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Home » Blog » E-Invoicing » Attributes of a Best-In-Class AP Operation – Part 3 of 3 – Invoice Straight-Through Processing & Higher Discounts

Attributes of a Best-In-Class AP Operation – Part 3 of 3 – Invoice Straight-Through Processing & Higher Discounts

Attributes of a Best-In-Class AP Operation – Part 3 of 3 – Invoice Straight-Through Processing & Higher Discounts
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In part 1 & part 2 of this blog series we took a look at the four major attributes of a best-in-class accounts payable operation and how electronic invoicing contributes to achievement of faster cycle times, lower invoice processing costs, improved staff productivity and reduced supplier inquiries.

The final two attributes which address the operational metrics of an accounts payable function and hence separate best-in-class accounts payable operation from its peers are as stated below:

5) High Straight-Through Processing Rate

Verifying the invoice information against the PO is laborious and time consuming however it is an essential component of the AP process as it helps in prevention of payment errors, frauds and even duplicate payments. Thus, it is quite amazing to note that according to an IOFM research, matching invoice line items with data in a PO system is the top pain point for 28% of AP departments surveyed.

Straight-through processing of invoices by automatically extracting data from invoices, automatically matching them against the PO and proof of delivery documents is made possible by an electronic invoicing and touchless processing solution. This is confirmed by a study by Ardent Partners that 82% of Best-in-Class organizations surveyed can automatically perform two or three way matching by means of an electronic invoicing solution.

Learn More: Merlin for AP Automation Software;

A portal-based e-Invoicing software solution not only makes it easy for the suppliers to submit invoices electronically but also streamlines the invoice processing for buyers. In a touchless invoice processing solution information can be validated against data sources, business rules and applications, thus eradicating duplicate payments and thereby reducing the scope for fraud and exceptions as well.

6) High Discount Capture Rate

The savings potential that can be realized from early-payment discount programs can be as high as 14 percent if all customer invoices are settled on optimum payment dates, according to a study conducted by MasterCard. The heart of the problem is that in a manual environment it is difficult to facilitate discount payments as invoices are typically approved outside the discount window.

Automation in invoice processing enables the buyer in overcoming this problem by creating an early payment discount program through an e-Invoicing solution and inviting suppliers to sign up to avail early payment opportunities. According to a finding by The Hackett Group, top performers capture seven times more early pay discounts as a percentage of spend (0.16 %) compared to their peers (0.02%). This also means that the financial controllers in these high performing companies have better ways to manage the invoice processing cycle times and the liquidity in their organization.

Accounts payable automation enables businesses to effectively and optimally manage their cash flows through accelerated invoice approval cycles and by capturing more early payment discounts.

Thus, in the 3-part blog series we saw how electronic invoicing not only helps organizations in reducing costs by removing paper, improving staff productivity, reducing invoice approval cycle time and processing costs, creating visibility for suppliers through self-service portals, but most importantly, also empowers an enterprise to compete better by optimizing their various accounts payable metrics.

Know More: AP Automation

Related Read:

  1. Blog – Attributes of a Best-In-Class AP Operation- Part 1 of 3 – Cost & Time Optimization
  2. Blog – Attributes of a Best-In-Class AP Operation-Part 2 of 3 – Staff Productivity & Supplier Self-Service
  3. Blog – Future Ready – Procurement Leader’s Quick Guide For Digital Signatures
  4. Blog – Top 8 Dynamic Discounting Features
  5. What is Dynamic Discounting?
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