ITESOFT Insider View – How Are Supplier Invoices Handled For Approval?

How are supplier invoices handled for approval?

Join Alan Brown, senior sales consultant @ ITESOFT as he talks through the top 5 things to understand about AP processing & matching.

Part 5, Alan will be delving into how supplier invoices are handled for approvals within your business.

For anyone involved in an Accounts Payable automation project, or is thinking about getting started these sessions will give you some actionable insights to help.

Watch the video, listen to the podcast or read the transcript below.

Part 5 of 5.

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How are supplier invoices handled for approval? The transcript.

Welcome back to the latest ITESOFT Insider View. This is week 5 of the 5 part series that we’ve put together.

My name is Alan Brown and I will be taking you through this week.

The subject that we have been looking at, overall, is the top 5 things to understand about AP processing and matching.

Week 1, we covered off how much time and money is spent on invoice matching.

In week 2, about how you are currently matching your supplier invoices.

Then in week 3, it was delving into a bit more specific detail on that, about do you need line item matching, and why?

Last week we were talking about how many and what you do when you still receive Non PO invoices.

This week, the final week, our final session of the series.

How are your supplier invoices handled for approval?

Well, isn’t this an interesting one! Most organisations that I go into ans speak with they tend to be manually based still.

They may have a little bit of automation in certain parts of their organisation. But from an AP point of view it still tends to be pretty manual.

That was triggered as part of the discussion that we had in week 1 interestingly enough.

So, here’s a question for you to start the discussion off.

Are your invoice discrepancies being handled manually?

And being monitored on Excel?

Guess what… That’s probably, I would say, 70% of where and how most organisations deal with it.

The rest of them, bizarrely enough are being dealt with on a piece of paper.

Someone will come in, they will get their invoice, they will do their matching with it, they’ll go “oh look there’s a discrepancy” or “its a non PO invoice”.

They will write it down on a piece of paper or they will update an excel spreadsheet, depending on…

And this is all it comes down to from what I can gather, this is finger in the air kind of rule in this case, the volume of invoices you’re getting coming in that you are then processing.

Is it excel? Or is it paper? Neither of these are really going to help from a digital perspective.

But this is about what are you doing, and how are you doing it?

Once you’ve got that at least registered, so its at least registered and that’s great, because there’s some organisations out there that dont even do that.

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Approval of supplier invoices in the business.

How do you then send that invoice out into the business for approval?

Is that, and we do have this, where individuals will walk it around the organisation? They will sometimes physically wait for that to be signed off.

In a lot of cases they will put it down on someone’s desk and wait for them to deal with it in their own time.

Most organisations at least have got to a level of digitalisation, but not a workflow and its not really digital because… They will send an email out with that invoice that’s been scanned in and attached to the email to go:

“Here’s the invoice, can you tell me what you are going to do with it?” or “can you tell me, as its a non PO invoice, how you want me to code this and are you happy to pay this?

It tends to be as simple as that. A lot of organisations, at a senior level within the company, believe that this is automation, this is workflow. No.

That’s not the case at all.

But, at least you know how its happening and at least you know why you are doing it that way.

At least you know where the problems are, and the costs are associated to that.

Benefits felt in more than just the AP team.

For many of these organisations digitalising this part of the AP process can and does, when they actually do it, generate huge amounts of financial savings for them.

And it’s not just in AP, but we can come onto that, but it’s in the wider business.

Part of that, for instance, is about, we’ve got an audit trail. We know whos got it. We know where it is.

So, if we come back to, have you put it down on an excel spreadsheet, or have you written it down on a piece of paper.

Well, you only need to forget one time to put it down on either one of these and its not accurate. You’ve now lost an invoice.

Until hopefully your supplier phones you up and asks what’s happened to the invoice as it hasn’t been paid yet.

Having an audit trail from the moment that an invoice comes in to the time that its paid means that you can report on it. So you have high levels of visibility for that.

You can also, then, chase people for it.

Proper workflow brings proper benefits.

This brings me into another part of, the benefit you get from putting the workflow capability in place.

If you have got a proper level of workflow automation in place, why can’t you put things like reminders in place?

