What Is Your Invoice Format Split? Why Is This Important?
Part 4/5, Alan is asking you; what is your invoice format split, do you know exactly?
Join Alan Brown, senior sales consultant @ ITESOFT as he talks through the fourth part of our 5 part series: 5 things to remember when detailing your AP processes.
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 4 of 5.
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What Is Your Invoice Format Split? Why Is It Important? The Transcript.
Hi and welcome to week 4 of the ITESOFT Insider View.
My name is Alan Brown, I have been running this series.
These sessions are all about the 5 things that you need to remember when you are detailing your AP processes.
Recapping the series so far
Week 1 was all about; “have you defined the ownership of the process steps in a clear and explicit way?”
Last week, week 3, was “do you receive multiple purchase invoices, and why? And how do you detail it?”
And this session we are going to be talking whether you can give an exact percentage split on your invoice formats.
How do we detail this, and why is it important?
Why is the invoice format split important?
Why is it important? Well, fundamentally businesses are becoming and seeing an increase in the number of invoices that they receive by email.
In some cases, it could be 80% + of their invoices are coming in by email.
These could be coming into a centralised email box.
It may well be that, in some cases, they are still coming into individuals within an organisation.
For most of organisations, there is still a huge range of different formats and structures that they are receiving their invoices as.
Whether they are PO or Non-PO is, in this case, completely irrelevant.
The most common invoice formats we see
Just as a quick run through, some of the formats we see:
PDF: Probably the top format that organisations get.
Strangely enough, people do get them as JPEG’s (pictures).
Sometimes they will get them as TIFF’s. And there are lots of other formats around that.
These are normally as email attachments.
That is great, a lot of organisations will be able to give a reasonably good split on that side of things.
I know that there are organisations out there that also get the invoice within the body of the email.
Some people would argue with me about that, and what format and structure that is.
Another format, that tends to be the other most common format, is paper. Still, its paper.
New kids on the block
Then we come into some other more interesting aspects that have been grabbing the headlines over the last few years.
EDI, or business to business exchanges.
There are a number of these out there that deal with this.
There are, as part of that, online supplier portals that are making ground in the marketplace.
Understanding the formats you receive to step towards automation
Whys this important for organisations?
And why is it more important for yourselves when, lets come back to the subject, this is about detailing your current AP processes.
There is a working assumption that, certainly if you are watching this, at some point you are looking at how do you automate some of this?
How do we standardise what we are doing and how we are doing things?
But let us assume that you are going to go down the route of some sort of automation.
Most of the businesses that I spend time with going through this level of detailing their AP or P2P process, in a very specific way, is done for a variety of reasons.
Do you actually know the exact % split in invoice formats?
Most organisations are not able to commit to what the exact % split that we are talking about here on invoice formats.
It is always done as “well its about” or “my gut feel is” or “let me go and speak with someone and try and find out”.
And it is very much trying and find out because they do not actually know.
It tends to be more of a blurry, in the background, it happens we know it happens, but we do not need to deal with it.
Well, the exact invoice format split is really important to understand because of the current impact that it has in your AP team. Or across your finance team.
Therefore, what are the benefits of automating the format types that you have on your invoices?
Shifting the costs…
For instance. There are a lot of organisations, especially some in public sector, that are suggesting, or have said that they are not accepting email invoices.
Because they are just printing them off.
And there is a time and cost associated with that.
And this is at their end, the time and cost. Whereas if it comes as a piece of paper, they do not have the cost of printing.
They do not have the cost of the toner, they do not have the cost of the printer contract etc. etc.
They already have, in a lot of cases, a post room in place. So, them dealing with the post and some of the issues there, it isn’t their cost directly.
Understand the costs of different invoice formats
Taking that to the automation side of things, just because you can then structure a centralised email box, for example invoices@whatever. Or accountspayableinvoices@
You can then centralise where all of your invoices are coming in.
How do you get a system that will actually pull a PDF invoice through and process that?
And we will come onto processing in a minute.
How do you get something that can say, actually this is a Word document or, and I have seen this, a PowerPoint that is coming in as an invoice, and processing it?
So, the ability for you to be able to understand what your split is, on the type of formats that you are getting your invoices in is important.
It feeds into your business case about where the problem areas are.
Understanding the problem areas, and what the impact and the cost associated to that problem is at the very start is really important.
The best use of time and skills?
Is that really a good use of your AP teams time? Is it a really good use of your AP teams’ skills?
And is that really what you want them to be doing in the future.
Assuming you put automation in place, but you have not dealt with the different invoice formats, and how to process automatically from these structures. It may still be manual.
It may be slightly better. But could still be manual.
So, when considering automation, it is something that you should really consider, it may even be the most important part.
How do we capture a document?
How do we standardise a document into a format that you want internally?
And more importantly, how can you then process that?
Predicting the future?
And when I say process, we are talking about data extraction and validation techniques.
How do you process that, so that regardless of the format you receive, (and can you predict the future?) we do not know what some of the newer formats could be.
So being future proof from that point of view is really important.
When you can say that you can process any format, it is really the key to being able to achieve the highest levels of automation into your organisations.
You are much more likely to be able to achieve the business case that you have set out.
Wrapping up for this week
What might have started off as a bit of an innocuous question about invoice formats, and not really having thought about it.
Really understanding the impact of this, and in terms of how quickly you can get an invoice into and registered onto your system, which can now be minutes rather than days or weeks.
This has a huge impact.
There are lots of questions here that I have left you guys to take back into your business.
To take back to your AP teams, and to talk about.
And to get their feedback on what you are looking for.
The key thing that I want you to remember about this, when you are looking at any of this, even just standardisation.
But especially when looking at automation to improve, bring efficiency, how can you get an effective system is:
How can you automatically pull from an email capture solution that process that the data extraction and data validation out of your attachments in a very simple and easy way?
Guys, I would love to hear your feedback and thoughts. Of course, and any questions that you may have.
Have a great day, look forward to speaking with you again soon.