Here at Accrualify, we’ve heard it a million times: processing vendor invoices is a tedious task riddled with errors that bottleneck operations. Data entry is, unfortunately, the name of the game. You start off as a young company processing just a handful of invoices. But then, your business grows, and you become inundated with bills. You find yourself spending a significant amount of your day performing data entry and vendor follow up.
Entering vendor invoices or bills could become even more daunting depending on your ERP system—with all of its configurations and required data fields. Not to mention, the invoices themselves are never consistent and vary from vendor to vendor, sometimes even within vendor organizations. Throw in some added complexities, like currency and taxes, and things could easily get out of control.
There are several options available to companies that want to better manage their vendors and vendor invoices. Let’s explore some of those options here.
Hire an AP clerk:
As a company continues to grow, it might consider finding an accounts payable (“AP”) clerk to manage vendors and invoices. This solution is a temporary fix, and, soon enough, the AP clerk becomes overwhelmed with stacks of paper on their desk and loads of emails hitting the AP alias. Some companies hire additional AP clerks, but the ratio of invoices to AP clerk is limited and costly.
Introduce an invoice automation software:
There are several solutions out there that can help you with automating data entry and synchronizing with your ERP system. Since it’s in my vested interest, I’ll talk about one of those solutions directly, and, if needed, mention some of the others indirectly.
Invoice automation software can come with some great benefits like:
- OCR – optical character recognition and automated data entry
- Workflow automation and approval automation
- Batch synchronization
- Vendor management
Some systems focus on the SMB market and, to do so effectively, provide a limited solution that may have basic invoice processing and workflow. More robust systems geared toward large and enterprise companies often come with high implementation costs and bloated processes.
These reasons are why we at Accrualify made sure our invoice automation software offers flexibility and robustness within a reasonable budget. Highlights of the Accrualify Invoice Management Module include:
- OCR – Our optical character recognition can pull some of the basic things like PO number, vendor name, amount, and payment terms. Other fields are available for more sophisticated ERPs.
- Artificial Intelligence and Data Entry – We learn your company. Once we commence processing your invoices, we learn the appropriate GL coding and code each invoice so your accounting team simply reviews.
- Vendor Portal – We expose our vendor portal to your customers providing key payment metrics and analytics. Vendors self-serve and can investigate payment status, as well as update banking information and W-9s
- Accruals – We are the only solution to automate accruals, which are an integral part of invoice automation. Book your month-end accruals and match them to your invoices. Run an accrual rollforward report to satisfy auditors.
- Invoice Workflow – Our customers have the ability to design complex workflows. You can use dollar amount thresholds or require team approvals, like from finance. You can route approvals based on department or subsidiary. Any number of workflow logic is available.
- Payments – Not only do you need to get your invoices into the system, but now you need to pay them. Domestic ACH is king, but the need for manual checks and international payments is also there. Our system supports all three, while other systems may have limited payment capabilities.
Whatever system a company deploys, getting thrown into a software solution is overwhelming and could frustrate your users and vendors. I keep thinking about these companies buying a sophisticated, bloated ERP, vendor portal, and invoice solution only to be frustrated by lack of support and functionality. Because we don’t believe that’s right, we price our software to ensure white glove support. Our customers can leverage our experts to help them navigate the platform and learn at their own pace.
I’d like to end this section of my article letting you know that we are pro people and would never want to replace any accounting clerks. Rather, we look to enhance your clerk’s’ roles, free them to be more efficient, and focus their efforts on more important, less redundant tasks.
Complete AP outsourcing is an option some CFOs and controllers take when their finance team doesn’t have the time to manage vendors and bill processing in-house or have been burned too frequently with errors by internal staff. Their answer to these problems typically is to outsource the management of their procure-to-pay processes, including bills.
In most of these instances, known as business process outsourcing (“BPO”), the firm that is contracted has an office located in an offshore location that throws bodies at the task. This simply shifts the administrative work to another, cheaper labor source but opens up an entirely new set of problems. With no technology involved, this solution is not scalable and key data points will be missed.
In my experience, a successful outsourcing firm will have a key technology partnership to process those invoices. Essentially, BPO firms are using a software themselves to become better at processing invoices. Technology has come a long way, and, with the continued advancements in character recognitions, AI, and machine learning, the ability to process invoices has become closer to a fully automated process. There will never be a substitute for human review, but a 95% accuracy rate is well within reach.
Whether a company wants to control the vendor relationship or wants to outsource the AP function, having an invoice automation software is instrumental in the growth of that company. Imagine processing 1,000 or 10,000 invoices per week or per day. Big business is leaning more on invoice automation software, and those that use technology to learn and record the data are becoming invaluable to company executives.