invoices & contracts

The 5 Myths of Invoice Automation for Modern Finance Leaders

by Gary Malhotra May 25, 2021

Accounts payable teams have been struggling with long cycle times and high-cost invoice processing for years, and AP leaders are urgently seeking change.

We recently held a webinar unraveling the top 5 myths of invoice automation holding finance leaders back from achieving next-level modern finance in their organizations. Watch the on-demand recording now.

Here is a breakdown of all 5 myths of invoice automation and the realities behind them:

Myth 1.  ERP invoice automation will solve all my AP challenges

ERP-based invoice automation seems very convenient. After all, it’s usually an add-on that might already be installed, and AP modules are often bundled for free.

Reality: Unfortunately, ERP is often an incomplete solution, with modules that don’t automate all manual invoices, especially those sent to an AP inbox.

For example, one tech client using Oracle Fusion faced a high cost of $10 per invoice as a result of manually keying in invoices. And they incurred duplicate invoice payments of over $1M.

Once they implemented AppZen’s Autonomous AP finance AI solution, however, they were able to rapidly process everything in their AP inbox and audit all of their invoices. They’re now on track to achieve over 65% autonomy for manual invoices, at a cost of $2 each. That’s an 80% productivity improvement.

Myth 2: Pushing suppliers to portals and networks is essential to reducing AP’s burden

Suppliers using portals and networks might appear to be the solution to reducing your AP processing burden through automation. After all, suppliers are the source of your AP inputs. And larger companies can dictate their preferred way of doing business.

Reality: Supplier portals and networks actually create more work and cost for both suppliers and AP.

For suppliers, it’s still easier for them to send an email with an attachment to your AP inbox. One industry survey found that 60% of suppliers had to log on to 10 or more portals every month, and 40% said portals increased their department’s workload.

Most companies are under the impression that P2P implementation takes less than a year. In reality, it can take as long as 2-5 years, and AP teams usually end up with the tedious work of onboarding suppliers. Portals often double or triple the number of duplicates, as suppliers provide invoices via both the portal and email. 

Myth 3: Implementing invoice OCR capture will make all manual work disappear 

If portals aren’t the answer, is it using invoice-scanning OCR technology to automate the manual keying-in of invoice data? 

Reality: Unfortunately, invoice OCR provides only 65% extraction accuracy. 

With 3-4 fields in each invoice often left blank or incorrectly extracted, your AP staff still end up reviewing, correcting, or manually entering data from every scanned or PDF invoice. Additionally, they will need to continue manually running validations, matching, classifying spend, and coding GL account segments.

Myth 4: Reaching 60% invoice automation with P2P is the low-hanging fruit

Reaching 60% invoice automation with a P2P program, starting with electronic POs, can seem like the easy path to invoice automation because electronic POs can provide the kind of structured data needed to automate the downstream invoicing process.

Reality: The true low-hanging fruit is the manual invoices in your AP inbox.

It makes sense that once the majority of POs are electronic, they can easily be turned into electronic invoices with structured data, which can be easily automated. It’s also assumed big suppliers are more tech-savvy and more likely to embrace electronic POs and supplier portals, covering 60% of invoice volume and spend. Despite millions of dollars of investment in P2P automation and 3-5 years of supplier onboarding, only 15% of enterprises ever get to “world-class” invoicing, defined by Ardent Partners as 54% e-invoice adoption.

Typically, these larger companies only represent 25-35% of the supply base. The remaining 65%, usually small-to-medium businesses, will continue emailing you invoices. That’s a lot of high-hanging fruit.

The best way to ensure that 100% of invoices are electronic is to start with invoice automation, not PO automation, using an AI-driven Autonomous AP solution. With AI models built and pre-trained on millions of invoices and expense receipts, extracting the required information with 100% confidence and without a single human touch in only 6 months is far from mythical.

Myth 5: Pre-payment audit of 100% of invoices and T&E solutions across all systems isn’t feasible

Prepayment audit across spend systems seems unrealistic, given that companies generally only audit 5-10% of invoices and the process is already expensive and time-consuming.

Most audit tools focus on post-payment checks, and any clawbacks require supplier chasing. Audit tools generally can’t analyze the range of ERPs, expense, and p-card systems in most larger enterprises, and are unable to find duplicates across multiple systems.

Reality: With Autonomous AP, 100% of invoice and T&E claims can be audited prepayment, across all accounting systems. Spotting duplicates across T&E reimbursement claims and supplier invoices is a big, untapped area of AP business savings.

These 5 myths hamper AP leaders’ invoice automation efforts, but AI Autonomous AP solutions make the process easy, turning the manual invoices in your AP inbox into low-hanging fruit, enabling pre-payment audit of 100% of invoice and T&E claims, and saving time, effort, and cost for your finance teams.

To find out more about the 5 myths and realities of invoice automation, check out our recent webinar.

Gary Malhotra
Sr. Director of Product Marketing

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