Bringing Automation to the Push for AP Optimization

Why automating invoice-to-pay workflow is the last line of defense in the battles against data entry errors, missed vendor discounts, and accounting inaccuracy

Imagine if there were a way to automate the AP workflow so it could scale as needed and still remain responsive and efficient. Today’s automation enhancements can now create opportunities to improve accuracy, shorten response times, and free up resources for greater initiatives.

While the accounts payable department is critical for every company, it's frequently viewed as a single-faceted unit responsible for one major task: pay the bills on time.

That may be a simple directive, but it's by no means a simple execution. From verifying the accuracy of invoices to storing and accessing data in real time, there are myriad ways for the AP process to reach unsustainable complexity.

Issues with the traditional AP process


That is the annual cost businesses must pay to manually process 500 invoices a month at a standard $22 per invoice1—a huge cost-cutting opportunity for those willing to harness the ever-increasing, constantly evolving technological capabilities of invoice workflow automation.

Other factors that can further increase the $132,000 price tag are high processing costs, slow invoice approval times, frequent missed payments, weakened supplier relationships, and overall inefficient use of company resources.

Workflow and approvals are particularly vulnerable areas of AP, as they depend on manual labor. A 2017 Aberdeen Group survey found that “Forty-seven percent of respondents said the need for real-time availability of data is a key AP challenge [related to workflow] and 29 percent said difficulty locating/managing paper-based documents was a struggle [tied to approval].”2

Then there are the inaccuracies to grapple with. Industry stats show that 8 out of 10 invoices will have at least one exception3. Relying on manual entry alone can mean single or multiple exceptions go unnoticed, requiring someone to stop work and research the error before resuming assigned tasks.

All of this means the best-laid plans of CFOs, controllers, and heads of accounts payables can go awry with an errant keystroke. The resulting damage to a company can be both financial—say, missed monthly projections—or reputational—your vendors label your company as “slow pay.”

According to a recent Oracle white paper, 22 percent of vendors “offer early payment discounts,” but many companies do not possess the organizational infrastructure or human resources necessary to take advantage of those breaks4—which means leaving money on the table in terms of a potential rebate.

Finding opportunities to automate

How can automation help? Manual and automatic resources should work together to create a smoother process, ideally employing those resources most efficiently, so you are able to keep costs low and return on investment high.

But not all automation is equal.

Optical Character Recognition (OCR) systems, for example, are put in place to scan an invoice, pull out what is important, and reduce the amount of manual intervention required to begin, or continue, the AP process.

Assuming the image quality is high enough to be usable5, it will then be saved in a document storage system and catalogued until needed. This typically means it will be manually printed or scanned and attached to approval documents. While this approach does provide a digital document for use in the approval workflow, it does not automate key steps of the AP process.

A best practice is to employ both OCR and manual intervention at the right points in the workflow to both ensure the legitimacy of the data for the decisioning, and payment of an invoice.

Once an invoice is scanned into the system, the platform should automatically assign a workflow template or model to each invoice while recognizing its unique conditions.

This is the point where accounting inaccuracies and rework caused by inaccuracies can be reduced. It’s possible to effectively remove guesswork required on the part of an AP clerk to research the appropriate general ledger path by setting preconditions for expenditure types based on the categories of product(s) purchased. This enables the clerk to visually verify the entry, thereby shortening the time it takes for an invoice to move on to the approval stage.

  • Cost Reduction: Reduce issues with manual routing and multiple touchpoints for the same invoice, prevent errors associated with lost and missing invoices6
  • Error rates: Minimize error rates, prevent fraud, minimize financial and reputational risk6
  • Personnel: More efficient use of staff6

Once a competent workflow management process and digitization of the vendor’s information has been established, then it is possible to ensure the approval and subsequent payment of the invoice according to best practices.

Invoices automatically routed to the correct individual for approval can be seamlessly routed back to an AP clerk tasked with the final step of making the payment.

The concept of accounts payable automation is quickly moving from cutting-edge to conventional wisdom: 27% of respondents said they were “planning to implement” some form of invoice workflow automation.

Laying the groundwork for automation success

To automate your AP process according to best practices, document the steps in your current AP process. Understanding the nuances of your process will be essential to implementing technology, and adopting a system or series of systems that meets the company’s needs and allows for scale in the future.

Ask key questions to define business requirements, including:

  • How do you currently receive invoices? Where do they come from?
  • Once received, where do they go? Who is responsible for processing invoices and in what manner, using what methods?
  • What kind of manual data entry or data manipulation is involved?
  • How are invoices approved? How are the payments applied to pay those invoices?
  • How are the invoices paid? By card, ACH, or check?
  • How are the payments of those invoices captured in your accounting system? Who is in charge of ensuring the payments are captured and posted correctly?

Fifth Third Bank has partnered with AvidXchange to develop the gold standard in invoice workflow automation: Expert AP.

With a comprehensive implementation plan and award-winning post-implementation support, Expert AP is positioned for you to capitalize on every possible advantage, helping you create innovative efficiencies and an invoice workflow process that feels as easy as creating a check run. We even take care of any exceptions, returns, or vendors who haven’t picked up their payment after so many days.

Invoice workflow automation and payment to your vendors has never been easier. Give your Fifth Third Treasury Management Officer a call today to learn more about how you can optimize your AP process through Expert AP.

The views expressed by the author are not necessarily those of Fifth Third Bank and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank.