How ECM Can Turbocharge Your Accounts Payable (AP) Function
Improving efficiencies in accounts payable (AP) is one of the big reasons why organizations want to adopt an enterprise content management (ECM) solution. Why is ECM so attractive to accounting functions?
In this article, we take a look at what drives ECM adoption in the AP function and how your organization can benefit.
The primary purpose of ECM is to streamline workflows and improve process efficiency. Because Accounts Payable (AP) is a document-intensive process—comprising multiple steps of accessing, reviewing and approving lots and lots of documents—it is ideally suited to benefit from ECM technologies that automate and digitize the process of capturing, analyzing, sharing and storing actionable data.
To illustrate, let’s look at how a manual invoice-processing procedure differs from a process that uses an ECM solution. The ultimate goal of invoice processing is to get an invoice or credit memo into the company’s system and ready for payment. In a manual process, when an invoice is received, it may pass from desk to desk and through multiple human hands for data entry, comparison to purchase orders, authorization, payment and storage. In a manual process, the labor requirements, the time to complete processing, the potential for delay and human error are all quite high—even when the invoice is a “simple” one. And when complications arise with an invoice (often the rule rather than the exception), the labor, time and error costs are multiplied.
In contrast, with an ECM solution, the movement of documents becomes far easier and far more efficient. Invoices and supporting content such as purchase orders, packing slips, vendor contracts, and historical correspondence are captured electronically and kept in one centralized, secure location, and authorized employees are able to access this information from anywhere with just a few mouse clicks. In addition, documents and key data are routed automatically through the appropriate workflows such as review, approval and posting, with notifications to stakeholders and built-in alerts for potential duplications, discrepancies, and special circumstances.
This substantial improvement to process efficiency is enough to justify adoption of an ECM system for AP, but ECM offers many other benefits to AP operations as well:
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- An opportunity to redirect staff to higher-level tasks. For example, instead of spending eight hours a day keying in invoices, AP staff may spend part of the day doing vendor reconciliations and solidifying vendor relationships, which are so critical to the business. Auditing and compliance tasks are other examples of where your staff time can be put to better use.
- Risk reduction. Manual AP processes such as data entry and document matching are notoriously error prone, leading to rework, delays, and incorrect or duplicate payments. ECM solutions use optical character recognition (OCR) and analytics-infused intelligent document processing (IDP) to ingest and analyze data, ensuring data accuracy and integrity and preventing duplication. Here’s an example: When an invoice arrives that does not match to a purchase order or is from a vendor that is not an approved vendor, the ECM can automatically route that invoice to an exception cue.
- Access and transparency. ECM solutions enable authorized users to access AP content from anywhere in the world. Let’s say an invoice requires a senior manager’s authorization for payment but that manager is traveling; they can simply log on with their laptop, phone or other mobile device and keep the process moving. Or the senior manager can temporarily or permanently delegate their approval authority to other employees, and the ECM solution will route the documents accordingly. Another benefit of ECM is that as invoices move through the different stages and levels of the AP process, interested parties can maintain visibility into where the document is at all times.
- Dashboards and metrics. Real-time dashboards give managers visibility into the status of workflows so that bottlenecks can be mitigated. Also, because ECM solutions improves data accuracy and integrity and are capable of automatically extracting and analyzing data from documents, they can generate key metrics in real time that an organization may not have had access to before. How many invoices are received? Are invoices being processed within the 30-day SLA of the vendor? Are exceptions being processed on time? Which AP employees are performing exceptionally? With visibility into these metrics, AP professionals can manage the process at a more granular level, using improved information to make better decisions for the company.
- Compliance. ECM solutions offer automated, secure document retention; track access to data; and trace all changes made to records. Plus, an ECM’s built-in rules for meeting operational and compliance procedures can make preparing for audits a simple task. For instance, rules can automatically “flag” and track invoices above certain amounts that require exceptional levels of authorization. Rules can also determine how long information is stored within the system for tax audit purposes.
Collectively, these benefits of an ECM system are capable of radically boosting the power of your AP operations. If you don’t already have an ECM system in place in your organization, consider starting your implementation with AP, and then turbocharge the rest of your organization as well.
Authored by Lynne Drea