When you are considering how your supplier invoices are going to be handled for approval. Especially the ones in discrepancy.

And stepping outside of what your current process, but looking at what would you say is a potentially perfect process or ideal process for you. It’s important to look at certain things.

How are they currently handled and why? Because you need to understand your workarounds, how many people touch it, for how long?

What flexibility do you get within this?

Is there any levels of flexibility?

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Risks in a manual supplier invoice approval process.

Maybe what areas of risk do you have within that?

And this is all within your current process.

Now, you will already know, for some of your existing invoices thats are manually passed around the organisation…

One of the areas of risk is that it sits on someone’s desk, or in their draw for a number of weeks.

Until they’ve had the phone call from the supplier asking what’s happened, we haven’t been paid.

They then phone AP and ask them for a favour. Can the invoice be rushed through please, I need this supplier to be paid really soon as I want to order again from them.

Being able to consider what you have got there, and what the risk element is.

And the risk isn’t always about someone trying to steal money from the organisation.

Bottlenecks & breaks in the process.

What pressures does that put onto the organisation to get that pout through quickly? It can have a huge impact, and not just in AP.

It could be your financial accountant, it could be the sign off team that are going to approve that payment, it has a snowball effect.

Other areas that can result in this are to do with bottlenecks, or breakdowns in the process. And this isn’t just to do with workarounds that are going on.

It can be to do with how you are overloading other parts of the team that aren’t aware of what’s going on through the process.

So let’s go back to the example I just gave, and you are about to make a payment run.

One of the business managers says “can I just, really quickly, push this invoice into this payment run?”

Well what impact does this have on other people who are already under stress at that stage because of the financial process & structure that they are going through to make payments to other suppliers on time?

Tools & technology to help automate supplier invoice approval processes.

So, what other tools can you use, or you can have, to make it easy to use technology? That gives you flexibility and gives you security as part of that process?

There are applications out there that provide an automated reminder, automated escalation to step back up the process.

ITESOFT has these workflow capabilities, these automated reminders and then end to end audit trail as part of this functionality that we are looking at.

If we come back to the manual way that organisations are dealing with this, excel and paper are the two examples I gave at the start.

How do you then, from paper or Excel, record that you have gone back and reminded that person? I’ve now chased him 3 times.

At what point do you want to use the policy that you have in place, that you should be going to his boss and asking him to deal with this?

Perhaps he is out of the business?

Lot’s of things to cover!

Quick recap of the 5 weeks.

What I would like to do now, let’s just wrap up and go right back to the very beginning.

This is about the top 5 things that I would like you to be able to understand and take away with you from this session about AP processing and matching.

The first one was, how much time and money is spent on invoices processing and matching?

Really, really important for the business case. Dea deasy, it is all about your data extraction and your validation. Simple as.

Its as good as that.

The second thing, how do you currently match your supplier invoices?

There was various questions thrown out as part of that.

As the normal second stage or second step of invoice processing, your ability to obtain high levels of straight through processing is directly impacted by the quality of your data extraction and validation.

Back to the data, everythings about the data!

Session 3, do you need line items? Why?

This is important, if the issues for yourselves is about reporting and trust, they key one is really about reporting. You can then use that to build everything else, then you need to look at this.

Session 4, why are you still receiving non PO invoices?

There are other ways of being able to deal with this. I mentioned during this session that ITESOFT has a supplier portal that would help with this side of things.

Today, session 5, how are your supplier invoices handled for approval or discrepancies?

Want to know more?

There are tools and technologies out there, ITESOFT has solutions built around this. This is workflows, there are various different names for that and there are different technologies for it.

ITESOFT uses BPM technologies for it.

Guys, thank you very much. I hope that you found these sessions really enjoyable.

We will be bringing you more ITESOFT Insider Views soon.

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Post by John Stovold,
Marketing Manager ITESOFT

John Stovold has worked at ITESOFT since 2012. Driven by a desire to learn and educate John has used this to set himself up as a true thought leader in digital transformation of Accounts Payable and Finance. John really isn't that keen on writing in the 3rd person... But will when he has to.

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