Accounts Payable Automation - the value of a business network
e-invoicing Trends, Accounts Payable Optimization, Buyer-Supplier Ecosystem, Digitalization, Source-to-Pay, Invoice Process Automation, Business Network, E-invoicing
So you’ve decided to digitally transform your accounts payable function with the goal of improving control, visibility and efficiency. The good news is, you don’t have to look to hard to find a business case. Automating the AP function is virtually a no-brainer with value spread all over the place (read my previous blog where I outline the key impact areas: people, processes and technology). Yes, the ROI is there if only you have the internal will to grasp it. Without wanting to repeat myself too much, I wanted to focus this blog, briefly, on the value of the business network to your efforts.
What’s in a network you say? Well, I’m glad you asked. The two most expensive things for an AP team to deal with (in my experience) are paper invoices and disputes/exceptions. Paper invoices have to be digitized and as you may already be experiencing, this is potentially done manually by keying in the invoice (and then scanning the invoice to attach) or through a OCR or Freeform Scan & Capture. Both methods however are labor intensive with the possibility of error – and this often enough is a contributor to the second issue: disputes/exceptions. Before leaving the Scan & Capture conversation, let’s just recognize that it’s hard to get away from if your suppliers are only able to send you paper – so hopefully your data extraction has very low error rates (and let’s not even talk about manual data entry). So, paper processing and dispute handling - how does a business network mitigate this big issues for AP?
If you are thinking the answer is simply ‘e-invoicing’ - you would be at least partly right. e-Invoicing is effectically the ends, but the means is the network. In order to receive your invoices electronically you need your suppliers to send them electronically (I’m ignoring S&C as a service for digitalization of invoices for simplicity sake). As you likely already know, getting your suppliers on-boarded to e-invoicing is easier said than done - and this is where the choice of business network comes into play. A good network will offer services to support your supplier engagement and onboarding efforts, let you create invitations yourself, track the campaign and offer e-invoicing options to your different supplier groups. This outreach is both educational for your suppliers and proactive. It becomes a process you can enroll new suppliers into and it becomes a key value driver for your AP Automation performance ambitions.
Once you are getting e-invoices from your key suppliers (who probably already are e-capable) and your long tail, you are getting high quality invoice data into your AP system. And, if your system is anything like the one we sell (and plenty of other vendors sell) then that data, especially if it’s based on PO data, will have a very high probability of being fully automated for zero-touch processing and high ‘first pass match rates.’ The network choice should include some key capability - not only the onboarding (self)service options but also around the e-invoicing technology itself. Think about the all the complexity a business network manages for you (copied from OpusCapita.com*) for example: ZUGFeRD, PEPPOL, Finvoice, TEAPPS, EAPPSXML, EDIFACT, EDIFICE, EDIFURN, EDIWHEEL, RINET, EANCOM, EDITRANS, EDITEX, Ebxml, ETIS, CEFIC, XÖV, EDI@Energy, EDILEKTRO, ODETTE, Cross Industry Invoice, EDIPAP, EDIGAS, VDA 4938, ,EDI, XML, EHF, FatturaPA. And how about the variety of channels (indirect and direct): OFTP, AS2, ENX, RFC, SOAP, HTTPS, OFTPII, X400(S)FTP, PEPPOL, Email, Paper, interoperability networks, direct connections. Those are just examples but good thing we are here to help you manage that mess.
Quickly let’s look at dispute handling for our last little angle for why a business network is a super valuable consideration for your Accounts Payable Automation project. A few years back I read that up to 25% of an AP Manager’s time was spent handling supplier inquiries. Now, I think that’s probably come down but just think what you could do with 25% more time (for your AP team) or 1/4th headcount reduction. So, how does a network enable this? Obviously, when you onboard a supplier to send you e-invoices, you (or your network) can/should onboard them to receive e-orders. This then allows them to build their invoicing directly from the order fulfillment process which - assuming you have a solid receiving process - almost guarantees the invoice will match a confirmed order and be straight-through-processed. What might be less obvious is the role the Business Network ‘portal’ has. For sure, large suppliers will want their orders as e-orders but what about your smaller suppliers - they don’t have systems to manage e-orders - the right network then offers them an opportunity to receive your orders, offer a change request, confirm the order and then flip it into an invoice - or a credit note. This process dovetails directly into your broader Procure-to-Pay process very nicely and goes a long way to removing disputes through improved collaboration via the network.
Extend all of the above to include supplier information & performance management, sourcing, contract awards, and catalog & pricing import/validation and you start to get the picture - A good Business Network goes a long way to ensure ALL relevant information/data is digitized from the start, ensuring your organization has the best possible chance to leverage digitalization for growth and performance (not to mention cost savings).
Rowan has more than 10 years of experience in the purchase-to-pay arena. During this time, he has managed the go-to-market for a diverse set of portfolios including Accounts Payable Automation, B2B Networks, Financing Services, eProcurement and Product Information Management.
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I would like to take a look at e-invoicing in the US as I just returned from a Business Payments Coalition meeting. And also provide more information about European developments.
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The first development is that Peppol is rebranding itself. The second development is that Peppol and the clearance model are moving closer together.
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