How to Improve Your Accounts Payable Process

There are few initiatives these days that deliver double-digit returns but the accounts payable (AP) process is a very good example where substantial efficiency improvements can be made, and quantifiable bottom-line savings achieved!

With the demands placed on global supply chains to exchange more and more data, current inefficiencies can often be linked to slow, inaccurate, and poorly defined paper-based workflow and capture processes. The result is: re-work when processing duplicate invoices, ‘lost’ vendor payment discounts, poor working capital management, and a poor vendor feedback and experience when querying the status of an invoice. The question is – where to begin?

1. Eradicate paper
Purchase orders, invoices and credit notes are often received in paper format, even though we all know that the use of electronic documents have many advantages over paper. Of course, vendors should be encouraged to send invoices in electronic format by rewarding them through speedy feedback, processing, and payment. Where organisations do not have the ‘luxury’ of Electronic Data Interchange (EDI Software) systems, other, less costly solutions are available! It must be noted that it is best practice to scan and capture all received paper invoices and credit notes as early as possible in the AP process.

2. Scan, capture, and identify duplicates as early as possible
Vendors often send the same invoice via multiple channels (in their enthusiasm to be paid). This can be the cause for a lot of unnecessary re-work as part of the AP process before discovering that an invoice is a duplicate and discarded. The early capture of fields that uniquely identify the invoice, such as the invoice number and vendor number, enables duplicates to be identified at a very early stage in the AP process.

3. Make use the invoice information that you have in the capture and validation process
Information that you already have in the back-end accounting system such as outstanding PO numbers, and anticipated invoice amounts from a specific vendor, can be used to increase the accuracy and reliability of the captured invoice information. In the case of manual capture processes, this information can be used as default values or selection lists to minimise the impact of human error. When capture automation is used, such as Optical Character Recognition (OCR), and the automation technology is closely integrated with the back-end accounting system, this information can be made available to the automation technology and used to increase accuracy – this lends to faster AP processes and less human error!

4. Provide immediate feedback to the vendor
Feedback to the vendor at appropriate stages in the AP process is crucial for improving the vendor experience, decreasing vendor queries and duplicates received, and assisting the vendor to identify issues as these arise. Feedback can be typically via SMS or e-mail. The vendor information must be maintained to ensure that the correct people or systems receive the feedback in the desired format, again lending to faster and more improved AP processes.

5. Don’t underestimate the AP process
The AP process is a little trickier than it may seem at first. Some of the curveballs that you may encounter, and which should be catered for by the AP solutions, are:

* Multiple PO numbers on a single invoice

* “Standing” PO numbers that are to be used many times for an indefinite final amount

* Partial deliveries where the PO number may, or may not, be received again from that vendor

* Invoices to be paid without PO numbers such as consignment stock invoices

All of the above can and should be managed by the AP process solution, thereby ensuring integrity and speed within the AP process.

6. Don’t underestimate change management and the culture of the organisation
Culture, or “the way we do things around here” is not easily changed, and yet the human factor is often ignored – to the detriment of efforts to implement and anchor process and technology changes. Those who find security in paper are not easily convinced to give it up. For example, there are a wide range of organisations whose staff print and courier memos internally and do not know what scanning is, to those that insist on the use of workflow, content management, and scanning technologies. It goes without saying that the change management efforts in these organisations should be and are worlds apart. Often when an AP management solution is implemented, the important ‘people-aspect’ is ignored and the success of an AP solution is hugely dependent on whether or not the solution is used!

Perceptant (http://www.perceptant.com) is a specialist in accounts payable improvement and has a range of strategies to remove paperwork and speed ordering and payment. In addtion, their EDI, B2B Integration and supply chain software software helps drive the integration, synchronisation and collaboration of supply chains. Perceptant is headquartered in Sheffield, Yorkshire, UK.

Is EDI 2.0 on the Horizon?

How long is it since you came across the acronym EDI? In its heyday, it seemed the entire World was infatuated with Electronic Data Interchange (EDI), although that was over 15 years ago. Since then, many formats have come to fruition, including Ansi X12, Edifact, Tradacoms, Odette and more recently, iterations based on XML.

Unfortunately, EDI became associated in the 1980’s with cumbersome software and complicated standards, which is why these days it’s a much maligned and often overlooked technology, even though, the concept of sending electronic messages and business documents between trading partners can drive tremendous savings and efficiency improvements across supply chains.

Therefore, should the process and investment to get trading partners computer systems talking to one another be simple and cost effective, then it’s safe to assume we could be about to witness another comeback King.

