Let me start by asking you this? Do you think AP automation is exceptionally valuable in 2021?
AP automation is a hot topic right now – a simple search for “AP automation” returns over 60 million results. Tungsten Network recently reported that for many, especially in the enterprise space, automating and optimising Procure to Pay (P2P) processes has become their highest, near-term priority.
If, like me, you have been attending market-leading events during the course of the pandemic, you’ll have heard countless finance leaders complain that core business processes, like supplier spend, have been thrown into complete disarray, as their teams have been unable to get into the office and follow their existing, often manual processes, so the need for change and improvement has been accelerated into focus and moved to the top of their to-do lists.
You may be surprised to learn that AP automation is NOT the answer…at least not to everything…
Where does AP Automation fit in?
Many technology companies will make you believe that AP automation will fix all your problems and drive the business value up – telling you that you will never need to deal with a paper invoice again. Whilst it is true that AP automation allows you to drive greater control over how invoices are processed – ensuring that invoices are not missed, lost, payments delayed, and that your approval policies are adhered to – it is important that you understand that finance systems will only process that they see within the system – they cannot ‘mark their own homework’. Fewer eyeballs performing manual checks and a lack of critical insight into your supplier spend will undoubtedly result in the presence of fraud and risk, and the longer it is left undetected the further embedded it becomes.
Many ERP providers do not invest in the features that truly optimise P2P – for example, access to forensics and AI-driven analytics – and so the implementation of AP automation as a stand-alone solution means that any level of control is driven by the approval and exception workflows that already exist within your system.
AP automation does not eliminate the risk prevalent in AP
There is no doubt that automating some or all of the P2P process leads to a reduction in manual errors made. However, organisations are unlikely to have a full no-touch straight-through processing system, which means that there will always be the need for manual interventions. Instead, most companies see greater benefits when they have a combination of the two, which adds another layer of complexity. There is still a huge amount of manual intervention required with blocked or failed invoices, and having been involved in P2P optimisation at several large, global organisations, FISCAL Technologies’ know that one of the biggest sources of waste in many P2P functions is the volume of invoices that cannot be automatically approved for payment because they do not match the purchase order (PO).
OCR is the poster child for AP automation, but OCR accuracy is unreliable. Firstly, accuracy rates are often quoted at the page level rather than the character level and so increasing the percentage of ‘straight-through’ invoices inevitably leads to an increased risk of payment errors and fraud, without introducing additional checks. Secondly, OCR is known for creating mis-scans, for example, ‘o’ versus ‘0’ and ‘5’ versus ‘s’, etc., which can create a large volume of exceptions that cannot be passed through the automated process. A lot of time, effort and resource is needed to deal with these manually.
Many Invoice Capture (IC) solutions have the ability for supplier self-serve. This relies on the supplier inputting the correct information and providing a PO.
AP automation can be described like a driver-less car – it’s a great idea, but the technology isn’t reliable enough to eliminate the need for someone behind the wheel to keep an eye on the road.
AP automation is a good starting point
By automating part or all of your AP processes, you are bringing a change to wastage in:
- Saving time, resource and money by allowing your skilled team to concentrate on value added tasks.
- Reducing some of the types of error found in manual processing.
- Ensuring greater consistency – Despite best practices being put in place, many finance team members have their own ways of doing things. Automating processes creates greater consistency within teams, reducing the chances of mistakes by information gaps.
- It can aid in reducing the chance of fraud caused by a member of the team: As much as you trust your team the temptation to commit fraud is too great for some people. Automating standard finance tasks makes things a lot more secure.
Add in forensics and AI-driven analytics for continuous monitoring of your suppliers and invoices
What AP automation does not deliver is the ability to audit 100% of your transactions prior to payment. Therefore, you are still at risk of overpayments and invoice mandate fraud. There will be less eyeballs, less manual oversight, but a higher processing velocity.
Accelerating the detection and prevention of cash leakage, NXG Forensics from FISCAL technologies delivers oversight to your whole P2P process, validating and highlighting any errors not flagged by your finance system, prior to payment.
I will leave you with this – are you ready to lose access to your banking app and bank statements because your direct debits and contactless payments have everything under control?
Visit www.fiscaltec.com
