Today’s EIPP (Electronic Invoice Presentment and Payment) solutions take the invoice from submission to the appropriate payment, from ACH with dynamic discounting for discount maximization, to card processing for increased days payables outstanding, to check printing. All of these functions make EIPP the ultimate payment process! They allow B2B transactions to take place with better efficiency than ever before.
It is interesting, that with the expansion of payables automation and EIPP, there are so many solutions that just can’t offer the payment portion. iPayables, an industry leader in EIPP, has expanded their payment options with a wide range of choices including: Customer System Delivery, ACH Transaction, American Express P-Card, MasterCard P-Card and Check Printing. iPayables also provides remittance detail to the supplier for purposes of cash application and reconciliation. It is interesting that so many of the payables automation solution providers stop prior to the payment step.
Here is a review of some of the payment processes you would expect to see in electronic invoice presentment and payment:
- Customer System Delivery – This is where the electronic invoice is simply delivered to the customer to pay within their system. It is commonly available with most any automation solution.
- ACH with Dynamic Discounting – Most companies are familiar with ACH, but there are challenges in collecting banking information from suppliers. This may be why many payables automation providers stop short of payment. iPayables and most EIPP solutions that perform ACH transactions are collecting ACH related information online and most often following up with phone calls to retrieve or validate information. Aside from the convenience of the EIPP provider collecting this information, the greatest benefit of all could come from enhanced control over payment timing. According to the procurement trade publication Spend Matters, businesses can earn a 20 percent or greater annual return on their invested capital by making early payments to suppliers. With Dynamic Discounting, the customer is using their working capital to pay suppliers early, but they are collecting a great return on that investment in the form of high value discounts.
- Payment Cards (Purchasing Cards) – For customers who don’t have the working capital to do early payments themselves, iPayables recommends using purchasing cards as a strategic form of payment for accounts payable. Purchasing cards processed through iPayables net the customer a handsome rebate, but actually extends the payment terms. Suppliers are often willing to take purchasing cards as payment for early payment when an early payment from the customer is not available.
- Automated Check Payment – Though a customer may want all payments paid electronically, there will often be some portion left as check. These can be managed with Customer System Delivery, or companies like iPayables will print the needed checks. This all-in-one approach allows the customer to focus on the supplier relations, audit and other value add efforts and not on paper printing.
A recent 2013 study by AFP the Association of Financial Professionals found that, “78 percent of organizations have integrated their ACH systems with accounting while 56 percent have done so for card payments,” said Jim Kaitz, AFP’s president and CEO. “AFP strongly supports electronic payments and we’re pleased to see the payment innovations now available to corporate treasurers.”
Improved technology and automation provide businesses with more choices when it comes to improving and expediting payment methods. The trend towards more flexibility and higher consumer demand has made traditional payment methods obsolete. Not only has there been a payment/ automation change in B2B, there has also been a methods change. EIPP with ACH and Dynamic Discounting is the latest evolution in payment processing, and it has become a popular and readily available option in accounts payable processing.
Why is AP Workflow so valuable to an Accounts Payable Department?
I believe it’s like the rudder for a boat or wings for a plane. Without it, an AP Department can be lacking in direction and could easily get into murky water and lose its way. AP workflow keeps an AP Department on the right course.
For many Organizations without the proper direction to follow could lead to disastrous results. On the other hand with the right insights and directions can lead to a higher ROI and a thriving Accounts Payable Department.
Now you’re probably wondering is there some kind of magical formula that can bring an AP Department to a “business panacea”. I’m not suggesting that all of your problem’s and troubles are going to disappear, but what I am suggesting is that with some hard work and proper training success is eminent .
Before an AP Department can be proficient in AP Workflow it first needs to answer five questions. These questions are especially important when you are talking about Non PO Invoices.
- What invoices require approval workflow?
- How do you start the workflow?
- When do you route to the next approver?
- When do invoices stop workflow or are finally approved?
- How do you deal with exception/special case workflow?
When these questions have been answered AP Workflow can begin to help an organization to improve its course of direction with a smoother and quicker flow of information.
Here are some other features that can be of help:
- Use a Simple Key – The vast majority of invoices should enter the organization using a simple key. Either Requestor, Buyer, Location or some other value that the supplier may know. Relate this key to the starting point in the organization.
