Last week I discussed ‘Taking Accounts Payable to the Next Level’ and transforming the accounts payable (“AP”) function from a tactical operation to a strategic one. I spoke about leveraging technology to facilitate this transition and the benefits to be gained. One of the biggest impediments to becoming more strategic is having to deal with exceptions, manual or otherwise. Exceptions, mistakes, and errors are a reality in life as they are in the business world.
Our newly released Ardent Partners ‘State of ePayables 2018: The Future is Now’ (click here to download) research study pinpoints the current trends in the AP market. We detail many different developments such as adoption of technology, perceived value within the organization, and the ability to manage business spend. However, there is one figure from the study that represents everything that is fundamentally wrong with today’s AP function: 24% of the average AP staff’s time is spent working directly with suppliers to fix invoice processing, and payment errors. Nearly a quarter of AP’s time is spent handling exceptions such as disputed payments, missing invoice data, incorrect posting information, and matching failures.
Unfortunately, invoice exception handling is not just relegated organizations that are still processing invoices manually. Invoice exception handling, and the associated time required to address them, also occurs in many organizations that have already invested in an ePayables automation solution. The question is why? Why does AP still spend so much time handling invoice exceptions? The answer is that simply having an ePayables automation solution is not enough. Work needs to be done at the onset of any automation project to ensure that invoices being submitted have the required data for ‘straight-through’ or ‘touchless processing’ to occur. Exceptions are going to occur, AP organizations need to work with suppliers, business units, and procurement, to correct the issues so the same errors or mistakes do not continue to cause problems time, and time again.
If AP is to move into its next phase of evolution, its staff cannot spend a quarter of its overall time tracking down phone numbers, correcting erroneous contact information, and interacting with suppliers to lock down missing pieces of information and/or fix mistakes. In order for AP to shed the last remnants of its tactical, back-office legacy, it needs to ensure that the scourge of invoice exceptions and other day-to-day annoyances are not part of the AP function of the future. The good news is this is not an insurmountable task. The technology that exists today has been proven to help increase ‘touchless’, ‘straight-through’ processing of invoices, and greatly reduce the need for time-consuming (and costly) manual handling. However, as stated previously, automation alone will not solve this problem. The exception queue must be managed, problems corrected, and standards put in place to ensure receipt of the proper information going forward. By combining all of these things, the amount of time AP is spending on exception handling will greatly and significantly diminish.
Final Thoughts
When AP departments learn that exceptions are meant for learning, not repeating, then, and only then, will they be able to successfully reach the ‘next level’ and become more strategic to their organization. Famed Irish playwright George Bernard Shaw put it best when he said “Success does not constitute never making mistakes but never making the same one a second time.”
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Download the State of ePayables 2018: The Future is Now Report Today!
Monday First Thing: Taking Accounts Payable to the Next Level
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