Back in the day, when we were just building DataServ’s single stream approach to AP Automation, people would ask us “But why would I want to pay bills any sooner?”
Of course the goal isn’t to get you to pay bills sooner, it’s to put you back in the driver’s seat when it comes to cash management.
We believe it should be possible for you to pay every invoice:
- Regardless of whether or not it has a Purchase Order associated with it
- No matter the format it was in when it was submitted
- With the input of anyone who has to approve it
- Regardless of which location or country they are in
- And regardless of the ERP where it will be recorded
You should be able to pay an invoice when it is most advantageous for you to pay it.
We also believe you should be able to see the status of every invoice from the time it is routed for approval to the time it is paid so that you can make wise, informed decisions about expenses and investments.
The Pitfalls of Manual Invoice Processing
It is very common for employees to have invoices routed directly to their desk via mail or email. There it might sit until it is due, or even past due, because it never got approved and entered into the system. These “invisible” invoices also create haste or even panic when they eventually show up in AP to be paid. They can also create a more costly paper trail because everyone has to have their own record; So they make a physical copy before passing it on.
Even more common now is that invoices come in to a single P.O. Box or to a single email, sometimes printed, get sent out for approval, and then fall through the cracks until again, they’re due or past due. Sometimes they’re sent to the wrong person to approve, sometimes they get lost in routing, sometimes they just hang out there because the manager who needs to approve them is out of the office or overwhelmed with other work.
Lack of Prioritization
For a lot of managers, AP is the oft-neglected stepchild. We say, “You need to approve your invoices,” and they think, “Yeah I know, but I’m busy doing my real job.” And because they really are busy with their “real jobs,” if there is no system for tracking that invoice it’s basically “out of sight out of mind.” And then you get stuck with all those rush payments, adjusting entries and accruals that now have to be handled along with your month-end close.
Depending on their Delegation of Authority structure, many of our clients tell us their invoices could be in their old system for weeks or even months before they were approved for payment, let alone paid. We even had one large company report that, prior to migrating to DataServ, they couldn’t accept any contracts that required payment in less than 90 days because they couldn’t guarantee that invoices would be processed in that time frame. By having all invoices routed through a single checkpoint (DataServ’s Digital Mailroom) and imported into a single data extraction process, their invoices can now move through the approval matrix in a week or less.
The Benefits of AP Automation
Having the ability to approve invoices that quickly doesn’t mean you’re going to pay invoices as soon as they’re approved. It does mean that when you need to pay an invoice it is already approved and ready to be paid. That means you are able to better manage your cash, because you can see what is going to be required to cover outstanding invoices. You can pay invoices either when they are due to avoid late fees, or early if that will generate a significant discount. The system will even flag invoices that have an early pay discount available so they’re at the top of your queue.
It also means you can track where an invoice is “stuck” in the approval process. You can ping anyone who has yet to approve an invoice and make sure it’s moving through the system in time to be paid without late fees. Invoices may also be automatically escalated if not approved within a specific timeframe or moved proactively to a different approver, if the approver is on vacation.
So yes, we know your goal isn’t to pay your bills sooner. But if your goal is to know what is due to be paid when, and to have invoices approved and scheduled for payment at the ideal time to avoid late fees or to take advantage of all available discounts, we can help.