- Hierarchy Approval Reporting – Utilize some kind of hierarchy to advance invoices along the route as needed for additional approvals. This may be reporting structure based or business rule based. 80% of invoices should follow this structure without fail.
- Utilize Matrix Approval Limits - to determine when an invoice is finally approved for payment. Approvers help expedite workflow.
- Limit Reviews of invoices to actual trouble suppliers, business units or spend.
All of this is dramatically improved if you are using technology to automate this process. By automating, all of your business rules that you have put in place are electronically codified into an application that must be adhered to. This process will speed up your approvals to under four days in most cases.
Now with all of these issues being addressed makes it paramount that AP Workflow is set up properly in order to solidify a successful Accounts Payable Department.
The term E-invoicing or electronic invoicing gets thrown around a lot these days in the business world but what does it mean exactly? What is electronic invoicing and why should we care? Electronic invoicing, as the name implies, is paperless invoicing. That is all fine and dandy but what’s so bad about paper? Let’s take a look at some of the current issues with traditional paper invoicing process as they relate to the AP department.
Paper invoices and purchase orders are both the staple and bane of most AP departments. Lost, duplicate, and incomplete invoices plague the AP department. Late payments which strain vendor relationships can cause executives to become frustrated. Routing an invoice often involves multiple people needing the same invoice, creating many opportunities for human error to occur, not to mention the tedious process of checking invoices against PO’s and putting that information into your bookkeeping software. Oh, and let’s not forget the additional effort and frustrations associated with audits.
If reading this is causing you to have an anxiety attack then chances are you’ve been victim of some of these problems. Well relax, Electronic invoicing is the solution. Electronic invoicing is a method of invoicing in which most of the aspects of the AP department are electronically automated, from invoice submission to payment. Your vendors submit invoice forms over a web portal. This same portal can allow you to review, code, approve or deny any invoice you receive.
E-invoicing software in an automation solution like iPayables InvoiceWorks will track and update PO information, and automatically match invoices against the PO. The same payables automation will automatically route non-PO invoices for approval based on your unique controls and integrates with your current accounting software and processes. Customers and vendors can easily track and view any invoice with just the click of a button. This makes e-invoicing a perfect solution for auditing and archiving problems. All invoices are securely stored on a server for easy access through the web application. Approved/matched invoices are either fed back into your payables system for payment, or be paid automatically by the payables automation solution once they are approved. A process that used to take weeks or even months can now take a day with e-invoicing.
Maybe this sounds like a big change, but the best part is, it’s getting easier every day. No, you don’t have to be a tech wizard to eliminate the nightmare of paper process. Once you decide to go live with e-invoicing the solution provider can walk you through everything from implementation, to vendor adoption, to support.
Electronic invoicing is an exciting technology that can greatly reduce the costs and hassles of the AP department. Paper in the business world is becoming obsolete. Information can be exchanged in seconds online and electronic invoicing aims to employ this technology to improve business process. E-mail has all but replaced snail mail in the business world and E-invoicing will do the same in the AP department.
RON BAIRD is a member of IPAYABLES MARKETING TEAM and contributed to this months post.
Cloud Invoicing is changing how we do business. It’s reforming organizations and giving them the ability to work with a more refined system (AP automation in the cloud).
Organizations around the world are feeling the need to make changes. The traditional way of processing invoices is simply inefficient. In order to improve cash flow, reduce costs and become more environmentally friendly improvements are needed. The old processes of paper invoicing and check processing is slow, costly and lacking in accountability.
Today, cloud invoicing customers can experience lower costs, cash flow enhancing and environmentally friendly methods through Accounts Payable Automation. Cloud Invoice software can be easily implemented as a software service (or SaaS). Cloud Invoicing also means that the hardware and software required to provide the invoicing service is something you do not have to build, maintain or purchase.
Cloud Services are often used because they scale rapidly. Or in other words, they enhance the process and make it reachable in a faster amount of time. It is an efficient option as you only pay for what you need as a consumer and can be rock solid reliable (depending on who you choose as your provider).
