If your success depends on everyone inside your organization doing the same thing, you have a training and compliance challenge. Not easy to meet, but not impossible.
If your success depends on everyone outside your organization doing the same thing, then you have an incentive challenge. And that can prove to be pretty much impossible.
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If people outside your organization are asking the question, “What’s in it for me to change the way I do things,” and the answer doesn’t outweigh the time, money, opportunity, and hassle of making the changes they have to make in order to do things your way, then you won’t be successful in getting them to do things your way.
That has always been the problem with the technologies that were touted as the ultimate solutions for AP automation. Your chances of getting 100 percent compliance from those you are paying are very slim. And while anything less than 100 percent compliance helps the problem, it doesn’t totally solve it.
The problem, as you probably know, begins with the intake process. Invoices and their supporting documents are submitted via multiple methods. Some may be sent in through EDI or retrieved directly by your AP department. Some come in through email, and those usually end up getting printed, sometimes in multiple copies before they are paid. And some will come in on paper and will probably be copied before being routed to an approver.
Inside of those transmissions, there is also a lack of consistency. One email might have multiple attachments and each one is a single document. Another might have one attachment but it will have multiple images and each image is an invoice. That means there is no standardization of how the documents arrive to you. It also means that every piece of information received is a manual process that involves a high level of decision making on the part of your AP staff.
I remember when industry experts said that EDI was going to create the standardization necessary to solve the intake process problem. It didn’t. EDI required your vendors to invest in technology that had to be set up, configured, and maintained at both ends of the transaction. It required them to change their process, which meant training, learning curves, and lost productivity. For many vendors, the ROI just wasn’t there and they didn’t buy it.
Then supplier networks were introduced to solve the problem. But that isn’t getting total compliance either. Surveys report that companies using a supplier network are still processing at least 25 percent of their invoices manually.
Your vendors who haven’t set up an EDI system or jumped on board the supplier network train aren’t just being difficult. They’re just like any other business; basically they want to sell stuff, they want to get paid, and they want to have a profit margin. If you’re asking them to make changes that aren’t cost effective for them you’re cutting into their profit margin and they have to weigh that against the possibility of not selling to you or waiting a little longer to get paid.
You probably work with vendors across a large spectrum of size and business models. They’re not all in the same position when it comes to finances, technology, or staffing. What might be an adequate incentive for one to change to a supplier network will be meaningless as an incentive for another company. So, for some of your vendors, it makes sense to comply with your request for them to join a supplier network. But, others will consider compliance unnecessary or even unfair.
Vendors that are not likely to see benefit from joining a supplier network tend to fall into one of three categories – too small to afford a change, too big to need to change, or they are the single source for what you need.
If you are doing business with small “Mom and Pop” suppliers you need to remember that they send comparatively few invoices and it is practically free for them to email you or even print and mail your invoices. They are too small to get a return on technology, so unless you are by far their largest customer, you probably don’t offer an incentive that makes compliance reasonable for them.
At the other extreme are the large vendors that command huge market share and offer the best pricing. If you want to buy from them, you have to comply with them, not the other way around. And, it may not be cost effective for you to change vendors.
Lastly, there are the industry specific suppliers. Raw material vendors, for instance, have a virtual corner on the product they supply and they aren’t likely to respond to any incentive or threat that requires an investment on their part.
Regardless of their reason for not complying, presumably you’re purchasing from each of your selected vendors for a reason. Perhaps they are the only game in town, or their pricing is the best available, or you have a trusted relationship based on quality and service. In any case, your purchasers have chosen this vendor. Is that a relationship AP can sacrifice? And do you really want to force your vendors into an arrangement that is costly and unfavorable for them?
In reality, asking 100 percent of your vendors to comply with any system you choose is not a reasonable ask. The only way to achieve 100 percent adoption is if you are willing and able to change your vendor relationships so that you are only doing business with those vendors for whom your chosen solution is a win-win for them and for you. For most companies that just isn’t practical.
What is practical is to partner with experts on the automation of the intake process either for all of your invoices or the “leftovers” that aren’t compliant with your existing solution. With our Digital Mailroom automated intake process in place, all of your documentation is standardized before it reaches your staff. Essentially, our people solve your problems so your people don’t have to.
That is the one time that if your success depends on getting everyone outside your organization to do the same thing, it’s not only possible... it’s guaranteed.