If automation is a priority for your accounts payable department, you are not alone.
Seventy-one percent of accounts payable departments plan to automate further, according to the results of an online survey conducted by the Institute of Finance and Management (IOFM) in 2020. Even highly automated accounts payable departments plan to deploy more technology this year.
Senior management also is getting behind automation efforts. Nearly two-thirds of accounts payable leaders surveyed by IOFM believe their senior management is more receptive to automation.
Accounts payable leaders know that automation uniquely addresses the challenges of the new reality:
- Increased risk of fraud because of disrupted operations
- More inquiries from suppliers regarding the status of invoices
- Greater chance of missed invoice due dates because of remote working
- Inadequate visibility into cashflow and spend information
While the business case for automation is clear, how to choose the right solution may not be.
Evaluating accounts payable solutions can overwhelm the most tech-savvy payables leader. There are lots of vendors and approaches to choose from, and new technologies are becoming available. What is more, remote working has radically changed the requirements for an automated solution.
Making the wrong decision can waste resources and cause operational problems.
What to look for in an accounts payable solution
Choosing the right accounts payable technology does not have to be so hard.
The Institute of Financial Operations (IFO) describes four levels of accounts payable automation:
- Entirely paper-based with manual processes
- Paper-based with front-end or back-end imaging
- Workflow-driven with data capture
- Fully electronic, touch-free processing
Seventy-nine percent of best-in-class accounts payable departments use document scanning, according to Ardent Partners. Sixty-one percent of best-in-class accounts payable departments use automated workflow or data capture technology such as optical character recognition (OCR). Self-service supplier portals are used by half of best-in-class accounts payable departments.
To choose the right technology, start by surveying the technology landscape. Leverage third-party resources such as trade publications, industry associations and analyst reports to understand the technologies your peers are deploying. Then determine how each technology addresses your current and future needs, its relative costs, and the level of customization and administration required.
Ensure that prospective solutions have the features to address your department’s needs.
According to IOFM, accounts payable departments identify several “must have” features:
- Standardized accounts payable processes across the enterprise
- Two-way or three-way int’s voice matching capabilities
- Posting invoices to an ERP straight-through, without human operator intervention
- Digital routing of invoices for approval
- Matching invoices to contracts or payment plans
- Measuring key accounts payable metrics
Make certain that potential solutions can support remote working.
Do a comparative analysis of features in each prospective solution. Map the available features to your lists of objectives and requirements. Ask prospective technology providers to demonstrate how their available features will address your unique processing requirements and points of pain.
Also carefully evaluate potential vendors.
Start by creating a short list of potential vendors based on unbiased third parties.
Then consider the level of integration with your existing ERP system. Tight integration with your ERP enhances an accounts payable system’s usability and performance and improves payback both systems. Look for a payables system that can be integrated with as little programming as possible.
Next, be sure the solution allows users to configure workflow rules to eliminate manual paper handling, help eliminate bottlenecks and ensure the control and tracking of documents.
Why configurability is key in the new reality
You also must consider the resources required to configure, implement, and support each technology provider’s solution, and the initial and long-term licensing, labor, and infrastructure costs. Be sure to ask how prospective technology partners will train and support far-flung accounts payable staff.
And ensure that prospective accounts payables systems are configurable without the need for a programmer (or vendor fees). Asking vendors how they address unique requirements may uncover areas that require customization. Create a vendor pricing matrix that includes standard functionality, add-on features, capabilities that require customization fees and maintenance and support expenses.
Vendors also should show that their solution meets your corporate standards for audit, compliance, reporting and security. Engage your information technology group to validate vendor claims.
Consider requiring finalists to demonstrate their software using your accounts payable documents. Slick generic product demonstrations may not look so hot under the light of real-world conditions.
Validate vendor claims with end-users whose processing requirements are like your own. Ask references about their experience during deployment, the ease of use of the system, the vendor’s level of support and compliance with service level agreements and their satisfaction with enhancements to the solution. Don’t hesitate to ask vendor references whether they are meeting their business case.
Also dig into the company’s history and the tenure of the executive team, review the company’s financial statements, assess the company’s stability, learn the company’s recent growth trends and determine the number of customers the company has in your industry and its customer retention rate.
Finally, understand the vendor’s user support options, including hours of support and whether the service is inter-company or outsourced. In addition, it’s important to get a clear picture of the vendor’s product development plans. Make sure the vendor has periodic software enhancements.
Make the right automation choice
Automation is critical to navigating the new reality. From intelligent data capture and dynamic workflows to seamless ERP integration and business intelligence, organizations of all sizes and across all industries recognize the big impact that automation can have on accounts payable.
But you cannot achieve the full benefits of accounts payable automation without the right solution and the right partner. Choosing the wrong solution or partner can result in a loss of trust, strained stakeholder relationships, and wasted time and resources. Following the strategies described above will help ensure that your accounts payable department finds the right solution for the new reality.