The Financial Controller at a leading organisation walked into her Accounts Payable department to discover they were struggling to process invoices, even with a supposedly automated solution. She started to investigate alternative solutions and thought that maybe one of the key areas would be around how to maximize straight-through processing.
We are always asked, what is your recognition rate, how many invoices will go straight through?
Is this relevant and what factors really impact the ability to achieve this?
Straight-through processing means that when an invoice is received by an organisation, it goes directly into their ERP platform for payment without any manual intervention. How is this achieved?
Why not request a demonstration of Mi Invoices to learn more about why there is more to this topic than just a percentage?
You need to consider that 100% is never achievable as certain invoices such as utility bills do not require a PO to send you an invoice.
The next question is how many of your invoices match 1st time without manual intervention?
How good and timely is your Goods Receipt Note (GRN) process?
Typically this is highly dependent on your industry, is your organisation working to Just in Time ( JIT ) and the goods are receipted by your goods in department or do your project teams undertake this once a week? Or even does it take several weeks for the goods to reach their destination before the project team can apply the GRN! What about service-based invoices? How timely are these receipted?
Do you need to match your invoices at the Line level or at the Header?
That’s before we get to the thorny questions, how good are your suppliers at invoicing correctly and critically how good is your master data!
Matching the extracted data to the Supplier Master Data held within the client’s ERP is the next step. If everything matches, it is within tolerance, and correct, the invoice can then pass straight through to the ERP without any human intervention.
Taking into account all these points is straight-through processing the answer and what does that mean?
See our Oracle sponsored blog, for the critical pillars of automated invoice processing into Oracle ERP platforms
We are left with the obvious statement, that 100% straight-through processing is rarely possible and manual intervention is inevitably going to be necessary.
Critically the actual question which should be asked of a supplier’s system;
How simple is it to process the exceptions with a minimal amount of time and effort?
This is the real area you need to focus on when looking at solutions to automate your invoice processing. Not the simple question “what is your recognition rate to enable straight-through processing.”
You can also have a major effect on the required processing time and effort by reviewing your master data and undertaking a data cleansing activity. Including the removal of redundant suppliers and ensuring your current supplier address details are complete!
Critical areas you need to focus on are;
A simple user-friendly interface, to minimise the number of keystrokes and mouse clicks to process the invoices. This also aids acceptance and reduces training needs.
Once all of the data is corrected and validated, the invoice is submitted to the ERP platform for onward processing. This should be achieved by tight integration that can dynamically push the invoice directly into approved ERP interfaces. Ideally, this should be for each invoice, as a flat file with a batch of invoices will fail if there is an error on any single invoice.