizations, less than two third’s of their procurement is currently under contract. As per Aberdeen Group, best in class (Top 20%) organizations take 3-8 days to process an invoice and show a 4.1% year over year increase in early payment discount capture. Corresponding figures for laggard (bottom 30%) organizations is 20.8 days and 0.5% and for industry average (middle 50%) is 9.7 days and 1.3% respectively.
The Accounts Payable (AP) is still an extremely paper heavy process in most organizations and has great potential to drive cost savings. What makes it more challenging is the huge volume of invoices that most mid to large organizations process every year. Best in class organizations have invested in invoice automation solutions. They are therefore able to ensure that invoices are effectively managed across its lifecycle from receipt, exception and mismatch handling through to the approval and payment process and invoices are archived in a central, searchable location. Approvers are able to manage approvals on their smartphone. These solutions continuously bring down the average invoice processing cost. They are also able to provide visibility to their CXO’s into key performance indicators (such as global visibility into liabilities) on their mobile device or desktop.
Vendor Invoice Management (VIM)
With the SAP-OpenText solution for Vendor Invoice Management, organizations can:
- Bring down the cost per invoice, bank transaction fees, discount leverage with suppliers etc.
- Ensure better cash utilization based on comprehensive insight into payments
- Enable state of art shared services delivery platform
- Bring down their cycle time for invoice processing from weeks to days
- Bring down the number of supplier calls significantly as a result of improved visibility into the overall process both for internal stakeholders as well as suppliers
- Negotiate better discounts with suppliers and ensure that all discounts are taken
- Improve overall productivity for the Accounts Payable department
Significantly improve vendor relationships
- Bring down risk of non-compliance or fraudulent and duplicate payments
The solution has an optional OCR component. Invoices can arrive in any format (paper or electronic or via a supplier network such as Ariba or GXS). The solution allows the invoice meta data to be validated and analyzed for potential duplications, mismatches or exceptions, passing through workflow approvals including to defined roles in case of exceptions which are appropriately recorded for audit trail. Finally the invoice once approved is passed through for payment. The solution has a detailed reporting feature that shows various trends and root cause analysis.
The SAP OpenText VIM solution is a pretty mature product with over 10 years experience and over 800+ customers across industries.
One of the world’s largest organizations in the business of integrated fibres and polymers needed a solution to streamline their Accounts Payable operations and simplify and automate their invoice processing. They had multiple challenges including inadequate accounts payable process control, excessive cost per invoice and difficulty in preparing accruals. They were looking to improve vendor discount opportunities and vendor relations.
They needed a three way match which involved matching the Invoice to the Purchase Order and the Goods Receipt Note. They also wanted to implement a scanning and indexing solution and standardize their process with invoice exception blocking and workflow. They wanted a scalable solution for their global offices including North America and Europe. Further, they wanted a web based invoice approval for services and a non-PO based invoice approval for their entities in Europe.
With the SAP-OpenText Vendor Invoice Management Solution, they were able to not only meet their stated requirements but were able to significantly reduce the percentage of overdue invoices month on month, thus being able to capitalize on negotiating better discounts with their suppliers and lowering their overall costs.
When it comes to Accounts Payable, automation is where rubber hits the road. Financial transformation with Invoice Automation allows organizations to take advantage of better supplier relationships and discounts. This is only possible if the enterprise has adequate insights into where invoices and purchase contracts deviate from what was agreed. Best in Class organizations pursue comprehensive AP automation and drive continuous performance improvements as a result.