How to Achieve Touch-Less Invoice-to-Pay Processing
Straight-through processing. Touch-free invoice processing. Hands-free invoice processing.
No matter what you call it, accounts payable (AP) professionals can be excused for dreaming of the day when the invoices they receive from suppliers are posted directly to an enterprise resource planning (ERP) application or accounting software package without anyone having to lift a finger.
But the way that most AP departments process and pay invoices is more of a nightmare than a dream.
From keying invoice data and chasing down approvals to resolving exceptions and executing payments, the invoice-to-pay process at most organizations involves lots of manual intervention.
Only 26 percent of invoices are posted without any human intervention, studies show.
Worse, the burden of manual invoice-to-pay tasks only gets bigger as an organization grows.
No wonder 38 percent of AP leaders surveyed for the Institute of Finance and Management’s (IOFM) 2023 Accounts Payable Performance benchmarking report identified automating manual tasks as their top priority and 37 percent of AP leaders cited improving processes as their top priority.
Additionally, McKinsey estimates that 79 percent of invoice processing tasks are “mostly or fully automatable.”
Top barriers to touch-less invoice-to-pay processing
So, what’s standing in the way of touch-less invoice-to-pay processing?
A lot of the blame for manual invoice processing can be placed on the antiquated approach that most AP departments take to capturing the amount, due date, purchase order (PO) number, quantity, pricing information and other header and line-item details from the invoices submitted by suppliers.
Outdated approaches to processing invoices contribute to two common types of exceptions:
At best, manually keying invoice data is 98 percent accurate. While a 2 percent error rate may not sound like much, a single typo or transposed number can create big downstream problems and potentially delay the financial close. Making matters worse, keying errors are unpredictable and can be difficult and time-consuming to detect.
Optical character recognition (OCR) exceptions.
OCR technology is between 80 and 99 percent accurate, depending on the complexity and the quality of the supplier invoice. But errors in how OCR templates and data extraction rules are set up can also contribute to invoice exceptions. OCR systems also generate false positives. Artificial intelligence (AI) will not catch every OCR capture error. And there’s no guarantee that an OCR system will accurately match a supplier invoice with PO data residing in a buyer’s ERP or accounting software package. Forty-four percent of AP departments say they experience a first-pass mismatch on 11 percent or more of their PO invoices, IOFM finds. Moreover, ensuring optimum performance from an OCR system requires constant maintenance and training.
Similarly, undetected duplicate invoices compound the problems caused by manual and OCR exceptions.
The benefits of intelligent data capture
While AP departments cannot prevent certain types of invoice exceptions – such as supplier invoices that don’t include a PO number – the intelligent data capture technology built into integrated invoice-to-pay platforms can help AP departments take a giant step towards touch-less processing.
Intelligent data capture uses OCR and other technologies as well as humans-in-the-loop to extract header and line-item details from invoices with 99.5 percent or better accuracy. Intelligent data capture solutions also provide a single platform for processing any supplier invoice, regardless of whether it was submitted via the mail, email, secure file transfer, or a portal. And in cases where there is a true invoice exception, the best invoice-to-pay platforms provide autonomous detection of invoice exceptions, expert-assisted resolution services, and online collaboration between parties.
By capturing invoice data with such a high degree of accuracy, and streamlining the resolution of invoice exceptions, intelligent data capture solutions reduce the cost to process invoices by 60 percent or more, eliminate process exceptions, and free staff to focus more time on higher-order activities such as analyzing invoice data for opportunities to capture early payment discounts.
Ready to make touch-less invoice-to-pay processing your AP department’s reality?
- Assess your department’s current invoice-to-pay technology. Does your department rely on outdated OCR technology?
- Evaluate your current processes. Look for opportunities to eliminate manual tasks such as keying, shuffling paper and emails, fixing errors and mistakes, and chasing down approvals.
- Benchmark your department against your peers. Does your AP department manually handle too many of the invoices it receives from suppliers? What percentage of the invoices you receive can be posted directly to your ERP application or accounting software package?
- Strive for end-to-end automation. Give preference to solutions that will automate your entire invoice-to-pay cycle – from invoice receipt through payment reconciliation.
AP departments no longer need to settle for manual invoice-to-pay tasks.
The intelligent data capture solutions built into integrated invoice-to-pay solutions eliminate the manual and OCR exceptions that stand in the way of touch-less processing.
Edenred Pay, an Edenred Company, is the global leader in invoice-to-pay automation. Our integrated platform connects businesses with suppliers, ERPs, banks, FinTechs, and payment rails to automate, optimize, and monetize the entire B2B payments lifecycle – from invoice receipt through payment reconciliation. Edenred Pay’s efficient, integrated solutions create a frictionless process and help deliver value to the enterprise by enhancing visibility and monetizing AP.