Automation is the key to better AP compliance
The CFO of one of your major suppliers is on the phone. She wants to know why your payments have slowed down, with some bills going unpaid for long periods of time. Your Accounts Payable (PA) team previously efficiently managed invoices to capture discounts for prepayment. What’s going on ?
Automated AP systems are designed to avoid such invoice management issues and reduce risk by increasing compliance with a company’s fraud prevention guidelines and rules. It’s a booming market, with investments in AP technology expected to grow from $ 1.9 billion in 2019 to over $ 3 billion by 2024, according to PYMNTS.com.
Different systems take different approaches to achieving beneficial goals, but they operate on the common idea that the more automated the process, the fewer human errors and the better the compliance performance of the business, say specialists. of the sector.
From a high-level perspective, a state-of-the-art AP solution enables an organization to receive and process invoices in all formats from vendors around the world, automatically and in a compliant manner, says Martti Nurminen, CFO of Basware, an AP Automation Developer.
âWith 100% good quality and available billing data, a business has a great foundation for an automated AP process. Ideally, the entire process, from receiving invoices to processing them, is automated, âhe said. âThis means less human intervention, more precision and, ultimately, more compliance. Indeed, we can call this process automated compliance in AP.
Rajeev Subramanyam, senior vice president and general manager of Emburse Pay, cites the increased use of machine learning and artificial intelligence in the compliance process to improve compliance.
These capabilities include the prediction of key fields in an invoice to minimize the number of keystrokes required from receipt to payments. âThe lower the number of human interactions required to process an invoice, the less chance there is that compliance issues will be introduced,â he said.
Another trend cited by Subramanyam is establishing deeper levels of connectivity and collaboration between suppliers and buyers within the AP system. âOf course, that means more interactivity between the two parties,â he said. “But it can also increase the level of automation and provide controls to ensure transaction data and vendor information is up-to-date and accurate, thereby improving compliance.”
Ideally, increasing the level of automation at access points shouldn’t create new problems, Subramanyam said. Compliance issues typically stem from issues with routing approvals and compliance rules incorrectly applied to an invoice. âSince these rules are created by the finance department when configuring the AP solution, if done correctly there shouldn’t be any issues going on,â he said. âIf any compliance issues are detected, it should be a relatively straightforward process to adjust the rules within the system. “
To the extent that the introduction of automation creates problems, it could stem from what Sanjay Champaneri, senior analyst at Gartner, calls dashboard fatigue – employees don’t learn or make mistakes. using new workflows or new dashboards.
If that fatigue were to set in, it would “slow down the whole work queue,” he said. Therefore, it is important that AP tools are “designed to interact with humans in a user-friendly manner, things like approvals being an example,” he said.
Benefits of metadata
CFOs can choose from a range of AP automation solutions in what Champaneri calls an extremely fragmented market.
In the API (application programming interface) accounts payable market alone, for example, vendors can offer three functional areas: invoice entry, processing, and payment with compliance and analysis capabilities. .
Given this fragmentation, CFOs can begin the selection process by determining which capabilities and features are most important to their organization’s needs and compile a shortlist of vendors that meet those needs. âFeatures could include the ability to manage complex routing rules, make payments to vendors directly within the solution, and the type of integrations offered with enterprise ERP (enterprise resource planning system). Said Subramanyam.
Jason Boyles, director of product management for the AP solution at GEP, believes that having a data-driven AP system is essential, especially one that uses metadata. Paper invoices provide basic billing information. These documents can be digitized, but working with digital invoices offers multiple advantages from a data collection and management perspective, as they can include additional metadata. For example, digital invoice metadata can help route invoices, add account codes, or provide other information to facilitate processing.
âMost are printed on the invoice, but there might be additional things that could be passed on by the supplier. Boyles said. âThis will facilitate the transition from the electronic only version to a digital version, which is truly the automation of metadata. “