Driving Accounts Payable (AP) Automation at Nationwide
Like other SAP ECC ERP customers running VIM by opentext, Nationwide is undoubtedly considering a migration to S/4HANA in the near future, if that is not already underway. With the enhanced capabilities that S/4HANA brings, many organisations are using this opportunity to re-evaluate their current process and solution architecture.
Within Accounts Payable and Invoice Management, SAP offers a number of different solutions and options including VIM, not to mention other 3rd party solutions that are available, each with their own strengths and weaknesses, and suitability to different scenarios based on various factors. We have talked to many organisations curious about SAP’s own roadmap for building Invoice Management capability in S/4HANA comparable to VIM.
To help you understand and navigate through these options, we have created the following review to ensure Nationwide are fully armed with all the information to make an informed decision on the most effective and efficient way to achieve end-to-end AP automation.
Introducing Accounts Payable (AP) Automation
Accounts Payable (AP) Automation is not a new concept. Following the advent of Enterprise Resource Planning (ERP) in the 1990s, many organizations embarked on a journey of standardizing and automating their discrete back-office processes and re-engineering end-to-end processes.
With the birth of Shared Service Centers (SSCs) and Global Business Services (GBS) leveraging economies of scale in back office processing, the need for automation across the entire back office function, including Accounts Payable gained prevalence. An industry developed around paperless solutions addressing the drive of organizations seeing to reduce costs and increase productivity.
Key Challenges Faced Within Accounts Payable Teams
A recent report by Ardent Partners provides an excellent summary of the state of AP Automation today and highlights many of the key challenges holding AP back. The top four barriers identified in this report include:
Even with many companies adopting a ‘No-PO, No-Pay’ policy, the bottleneck in the process is having to manually deal with a high percentage of exceptions. The type of execution varies per industry and geography, but nevertheless still adds to the inefficiency and costs in the AP process.
Most companies have made strides to improve the invoice approval times by making policy decisions and deploying mobile based tools. However, the time to approve an invoice is still a challenge in many organizations and adding cost, inefficiency and payment delays to the AP process. In many cases, the delays in invoice approvals will be directly linked to the higher number of invoice exceptions that need additional manual interventions.
According to the report, this is the first time that electronic invoicing has outweighed paper invoices. However, paper invoices sent manually still represents 49.7% of the respondent’s invoice volumes.
The report highlights the fact that AP teams spend nearly a quarter of their time handling supplier queries. This should not be surprising given that if companies are dealing with a high level of exceptions and increased approval times, there will be a knock on effect from suppliers inquiring about the status of their invoice.
Addressing Fundamental AP Automation Objectives
Accounts Payable is the bridge between procurement and payment, and an AP department is a busy place and is typically awash in manual processes, whether that’s cash management, paper invoices, data entry, or double-checking due dates. However, significant efficiencies can be attained by focusing on the two core processes of Invoice Ingestion and the subsequent Processing of these invoices.
Invoice Ingestion
The capture and pre-processing of incoming invoices, so includes OCR, but is much broader and becoming broader over time, with the proliferation of government invoice portals and legally mandated e-Invoicing standards (both national and international).
Invoice Processing
The matching of the invoice to an appropriate PO or securing the right approvals for an invoice that is not linked to a PO, and the identification and resolution of any issues before the invoice can be accepted and posted as a financial document.
Achieving both Invoice Ingestion and Invoice Processing with as little human intervention as possible is the No1 challenge. This is always a balance between compliance and efficiency. If we want to ensure 100% compliance then we can have AP experts eyeball and manually process every invoice. To achieve 100% efficiency then we could simply pay every invoice that is received. Neither is realistic or advisable, so we need to consider and adopt some Guiding Principles to achieve the optimum balance.
AP Automation Guiding Principles of an effective AP Strategy
What can be achieved with true Automation?
Achieving Touchless Invoices through Artificial Intelligence (AI) and Machine Learning (AL)
100% Invoice Capture
Invoice ingestion already benefits greatly from the application of AI and ML, particularly for improving invoice capture from legacy channels, i.e., OCR and readable PDF. However, extending this when capturing unstructured (scanned PFDF) or semi-structured (readable PDF) could see 100% capture rates in the future.
Automated Matching for PO-Based Spend
Using any combination of the invoice, POs, external POs, goods receipts, quality checks, contracts, etc. at the line level and header level, AI can significantly improve straight through processing rates. And when information is missing, recognition methods can review the available data and calculate the best matching scenario for you.
Automated Coding for Non-PO Spend
Using any combination of the invoice, POs, external POs, goods receipts, quality checks, contracts, etc. at the line level and header level, AI can significantly improve straight through processing rates. And when information is missing, recognition methods can review the available data and calculate the best matching scenario for you.
Automated Exception Handling
For all invoice types, the opportunity is also there to improve exception handling. Traditionally, exception handling has been addressed with pre-configured scenarios and routing to actors based on initial design blueprinting, however AI and ML present the opportunity to make this much more dynamic and adaptable to changing business scenarios and new vendors etc.
Intelligent Routing for Speedy Processing
For any remaining portion of invoice exceptions, AI led intelligent routing functionality ensures that invoices are automatically sent to the appointed approval workflow, without the need for any manual effort. Based on the data on the invoice, the system automatically determines the recipient and sends the invoice along for coding and processing.
Key Performance Indicator Reporting
This also an area that can benefit greatly from AI and ML, particularly in identifying trends and patterns in invoice processing and forecasting future performance, as well as generating actionable insight based on statistical data analysis, which is invaluable when driving continuous improvement.
AP Automation Technology Overview
Explore top-tier AP Automation solutions with Excelerateds2p and Basware, each with its own set of advantages and considerations. From SAP’s diverse offerings to our partnership’s comprehensive approach, find the perfect fit for your needs. Delve deeper on our dedicated page for more insights.
excelerateds2p’s Accounts Payable (AP) Diagnostic
Unlock insights into your accounts payable processes with excelerateds2p’s AP Diagnostic. Our thorough analysis identifies inefficiencies and provides actionable recommendations for improvement. Learn how our service can streamline your operations and drive success. Click below to discover more.
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