Accounts Payable often has opportunity to reduce the overall cost if early pay discounts can be taken.
The first wave of technology digitized paper invoices at the time of capture so that AP staff could be working from a digital copy and not paper, then Optical Character Recognition was applied to enable lifting specific pieces of information off the invoice, like invoice number, purchase order vendor name, invoice date and dollar amount to reduce indexing.
Then, the OCR results were used to validate against the purchase order to confirm the invoice matched the purchase order and payment was approved.
Early payment discounts
This enabled early pay discounts to be taken as a standard business practice; if mail was centrally collected and invoices scanned in the mailroom, invoices could be paid within a day of receipt (cha-ching!)
Non-purchase order invoice processing could also be improved IF the vendor put the contact name/email in the invoice.
Once it was digitized, the invoice could be sent through workflow to the contact for approval of the amount, with escalations if not addressed within a specified amount of time.
Lessons that paid off
On the receipt side, Check21 requirements enabled check scanning at the time of receipt for organizations who understood and could implement an image cash letter format.
Checks that didn’t conform could be set aside for further investigation and/or collections efforts BEFORE they were deposited in the bank, avoiding bank fees and holds. (More cha-ching!)
The lessons learned were many and so were the advantages. Businesses were able to see their liabilities on a daily basis, confirm as a standard, trackable business process vendor calculations in each invoice (many math mistakes on the part of vendors!)
Duplicate payments can be identified across the vendor database. If you assign work by vendor name, chances are you’ve had a least one duplicate payment when one of your vendors (ABC Company) is acquired by another existing vendor (XZY Company) and both send invoices for a period of service because their systems aren’t yet fully integrated (it happens!)
All this was expensive and an organization needed to be of a certain size to have a realistic return on the investment.
Total Cost of Ownership was high – when one system had an upgrade, they all had to be upgraded or manual tasks re-introduced as work-arounds.
Shortening the learning curve
Now, with the democratization of robotic process automation, business intelligence analytics, workflow and enhanced capture, smaller businesses can reap the rewards of early pay discounts, quicker remittance processing and fraud detection without the high overhead and management costs.
And, unlike some SAAS and Cloud services that are available, the solutions that Western provides integrate with your existing financial management application and your existing vendor portals. The learning curve is shallow and short.