Tuesday, November 1, 2011

Black Holes, Acid Wash Jeans, and AP more than AR - 3 Things I Don't Really Understand

By Angela Childs

I work with a lot of companies implementing content management and workflow.  More often than not, we’re working with Accounts Payable.  We might be helping them implement paperless invoice approvals, shrink the timeline to take more discounts, or sometimes even tracking vendor behavior to turn vendor invoicing errors into rebates.

None of this surprises me.  It doesn’t make sense to have AP clerks key invoices when you don’t have to, or to shuffle paper invoices all over the organization.  And, if at the same time you can turn a vendor’s bad habit of sending duplicate invoices or invoicing the wrong quantities/prices into a bigger discount or longer payment terms, even better – what are we waiting for, right?

Of course those things should all be on our to-do list, no mystery there.  What I always find odd though, is that we don’t spend as much time talking about AR.  I find it odd because it’s a lot more fun to talk about AR.  It's how much quicker can I get paid vs. how much more efficiently can I pay.  Cash in vs. cash out.  The first half of that is definitely more appealing.

So why AP?  Okay, truth time, I know the answer to this question.  The AP process touches a lot of people.  It’s not just accounting but every approver and purchasing, add the vendors calling with questions regarding when their invoices will be paid, and you have a crowd.  With all the players, fixing the AP process becomes a shear necessity – unless you have unlimited time and money, in which case we should still talk. 

Clearly, AP automation/workflow is something we want to do but we are starting to see a real uptick in the areas of AR and sales order processing.  This is a natural progression and it’s nice to see. 

We’re working with two companies now that are automating sales order processing.  The premise is how they, with the least amount of manual intervention, can get a sales order from receipt to the production floor.  Adding to that base premise, we’re also working to error proof the process by automating data validation, checking available stock, confirming schedules, and verifying pricing.  The same things we do for AP – capture as soon as the document comes in, automatically extract the data, and route – all apply to orders.

That’s the order to invoice side of the equation.  What about invoice to pay?  If I talk to any CFO about their DSO they all want it reduced and why wouldn’t they?  The quicker you have your money, well, the quicker you have your money.  

When we start to look at the reasons customers give for a delayed payment it’s often that they don’t have proof of delivery, they need another copy of the invoice, or they need to confirm agreed to terms (quantity, pricing, etc.).  If you capture documents throughout the process, then wrap them all up together with the invoice you generate to the customer that information will be at the fingertips of your Collections group.  Contact the customer at 25 days, perhaps, and ask about payment.  If Collections hears any of those objections, the detail that gets the money in your hands is a mouse click away from being emailed to that customer.  They can even ask – “I just emailed you proof of delivery.  Did you get it?  Is it what you needed?” 

So content management and workflow clearly can make a huge impact in both AP and AR.  Does it make sense to start with AP?  For companies with a high invoice volume, a lot of approvers, or a distributed workforce, it probably does.  What I want is to not stop there.  Let’s take everything we learn about automating and using workflow tools while working with AP to make a real impact in AR.

Want to take a look at your AP or AR processes?  At Imaging Office Systems we specialize in process mapping and re-engineering, automation, workflow, and content management.  Take a look at our results and contact us.  We can help.

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