Recently at an industry trade show, one of the executives here at iPayables was asked, “how is InvoiceWorks Cloud Invoicing different from everyone else?” His answer was, “InvoiceWorks includes benefits such as common functionality like PO Flip, Notification Escalation, AdHoc Reporting and Advanced Duplicate Detection, he said. “The completeness of our package and the various options we provide, is something you rarely see in the industry.”
iPayables InvoiceWorks simplifies the process of adopting Accounts Payable Automation. It accelerates the on boarding of business partners, sends and receives legally compliant and digitally signed invoices electronically through the cloud in the formats your business requires. InvoiceWorks can also leverage automation with software that enforces tax and legal requirements.
Cloud computing enables organizations to take on an even wider array of tasks and of delivering more profound benefits for businesses. Cloud services as part of a comprehensive automation package, embraces the benefits of fast, efficient, paperless processing..
Tags: Accounts Payable Automation, AdHoc Reporting, Advanced Duplicate Detection, AP Automation, Cloud Computing, Cloud Invoice, Cloud Invoicing, InvoiceWorks, Notification Escalation, paperless invoicing, Paperless Processing, PO flip
I have been working with suppliers for a few years helping them get set up with automated invoice processing. I have seen firsthand the many benefits the suppliers experience through invoice automation. They appreciate no supplier fees, invoice verification, the invoice search tool, e-mail verification, timely processing, purchase order approval and edit errors. With these advantages suppliers can make available a complete and correct invoice. Vendors are able to view updates and approval payment processing allowing for a faster and smoother accounts payable journey.
6 Supplier Benefits for AP Automation
- No supplier fees – iPayables automation is affordable and paid for completely by the customer. The suppliers are enrolled and submit invoices free of charge.
- Invoice Search Tool - Once the invoice is submitted, the supplier can view updates through the Invoice Search Tool online. They will be able to see the invoice go through the automated invoice process and any payment information that is made available by the customer.
- Email Verification – The supplier also has the option to be notified via email if an invoice is denied or put in dispute. Thus the supplier can take the appropriate action as soon as possible regarding that invoice so that it can get back on track to be paid.
- Timely Processing – Because there are no delays with the mail service or time in between one approver’s outbox and the other approver’s inbox, everything moves faster. At the end of one step, like invoice submission, the invoice is immediately available for the next step, like first approval, then second approval, etc. Escalation emails, immediate dispute notifications, vacation reroutes are all in place to make sure the invoice is processed quickly and efficiently.
- Purchase Order Approval - Invoices that are associated with a Purchase Order are matched against that Purchase Order based on rules specific to that type of invoice. Thus PO invoices that match the Purchase Order according to the rules for that type of purchase order move straight to payment processing with payables automation.
- Edit Errors - When using invoice automation, the suppliers sometimes run into edit errors on their invoice. These edits help ensure that all mandatory information is filled in on the invoice before it is submitted. Without the required information, invoices would be rejected and the supplier would need to submit a new invoice. Edit errors avoid this double work by making sure the invoice has all the vital information needed for ap automation before it is submitted the first time.
When using ap automation, suppliers find that they can enter all mandatory information and can verify that it is correct before sending the invoice to the customer. Accounts payable automation also allows the supplier to keep updated on what is happening with their invoice and when to expect payment. Now suppliers are able to view updates and approval payment processing allowing for a better and more accurate accounts payable automation experience.
Elyse Larsen is Supplier Service Specialist for iPayables and contributed to this month’s post.
So how could electronic invoicing be the answer to the Government Shutdown? Glad you asked.
Regardless of your political stripes, there seems to be endless discussions on how and on what to spend money by our politicians. But it is more than just talk, as the government is also very good at actually spending the money.
Accounts Payable groups on the other hand are the experts at how to best distribute money and monitor where and how it is being spent. They have the tools and the expertise. So what could the government learn from Accounts Payable and electronic invoicing?
Electronic Invoicing is all about . . . .
Looking at best practices should be everyone’s goal and automation is one of those areas within Account Payable. Paper, for example, slows the whole process down. But it isn’t just about taking a manual process and converting it into something automated. It is about removing the limitations inherent to a manual process and opening up the potential to a whole new world of capabilities not previously available.
I doubt anyone would hold the government as the example of efficiency and productivity. But I believe that there are opportunities where more could be done on both sides of the isle if government could just operate more efficiently and be more productive. The world is a competitive place and if we don’t improve then we will be left behind.
