Accounts payable is related to the payment aspect of your finance department, where you pay for the supplies and services that your company purchases. Today, technology has come into play, and now you have the option to automate the AP process to improve the efficiency of your operations.
In the process of accounts payable (AP), one of the first steps is to capture the data on the invoice, based on which the entire process begins. When your AP solution has inbuilt data capture capability, that is referred to as native data capture.
Accounts payable can impact the following areas:
When you have manual processes in place, your accounts payable processes may likely be slow and often error-prone. As a result, you may not have complete visibility into the invoices that are due for payment. You may also have friction in the supply chain due to the days payable outstanding (DPO) and due to missed early payment discounts.
Often there could be an additional cost due to the manual processing errors, missed invoices, late payment fees. In any case, the cost of manual accounts payable processing can be very high when you consider the paperwork, the people involved, the delays, and the follow-up processes.
Limited capability to allocate the right approval authority due to lack of the proper technology to enable this can make compliance with audit requirements difficult. Reporting regularly is another aspect of compliance that is affected by manual accounts payable process.
Here are the necessary steps that the invoice capture process follows:
- Optical character recognition (OCR) and extraction: OCR is the conversion of typed, handwritten, or printed information into text machine-encode text. When the data is retrieved for further process or storage, it is called extraction.
- Classification of the document (or invoice): Earlier on templates were used, but today you have technology that self learns or has automated training methods to set up and classify the data to be validated.
- Data validation and quality control: The data that is extracted and classified is validated against business rules defined and line item validation, field specification, expressions, checksums, etc.
- Reporting and analysis: Regular reports have data is operation level to include the status of the batch, information accuracy, operator statistics, etc. You can also drill down to generate reports that can help gain insights into procurement policy compliance, cash flow, working capital, etc.
With native data capture, both the data and workflow of the invoice reside in the same system. As a result, you can see that the line matching between invoice, purchase order, and goods receipt goes beyond mere three-way line matching.
It uses empirical data, machine learning, and artificial intelligence along with business rules to handle exceptions (within set limits) with ease. Factors like sensitive data, limiting approval authority, keeping some items confidential are all features that our solution offers.
Having native data capture enables end-to-end accounts payable automation within the same solution. With the solution being able to keep learning and improving on the way data is captured, your processes become more efficient and provide better insights to the users.
Some of the main benefits of native data capture in your accounts payable automation include:
- Ability to establish KPIs and achieve them with ease
- Generation of better spend reports and thereby, more control on unplanned expenses
- Insights into where the bottlenecks so that they can be mitigated to ease the problem
- Faster processing times, lesser manual efforts, quicker approvals and payments
- Establish a good market reputation and build better rapport with suppliers for better rates
At To-Increase, we offer To-Increase MediusFlow; our complete best-of-breed accounts payable automation solution.
To-Increase MediusFlow has native data capture, which goes beyond mere digitization of invoices.