On any typical day, your Accounts Payable staffers are zoned in on paperwork and payments. But it’s essential for them to pause and take a big-picture look at your invoice process.
Here’s why: More than a third (39%) of companies say their invoice count has increased as much as 10% in recent years, according to iPayables. And with that number only looking to grow more as your company does, it’s important to nail down an efficient invoice process now.
Some savvy self-auditing
In briefly stepping back, your A/P staff can identify areas for improvement to move forward, says leading expense management company Concur.
It all starts with a short test. Essentially, your staffers will need to set aside time to sit down and answer questions to determine where improvements are needed most.
To get the ball rolling, here are three parts of your invoice process to evaluate and some specific questions for each, courtesy of Concur:
1. Invoice receipt. To see if your company should modify its invoice entry methods, consider:
- What percentage of invoices do you get on paper? By email? Via other electronic systems?
- Must any invoices be scanned? What percentage of them?
- Do all invoices arrive in one central place?
2. Invoice processing. Once an invoice is in hand, ideally, things should move efficiently. Ask:
- How much invoice data must be manually rekeyed into your system(s)?
- How many people are involved in invoice approval? What does your cycle time look like?
- How often does your company receive duplicate invoices? Do you have a method to quickly spot and address them?
- How often are payments late? Do you incur late fees, and if so, what do they cost your company?
- How much time does your A/P staff spend answering vendor queries?
3. After invoice payment. Lastly, evaluate your invoice and payment data practices by pondering:
- Do you keep a complete invoice audit trail to stay compliant?
- Can you assess each department’s spending habits to control costs?
- Do you have insight into vendors’ spending to use in negotiations?
- Can you integrate this data with other financial spend data for a comprehensive picture?
Note: Since every company’s operations are different, you may need to add more questions to get an accurate, holistic depiction of your entire invoice process.
After your A/P staff has completed the test, you can meet to go over their findings and pinpoint which areas of your invoice process it should focus on improving most.
That may mean rethinking certain Purchase-to-Pay policies (How many approvers are necessary? What’s our required turnaround time?) or selecting certain aspects of your invoice process to automate so your department can be more effective. (In fact, those who automate invoice capture and payments save an average of one hour per day, found research from MineralTree.)
With your test complete and improvement plans set, your A/P department can rest assured it’s well on its way toward higher efficiency.