Want your Invoices Paid within 30 days? Try 1.2

 

Out of 15,625 reports of UK companies’ payment practices, 5,439 companies reported that they were paying their invoices within 30 days. That means 65% of companies that have reported their payment practices are taking longer than 30 days to pay suppliers upon receipt of an invoice.

Why is this?

It could be due to a number of factors; I would place a large wager on the biggest factor being the lack of automation and the use of paper invoices.

Why is this a problem?

In some cases, companies may have payment terms with suppliers of over 60 days, whilst this may be seen as fair, payment terms like this are damaging to both supplier and purchaser.

The impact on the supplier is obvious – they won’t get paid for goods/services they have delivered/performed until a long while after the fact.

The impact on the purchaser is that of cash flow. If you have many outstanding debts, keeping track of it all can be overwhelming even for larger companies, having money going out the bank sooner gives a clear view of spend and can make budgeting easier.

Would E-Invoicing Help?

Even when companies report supporting E-Invoicing, 67% still take over 30 days to pay invoices.

Does E-Invoicing mean automation?

No.

Usually it would be an accessory to an automated solution, but that does not mean that all E-Invoices are automated.

For an in-depth take on what E-Invoicing is exactly, click here to read my article entitled “The Truth about E-Invoicing”.

Automated Capture

The biggest obstacle to an efficient Accounts Payable department is often the mammoth task of data input.

Different types of data capture solutions exist.

Some require templates to be told where to look and what for, others use AI and Machine Learning to find the information itself and remember for the next time it comes across an invoice from the same company.

These solutions are vital to achieving high throughput rates (where invoices enter the business and are ready to pay without any human touch).

With the right policies in place, some companies have achieved 90%+ touchless processing.

Supplier Master Data

In order to have invoices paid automatically, your Supplier Master Data needs to be as accurate as possible.

According to the PPN Annual Survey Results in 2018, 43% of respondents claimed to be monitoring their Supplier Data at least every 6 months.

Modern technologies such as ITESOFT’s Capture as a Service provides a shared repository of supplier master data, updated through AI and Machine Learning, reducing the need for AP departments to monitor their own data.

Whitepaper download – Capture as a Service

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Automated Workflows

Hopefully you only need to imagine what kind of carnage a fully paper process would cause within your business.

Picture paper invoices flying around the office, getting lost, damaged, destroyed, or even copied.

Luckily a solution is available to pass these vital documents around the company, in a safe, secure, and paperless fashion.

Even more exciting is the availability for these documents to be digitally passed around automatically, with no human intervention.

Say, for example, an invoice comes in via email, the solution can open the email, retrieve the information, submit for approval to an automated workflow. If the PO number on the invoice matches one in the system, and the amounts don’t, it can flag it up and send it to the most relevant person to approve (or deny) payment of the invoice.

This, paired with the collection and storage of meta data, increases the availability (and quality) of information available to auditors, since you can see who has opened each invoice, when, and where.

A Centralised Process

You may think that centralising your AP process would help you reduce the number of days it takes to have your invoices paid.

This makes sense in a paper-centric world, since physical documents need to be transported and delivered to each person in the process.

In a digitalised workplace, a centralised process is no more efficient than if everybody were to work from home, since documents will travel through the network and reach the destination in a fraction of the time taken to post a piece of paper.

In fact, Canal and River Trust process 100,000 supplier invoices and 10,000 expense claims from 100+ office locations whilst increasing staff productivity by 78%.

To Conclude

There are many different measures you can put in place to attempt to streamline your accounts payable process and have your invoices paid within 30 days.

The only way to make sure you have the most efficient process possible is to cognitively approach your current process and assess which parts could be stripped of fat, and which ones are already working well.

Remember, digital transformation is not a do-once-and-leave-it fix. For effective digital transformation you must continue scrutinising and assessing your processes, making it more of a “digital evolution”.

Also, E-Invoicing is great, but the rest of your processes are going to need tightening to hit that 30-day payment mark.

Read ITESOFT’s Network Rail case study to learn how they reduced their processing times to 1.2 days and became recognised by Hackett Group as a world class AP department.

Download our Capture as a Service Whitepaper Today!

Whitepaper: Capture as a Service for Supplier Invoices

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Post by Rory Coleman-Smith

Rory has been working with ITESOFT since early 2017. He has placed himself as a thought leader, educating finance departments on the latest advancements in technology in Financial Process Automation.

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