Who doesn’t like additional revenue opportunities and within Accounts Payable? When invoice approval processes take 30-60-90 days, there is no opportunity for discounts. Procurement works hard to negotiate these terms and wouldn’t it be a great thing in the spirit of cooperation to be able to act on these discount opportunities. Take advantage of the revenue opportunities within Accounts Payable. Who would have thought?
The idea is to have the appropriate people handing the work. When a Purchase Order invoice fails to match, the supplier is in the best position to address the error. The approver who ordered the service knows best if it was completed and which cost center it should hit (generally his/her own). Account Payable could deal with all of the match exceptions and coding but are they really in the best position to answer these questions? It is better to distribute the activities to where they should be and have Account Payable focus on their key areas. The result is a win-win for everyone.
Electronic invoicing helps provide visibility on what is being spent where, by whom and how much. All of these controls can provide an accurate picture as to how we are doing in relation to our budgets and forecasts. It allows before versus after the fact control of our spending and priorities.
It’s that dirty little 14 letter word. It is what pushes everyone toward budgets, metrics, goals and the like. Electronic invoicing enables the ability to measure and track both numbers and people which helps drive accountability.
Electronic Invoicing is a tool for everyone to use. No politics, just a tool to help everyone better achieve their goals.
So just maybe, just maybe, if the government had been using electronic invoicing and the principles associated with it, there may not have been a shutdown to begin with.
Robert Ripley is Chief Operations Officer at iPayables. His experience at iPayables and previously at Accenture includes IT Integration, business process design and AP Automation with Fortune 500 companies.
We had a high school student working some light office tasks and thought it would be interesting to see how she viewed accounts payable. Here’s what she wrote:
I’m 17. I’m applying to colleges, so it’s about time I spend some time thinking about my future and what career path I should take.
I took a job working for iPayables and started learning a little more about accounting and accounts payable. One assignment I received was just basic training and I needed to research who works in accounts payable. I learned all about the accounts payable chain of command and who does what and why that helps the company. It starts at the bottom with the AP clerks. These guys know what hard work is, constantly entering numbers, collecting information, filing data, and talking to suppliers, they are definitely the busy bees. Unfortunately, with all that hard work, mistakes happen and even worse, they happen frequently. That’s when the AP supervisor who monitors the clerks’ work either catches a mistake and fixes it or else gets an earful about it from the AP manager who records all the data and has to watch out for the AP director who has the all magical power to fire people who keep screwing things up that he has to smooth out with the suppliers. It can be a very stressful environment, especially when you’re working with paper.
In an accounts payable department, the words ‘down time’ do not exist. People are constantly rushing from one thing to the next with their AP supervisor breathing down their necks and hollering at them asking why things aren’t getting done fast enough. And, they aren’t just putting a stamp of approval on all the bills that need to be paid. When a bill comes in (we are assuming for the present time, that they do not have POs) an AP clerk must first read through the bill to make sure the numbers add up, then, because they have approval authority of about ten cents, they forward the invoice on to someone higher ranked who has the higher rate approval that’s needed, that person signs it, and only then can they begin the process of filing the document as an approved, paid invoice. Unfortunately, if an invoice needs a signature of approval, it usually gets pushed to the side and clerks work on the ‘already approved’ documents until it’s convenient for them to work on the ‘need approval’ invoices. For this reason, suppliers prefer when companies use POs because it results it their quick payment with much less hassle.
Then I started learning about iPayables and payables automation. iPayables is an electronic invoicing company, that is to say, they automate other companies using payables automation and electronic invoice presentment and payment (EIPP). EIPP is a solution that automatically checks invoices, catches mistakes, forwards them to get approved or matches them, and puts the invoice into the payables system. Payables automation is becoming more widely used and accepted, but some people do still prefer to use paper or just aren’t willing to fire the clerks that EIPP would replace.
In summary, I don’t think I should plan on being an accounts payable clerk, but there is still work to be done in accounts payable. Until a company becomes automated, there will need to be people running around checking, rerouting things for approval, re checking, and filing whatever stack of invoices they receive on any given day. A busy job, yes. But one somebody or something has to do.
Well, there you have accounts payable from a 17 year-old point of view. What do you think? What is she missing? What did she get right?
Add a comment or send me an email (firstname.lastname@example.org). I’d love to share your thoughts.