Can your firewall stop bad invoices?
As invoices are approved automatically, AP’s main responsibility is no longer handling, but exception handling – The Accounts Payable Network
While everyone clearly understands the benefits of automating the P2P process in terms of freeing up the AP department from the time consuming task of approving invoices, studies show that we are still a long ways from achieving a level of efficiency that reduces the AP role to one of managing exceptions.
According to an Institute of Financial Operations article, days sales outstanding (DSO) are at “record levels” averaging 42 days in the U.S. The cause of slow payments is directly related to defective invoices sent by trade vendors. In fact, defective invoices (invoices that don’t reconcile) account for “nearly two-thirds (63 percent) of past due payments,” and on average, take “two to three times longer to be paid than clean invoices.”
This provides indisputable evidence that automation of the P2P process alone is not enough. All it does is ensure that bad invoices are delivered faster. What we really need is a firewall that will stop bad invoices from entering the AP process to begin with – a Compliance Firewall.
A Compliance Firewall enables you to move from Paperless to Errorless and Effortless so that you can truly manage by exception.
With the Compliance Firewall, invoices are automatically reconciled with purchase orders and receiving records to ensure compliance with your payment policies. In case of a mismatch, the invoice is automatically returned to the supplier to be corrected, without any effort on your part and before it enters your ERP system or your AP process. This pre-emptive validation capability will enable you to achieve a near 100% invoice reconciliation while providing suppliers with instant acknowledgement and confirmation.
But aren’t you just shifting the work to the supplier, some skeptics may ask?
Yes we are, and suppliers are quite happy about it.
Rather than send a bad invoice into a black hole (no offense to AP), where the invoice may take weeks to be approved and at the end of the day may be rejected altogether, suppliers are now empowered to make sure their invoices are compliant. Once they do, they are rewarded with quick payment and automated approval that takes just minutes.
This level of transparency is, as one supplier described it “one of the biggest advantages, as we now know within seconds if there is an issue with an invoice. Previously, we had to wait until the due date to learn that the invoice wasn’t going to be paid.”
Is there a supplier that wouldn’t like that?
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