By Willem Scheepers, Principal Consultant at Chrome Consulting
According to Gartner Research, automation of accounts-payable invoices produces one of the largest returns on investment when compared to other technology initiatives. It, therefore, makes sense for companies to implement a solution and continue to measure the effectiveness of their invoice automation solution to identify inefficiencies for improvement.
As with many implementations, the planned value does not always mirror the value achieved. Compromises can be made based on environmental factors and shifting priorities during and after the invoice automation project. After the implementation, data and process compliance often decrease, further eroding value and potentially leading to a breach of legislative requirements.
Specifically, Australian based companies need to consider how they are affected by the newly introduced government Payment Times Reporting Scheme (PTRS) legislation.
With this government scheme, payment times for small businesses will be publicised with the overall goal to have the time to pay reduced. This scheme creates an incentive for larger companies to improve payment times and practices regarding small and medium businesses to protect their brand image in the marketplace. The converse is also true; without improvement, supplier relations will be impacted, and penalties are applied.
Measure for improvement
The first step on the road to improvement is to measure your Vendor Invoice Management (VIM) solution’s performance. Peter Drucker (1909-2005), one of the most widely known and influential thinkers on management, once said, “You cannot improve what you cannot measure”. There are several KPI’s that can be measured to ensure both short term and long-term ROI. They would include the following KPI’s:
- Reduction in Invoice Cycle Time – Receipt of the invoice to Payment
- Reduction in Days Payable Outstanding
- Increase in Touchless Percentage (Automation – straight through posting)
- Increase in OCR extraction and recognition accuracy
- Increase in Invoices Paid On-time
- Increase in Early Payment Discounts where they exist
Measuring these KPI’s will quickly point out if there are any waste or untapped potential in your solution. In addition, these KPI’s will highlight escalating problems where in the worst case, suppliers may stop working with you.
Automation is behind every next big thing
There are a couple of areas in your VIM solution that can be improved. From invoice verification and exception handling, better collaboration internally and with suppliers, data transformation, data enhancements and system performance, to name but a few.
In all these areas, increased invoice process automation is one of the key enablers for improvements. To quote Arthur Goldstuck, “Automation is behind every next big thing.” [1]
Whether it is the new machine learning capabilities of Intelligent Capture from OpenText, the optimal use of VIM logic modules, or just making sure VIM features are configured effectively to reduce or avoid manual work, you can be assured, increased automation is directly linked to increased value.
More than just optimisation gains, increased automation also add more strategic value to a company.
Finance professionals and the intelligent enterprise
With increase automation, employees will have more time for value-adding tasks, such as process optimisation, data analysis and supplier relations.
In a 2019 article from Medius [2], a leading global provider of cloud-based spend management solutions, it was noted that accounts payable is no longer orientated as a back-office function, but has become a very important Value Center for a business.
Gaining value then starts with two simple questions, are your AP invoice processing KPIs trending in the right direction, and if not, how do you fix it?
Time for an Invoice Automation Health Check
A Health Check will give you the assurance that all aspects of your solution are working optimally and also provide input to the training and development of your people. A typical health check will examine each facet of your SAP environment and will include an examination of the following:
- Identify further opportunities for touchless processing and provide a roadmap on how to get there.
- Identify other SAP objects, such as delivery notes and remittance advices for OCR to speed up and make more accurate data capture.
- Identify any risk and issues with the existing system configuration and enhancements that can impact system performance.
- Assess if and how newer capabilities can improve your solution, such as electronic invoicing and PEPPOL Compliance.
- Review upgrade options or the S/4 transition to public and private cloud options.
Looking beyond Automation and Optimisation
Most organisations simply aren’t performing at their full potential, nor do they know what their full potential is. Of those organisations focused on end to end process improvement, many have been leveraging process mining technology like Celonis.
“Process mining is an analytical discipline for discovering, monitoring, and improving processes as they actually are (not as you think they might be), by extracting knowledge from event logs readily available in today’s information systems.
Process mining offers objective, fact-based insights, derived from actual data, that help you audit, analyse, and improve your existing business processes by answering both compliance-related and performance-related questions.”
In 2021, there is a new trend emerging as process mining is now considered mainstream with thousands of organisations having unlocked tremendous value. Interestingly, the early adopters of process mining have evolved their focus. Their appetite for optimisation has shifted from process improvement to maximising their capacity to execute.
Leaders of high performing organisations are now leveraging Celonis to close gap between their current performance and the level of performance that should be achieved with the same (or less) available time and resources. That is what a true transformation should deliver, right?
By removing the complexity that puts artificial restraints on end to end processes, the perceived limits on process performance are eliminated. Reducing costs, errors, rework and increasing output, services levels and working capital – all with existing datasets.
This change in mindset is called Execution Management. It takes advantage of technological advances in Robotic Process Automation, Machine Learning, Natural Language Programming and Artificial Intelligence to give organisations a real time, and end to end process view of any risks that will impact their ability to execute to their full potential. Those risks are mitigated as they happen and before impacts happen downstream.
These efficiencies are being realised by organisations now. We are seeing rapid adoption in markets around the world and early adopters are building significant competitive advantage. With over 46 years of combined global invoice automation experience across 77 different client engagements, Chrome Consulting has the expertise and experience to help you fully gain value from your invoice automation solution.
If your organisation would like to hear more, please send a message to info@chromeconsulting.com.au.
References/further reading
[1] Goldstuck, Arthur. (2020, April 9). “Automation is behind every next big thing”: Innovation. Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2geehttps://blogs.oracle.com/africa/automation-is-behind-every-next-big-thing [2] Untapped Editorial Team. “5 Accounts Payable Trends for 2020”: Invoice automation insights https://www.mediusflow.com/en/untapped/articles/news/accounts-payable-trends
• Australian Government Information re PTRS
https://www.industry.gov.au/regulations-and-standards/payment-times-reporting-scheme
• E-Invoicing and PEPPOL
https://www.ato.gov.au/business/e-invoicing/
• What is Process Mining
What is Process Mining? | Celonis Execution Management System
This article is sponsored by Chrome Consulting
