Why Making Vendors Adhere To Your AP Automation Guidelines Isn’t An Optimal Solution

If you’ve read our blog posts in recent months, you have undoubtedly noticed that we have been encouraging people to critically investigate claims by vendors that they can deliver 100 percent electronic invoice data through e-invoicing or supplier portals. Now we would like to delve into the intriguing and often overlooked topic of “beating up your vendors” when it comes to accounts payable automation. We found an interesting blog post by Chris Elmore, author of the 2011 book The 8 Pitfalls of Accounts Payable Automation, who has first-hand knowledge of the trials and tribulations of AP automation for companies. His short piece illustrates why making your vendors go into a portal and enter their information to adhere to your particular invoice format is a losing proposition in most instances. Elmore outlines why a retail behemoth like Wal-Mart can get away with this strategy – because so many vendors want to do business with one of the world’s largest retailers – and also describes why for most companies it won’t prove effective in the long run.

We particularly support Elmore’s following observation: “I have found that with more choices, like email, outsourced scanning and a vendor portal (just a few examples) it takes you out of the position to ‘sell’ the automation idea to vendors. There is a direct link between the change you make your vendors do to adopt and how long and contentious your implementation process is.”

The fundamental choice you need to make is whether you will take on the challenge of managing change across all your vendors or opt for a solution that eliminates this change management challenge by creating a single-stream process that accepts all invoices regardless of format and turns over to you the electronic data necessary to automate 100 percent of your invoice stream. Under the latter scenario, there is no vendor dependency whatsoever, and your vendors don’t have to do anything out of the ordinary. That leads to true purchase to pay automation, as opposed to passing the responsibility of manual data entry on to your suppliers in an attempt to achieve something that is less than true automation.

In the final analysis, success will be determined by how well your purchase to pay automation strategy engages and supports the overall effectiveness of your channel. If your strategy merely shifts cost to your suppliers and does little to eliminate costs altogether, your ability to reap long-term savings is put in jeopardy. Providing options to vendors and using leading edge technology and business best practices to digitize and automate invoices provides the greatest opportunity for successful automation, more solid supplier relationships, and overall cost savings that are sustainable into the future.

Feel free to tell us what you think or ask a question by dropping us an email at info@DataServ.com.