The Accounts Payable (r)evolution as we see it

In the beginning there was a paper invoice, which typically required someone from the seller business to hand deliver or post it to the buyer. This was followed by a close collaboration between the buyer’s Finance Department and Operational staff, and there was also a requirement to have the invoice manually approved, mostly using physical signatures. If there was a system at the buyers end to do the financial allocation of the payable, an early stage ERP system, it would have often been a home grown, green screen mainframe system. A processing cost per transaction was high and error prone, and the filing cabinet providers benefited out the all the space this flow of information required.

This “era” was followed by the foundation of ERPs as the developments in IT opened up new possibilities. Processes in a lot of businesses became more centralized and movement of procurement and AP functions towards each other slowly began to take place. Also an operational shift took place where the ERP systems were managed by a centralized finance function in the business, however the business approval of spend typically is where a lot of businesses were losing visibility. This was followed by further development of AP towards centralization, for example a lot of Shared Service departments were founded. AP being in the heart of a shared service function was an area where development of technology could really be leveraged. Around this time a lot of service and technology providers took up the challenge and developed simple but effective “outside–ERP” AP processing platforms with simple Optical Character Recognition (OCR) capabilities. These platforms enabled businesses to support the centralization of the core AP functions in a new and meaningful way and I would call this an AP revolution. In a best practice AP environment at the time, you would have a central invoicing address for your suppliers, 1-2 scanners to scan the invoices, supported by an OCR that perhaps captured a field or two out of the invoice, before getting manually fixed by the AP and saved into your workflow solution. Some businesses were still developing AP workflow and approval mechanisms in their ERPs, but a clear trend was towards a fully electronic invoice approval workflow which maintained a full audit trail through the invoice lifecycle, captured the GL allocation and the cost items from an invoice and appreciated the ERP solution by integrating with it, both by collecting the master data from it as well as pushing the data back to the ERP solution at the end of the approval flow. This enabled the foundation of some sophisticated AP functions, where the visibility of cash was increasingly important, processing cost per transaction was lower than ever and auditing was a function of running database queries rather than fighting through an endless pile of maps with approved invoices.

Can it get any better than that?

Short answer is yes, and it has.

Today, if you look at an invoice where the whole financial process originates from and try to bring together all the touch points of that single invoice, you have to ask yourself a question: Why on earth does the invoice need to be on paper in this era of cloud revolution? If you look at the supplier’s process on generating a sales invoice, it is in an electronic form isn’t it? If you look at the other trading partner here being the buyer, you get to the same resolution. So the question is if the invoice today is generated in an electronic format on the suppliers AR system, why does it most of the time get printed onto paper, enveloped, stamped, delivered to the local postal institution and in the end this physical delivery process which is not environmentally friendly nor cost effective, ends up with the buyer which after the initial processing steps most likely scans or keys that into their ERP solution or AP processing workflow and the same invoice becomes electronic again.

Most of the invoices in A/NZ region are still physically delivered between the supplier and the buyer when there are technology solutions out there that are not prone to errors, are environmentally friendly, paperless, increase visibility between both the supplier and the buyer and bring cost efficiencies for both of the trading partners. Now that the role of the AP has truly transformed to something that only deals with the exceptions, isn’t it the job of the technology to support that so that the number of exceptions within the AP process is minimal, maximizing in turn the straight through processing capabilities? If you answered yes to that then the way to make sure your transactions are correctly presented in your AP or Procure-To-Pay solution is to make sure you get the information as it was being issued by your supplier. Best way to make sure the information is truly accurate is to make sure the information is correct at its source. The source is the supplier not the paper invoice you receive, and all you have to do to achieve this is to introduce electronic invoicing to your suppliers and start receiving all your invoices electronically. This is what operator driven electronic invoicing can do for your business.

The customer view – receiving, processing and paying accurately

An electronic invoicing solution where the eInvoicing operator in between the trading partners works as a traffic police, making sure the accuracy of information is maintained through the delivery from the supplier to the buyer, is here today making sure the accuracy of the invoice at its source only truly enables the automation at the buyer’s system. Even the most sophisticated AP solutions lose very quickly it’s sophisticated features if the information fed to it, typically manually keyed in, is incorrect. Of course you get some additional benefits such as a full visibility to your incoming payables, you get the collaboration tools through an eInvoicing portal that enables you to communicate electronically with your suppliers and all of your payables are presented, easily retrievable and in an electronic format. And the information is correct, every time.

The seller view – getting paid

Every organization ultimately is interested or should be interested of when they are getting paid by their customers. The simplicity or complexity of this is made up of few factors, such as what are the goods and services you are invoicing your client for, what are the payment terms associated with this trading relationship, and how quickly do you invoice your client but this is not all that makes up the delay on getting paid. It’s also made up in which form they receive your invoices, what information they require on the invoice to pay the invoice on time or even so how quickly your invoice reached your trading partner. Using today’s technology and an operator driven electronic invoicing, your invoices reach your customer in minutes, if the information is not accurately presented you will be informed quickly (as there are validations along the way before the invoice hits your customers AP), or if there is further information required by your customer before they pay you, the collaboration tools through a customer portal are there to resolve this, ensuring you get paid on time, every time.

Converga’s Digital Gateway (D-Gateway) electronic invoicing solution brings a full visibility of invoice traffic to both the seller and buyer. It combines multiple sending methods for the suppliers to ensure even the smallest suppliers have incentives and possibility to join. Converga’s D-Gateway completely removes the need of sending invoices physically and ensures the buyer gets a single entry to their AP or ERP solution for their invoices. High supplier adoption is guaranteed by utilizing Converga’s Supplier Enablement Program, it’s fast to implement to ensure the benefits become available immediately. The solution has been created for all AR and AP professionals, for their requirements, to achieve a completely paperless office.

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