For many Accounts Payable (“AP”) and finance leaders, there is a strong desire to take the department to the next level of performance. But AP departments that get stuck processing paper-based invoices or handling the many invoice exceptions that come in will struggle to provide true strategic value to the enterprise. There just isn’t enough time. AP leaders must understand that they will only reach this next level when automated processes are prevalent throughout the entirety of the AP function.

Manual Processes Slow Everything Down

As AP departments strive to reach a new level of performance, there remains one key component on which they should focus: the removal of paper from the entire accounts payable function. When AP is able to eradicate all manual- and paper-based invoice processing,  they will be able to become more than just a back-room function. Although there is so much digitization in the business world today, nearly two-thirds of all invoices managed, processed, and analyzed in the typical AP department are still done through a manual process.

The average AP department, and especially those that process thousands of invoices a month, face inflated costs for invoice processing. In 2016, the average cost to process one invoice was $13.04 and it took an average of 12 days to complete.

Meanwhile, AP’s paper avalanche has left many AP departments struggling to find the time to focus on other more strategic work. Few AP operations can move forward if they are mired in manual processing strategies and programs. Finance professionals who understand this know that when automation is prevalent throughout the entirety of the AP function, they will cut costs and save time, which can be better utilized in other areas.

Untimely Exceptions

Exceptions on invoices are the scourge of every AP department. They can occur for the tiniest of reasons, like a missing zip code, or there could be a major issue like a missing contract number. But every exception slows down the AP process and becomes more costly to resolve. Over 17% of a company’s invoices cause exceptions. This represents a significant amount of time spent on resolving each individual problem and clearing the invoice for entry back into the traditional process. That is why AP departments need to make reducing exceptions a top priority.

Non-matching information, inaccurate invoice header data, and specific invoice line exceptions are all issues that can burn even the most well-run AP team. Any issues in invoice processing cause delayed payments to suppliers and can result in higher overall costs because of an extended invoice approval time. Manual, paper-based processes exacerbate the exception challenges that AP departments face, since manual processes normally require AP staffers to spend time keying in invoice data and hunting down missing information to resolve the exceptions. These are time-intensive tasks in a manual environment, and costs begin to add up as the process takes longer and is more likely to include errors.

Speed Kills

When AP does reach its higher ground and becomes a true hub of intelligence, the key attribute will be through the removal of paper-based processes and prioritizing the reduction of invoice exceptions. High-performing AP teams leverage eInvoicing solutions at a much higher rate than other companies. These Best-In-Class enterprises are able to avoid more of the time-intensive and transactional work of manual processes (not to mention higher costs) by receiving, processing, and managing invoices electronically. While Ardent Partners’ research shows that more and more AP departments are moving towards automated systems, we are still a ways away from the time when an automated invoicing process will be the default foundation for the AP function.

Automating the AP process will also go a long way in helping to reduce the number of exceptions. Leveraging standardized capabilities, automated processes make it much easier to diagnose the cause of exceptions. As AP becomes better at handling exceptions, the amount of time available for strategic activity increases. Improved exception handling also leads to better data visibility. Data that AP can provide to their functional partners and the C-suite to be utilized for critical planning, budgeting, and forecasting.

Final Thoughts

AP and finance leaders need to continue to push the AP unit into more strategic territory. But in order to provide real strategic value to the enterprise, AP departments need to be able to spend less of their time on the traditional back-room work, like processing paper invoices and handling exceptions. As the business unit moves forward, automation won’t just be an added benefit, it will be a requirement.


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