Top tips to improve your invoice process: part one
Accounts payable (AP) departments are taking an increasingly active role in helping businesses to grow competitive advantage. No longer used simply to process invoices and re-key data, today’s AP teams make significant contributions to business strategy – using the wealth of data at their disposal to assist with C-suite decision-making and to strike better deals for the firm.
Of course, this means more work. And if an AP team is to truly contribute to the growth of the business, it’s important that it’s empowered to spend time on higher value tasks, rather than getting bogged down in manual processes.
In this two-part series, Dafydd Llewellyn Managing Director, UK SMB at Concur, provides his top tips for improving an invoice process and showing the true value of an effective AP team.
Start with an audit
Did you know that 57% of invoices are still received on paper? That the average invoice involves 15 people and takes more than seven days to process? Or that more than half of finance teams are unable to identify their supplier invoice liabilities at any given time?
Often, we’re so busy ‘doing’ that we don’t have time to stop and think. But while it can be tough, finding the time to ask yourself some simple questions about your invoice process – such as how often you make late payments or whether you’re effectively reclaiming VAT on your purchases – can highlight your pain points. And opportunities for improvement.
Assess your current costs
Of course, you may not know the answers to all of the questions raised in an audit. But by taking a closer look at each stage of your AP process you can begin to get a clearer idea of the problem areas and hidden costs involved.
For instance, a business may forget to account for the cost of processing invoices. Ardent Partners estimates that the average invoice costs £9 to process – and this can quickly add up. To put this into context, if an AP team were to process 1,000 invoices a month, that would cost the company £108,000 a year.
Identify the inefficiencies of paper and spreadsheets
In the 21st Century it’s somewhat surprising that many companies still handle their invoice processes the way they always have – with paper and spreadsheets. And while this may work for small businesses, as they grow, the number of employees, approvers and office locations can become almost impossible to keep track of – leading to duplicate payments and other errors that simply have no place in modern finance.
Spreadsheets are a handy finance tool, but they weren’t designed to shepherd a process. They don’t have the built-in workflows or triggers needed to shorten the payment cycle. The more you can cut them out of the overall AP process and replace them with automated options, the more visible, accurate and efficient the process will be.
Work out where your time-savings lie
It’s one thing to use data to save time, but AP teams should go a step further and save time in the process of capturing the data itself. First, they should centralise where invoices are sent. Then, by going electronic they can take advantage of optical recognition tools to cut data capture times in half or more. Teams should import invoices directly into their finance tool to save time on fact-checking and further down the line during audits. Finally, they could take the process off of AP employees’ shoulders completely, allowing them to focus on higher value tasks by outsourcing data capture to a specialist team of invoice experts.
Remove the margin for human error
It doesn’t matter how smart you are. We’re all human and we all make mistakes – finance professionals included. AP teams can look to minimise their exposure to human error by automating as much as possible. This should start with heavily manual processes such as rekeying data into financial systems and can progress to helping catch duplicate and fraudulent invoices. Just set up a search by invoice number that flags when an invoice comes up twice in your queue before you end up paying double.
For more information, check out Concur’s whitepaper, ‘A 10-Step Guide to an Efficient Supplier Invoice Process’
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Concur, a part of SAP, is the leading provider of spend management solutions and services in the world, helping companies of all sizes transform the way they manage spend so they can focus on what...