Every company must purchase goods and services from its suppliers as a natural part of its development, but as it grows, the Accounts Payable process can become a real headache. According to statistics, we are talking about a generation of up to 85% in hidden operating costs caused by poor management.
Purchases can be so large that many companies have their own accounts payable AP Automation getyooz.com department to make the corresponding payments. These may vary depending on the volume of transactions carried out by the organization.
The Process is Generally Done in this Way:
- Receipt of the invoice: When goods or services are purchased, the company receives a physical or electronic invoice that contains information such as the name of the item, amounts, etc.
- Review of the detail of the invoice: In it you will find data such as the name of the supplier, date, amounts, number of items purchased, among others.
- Updating and validation of the records: These must be completed based on the values contained in the invoices received and may require approvals and consultations with internal systems. If they are physical invoices, they are stored in the corresponding place.
- Payment Making: All payments made to the supplier within the established due date. A series of documentation is required such as having purchase orders, bank account data, among others.
An apparently “simple” process that creates real challenges
This process, which is generally manual, brings with it a series of costs that are not usually reflected in financial reports, but that directly affect the productivity, efficiency and work environment of employees.
Just to Name a few, we have:
- Errors in Data Entry
This is one of the most frequent errors in Accounts Payable. When manually typing, it is common for errors to occur such as forgetting a data, confusing a number or incorrectly typing a value.
- Errors in Agreement with what was Received
Performing the validation of the acquired with the delivered, can lead to a detective function to the accounting team. Using time to investigate between the documentation received and generated if what was acquired is in accordance with what was delivered.
- Misplaced or Lost
By having all the information without an established order and, being sent to different people, the processes can be truncated due to the loss of physical documents or emails that simply were not read and ignored as a result of the day to day work.
- Payment of Products and Services not Received
By not having full visibility of the process, it may happen that payments to suppliers are made before receiving the agreement. This occurs when officials make quick approvals as soon as they are received to avoid bottlenecks that, on the contrary, can complicate the situation.
- Unauthorized Purchases
Companies have rules about the type of purchases that can be made, including parameters such as amounts. However, depending on the system used, these unauthorized purchases can occur more frequently.
How to Solve the Problems of the Accounts Payable Process?
- The problem: Data processing errors
- Solution: Use XM data capture technology in electronic invoices, as well as OCR, ICR and / or Artificial Intelligence for physical invoices
Using a data capture system that can extract the main values such as the invoice detail is one of the best options to avoid human errors and save costs. In most cases, data capture is applied through XML with an automated system. In the case of physical invoices, the technology makes it possible to detect characters from a PDF or even, in a more advanced state, to understand the texts printed in an image through AI.
Not only that, through technologies such as machine learning and contextual semantics, they manage to learn and validate documents with human precision.
- Problem: Loss and misrepresentation
- Solution: Use systems that serve as digital repository of documents
That an invoice is digital does not necessarily ensure accessibility. The important thing is to have a repository where you can find all the documentation of the related invoice to quickly access it, no matter where you are.
- Problem: Approval bottlenecks and lack of visibility
- Solution: Automation of the process with business rules
It is easy that, amid so much documentation and manual approvals, the process is left unattended. For this reason, it is important to automate processes such as Accounts Payable with established business rules that allow total visibility with alerts and notifications that keep all parties involved up to date.
- Problem: Payment errors, duplications
- Solution: Use systems that validate and reconcile related documentation
Reconciling the invoice with the quotation and the purchase order is known as a 3-way match. This allows the company to be sure that every payment made has the required documentation, without problems of duplication or errors between what is received and paid.
A Tailor-Made Solution
It is important to have a solution that integrates these and more technologies in one place. And not only that, that it has the flexibility to adapt to the processes of each company.
Yooz AP Automation offers that level of versatility already proven in more than a thousand clients around the world, allowing you to save hidden costs and even improve the level of satisfaction of the organization’s collaborators.
If you want to know more information about how Yooz AP Automation can help you to substantially improve your Accounts Payable process, you can click here for more information.