Unbeknown to many industry pundits, there have been a number of low key software companies and specialists working on simplifying computer-to-computer message translation (i.e. the process of sending a purchase order (PO) straight from a customer’s computer system to a supplier’s computer system in seconds). If you’re a business that employs vendor managed inventory, real time replenishment, JIT manufacturing, collaborative planning and forecasting or simply yearns for a near-paperless working practice, then you’ll be salivating at the prospect of EDI 2.0 (pardon the pun).

EDI 2.0, deployed as a fully managed service (i.e. the edi software supplier hosts, manages, configures and supports the software for you and your trading partners), doesn’t require a team of internal IT people or hefty investment. Furthermore, electronic trading relationships with customers, suppliers or partners can be setup within hours and the business benefits reaped within days.

For minimal capital outlay, companies can reduce their average days of debt, streamline the accounts department, improve cash flow and decrease operating expenditure. How often does this type of opportunity present itself I ask myself?

History is littered with examples of “reinventing the wheel”, fundamentally because we realized the previous version had intrinsic value and applying more modern thinking and advancements in technology could make a step change in our economy or life. Certainly, EDI is one such example and a small secretive group of supply chain software vendors could be on the verge changing the way we conduct business forever.

EDI 2.0 – a Supply Chain Myth, Legend or Reality?

EDI 2.0 – a Supply Chain Myth, Legend or Reality?

Is Collaborative Planning, Forecasting and Replenishment the Holy Grail of Supply Chain Management?

Supply Chain Management (SCM) means many things to many people but fundamentally it’s the management of the flow of materials and services needed to make a product and deliver it to customers. For many companies, it’s an integral part of their overall strategy for meeting customer demand.

Stage one of SCM involves selecting suppliers for the goods and services needed to create the product. Stage two relates to developing processes with suppliers for pricing, delivery and payment. So far so good…

Stage three and beyond though is where an experienced SCM Manager can really command big bucks because a manufacturer or retailer able to collaborate with suppliers on a mass scale and schedule production, manage inventory, verify shipments, authorize payments, transfer goods to manufacturing and co-ordinate logistics as seamlessly, quickly and cost effectively as possible makes the difference between a Wall Street performer or flop.

Initially thought of as the relationship between manufacturers and retailers, supply chain collaboration (SCC) is a business to business (B2B) concept that has now been extended to include raw materials, logistics and service suppliers.

In essence, SCC is two or more companies working jointly to develop shared information, develop joint plans based on that shared information, and consequently execute their businesses with greater success than when acting independently. Until recently though, such collaboration was rarely attained within a company let alone between companies.

With the introduction of the Collaborative Planning, Forecasting and Replenishment (CPFR) business model though, which many consider the standard for direct material planning and fulfilment, companies now have a firm foundation on which to base their operational plans and supply chain solutions.

CPFR is intended to eliminate the uncertainty in demand and supply by actively promoting the exchange of information and data, including demand signals, forecasts, inventory and logistics across supply chain partners. Post implementation, companies experience increased sales, reduced inventory and cycle time and lower cost of sales. Furthermore, successful partners exhibit mutual trust and believe that both sides profit equally when both supplier and customer are responsible for using inventory efficiently, keeping stock levels low and more effectively managing transportation.

Thankfully, there is now SCM software that supports CPFR standards and enterprises that have invested time, resources, and money in Enterprise Resource Planning (ERP) systems needn’t worry because it compliments not competes with their investment. This could explain why some of the emerging Software-as-a-Service (SaaS) supply chain software vendors are seen as such hot property.

One such vendor is Perceptant (http://www.perceptant.com), the cloud computing supply chain management, B2B collaborative portal and EDI software vendor, who has openly endorsed CPFR and during a recent interview revealed it received on average two offers of venture capital a month.

SaaS drives the EDI and Supply Chain Software Market…

Once considered heretics, SaaS Supply Chain Management and EDI companies are now considered hot property due to a recent report published by ARC.


The report highlights that the Supply Chain Integration and Management market has grown at a 7 percent Compound Annual Growth Rate (CAGR), since 2005. The growth rate would have been much higher though were it not for the global economic downturn that started pinching in 2008 and hit with full force in 2009. During that time frame however, SaaS based Supply Chain and EDI (Electronic Data Interchange) solutions grew by a CAGR in excess of 20 percent.

To clarify, the SCM market includes Supply Chain Execution —production, warehouse, and transportation management — as well as Supply Chain Planning — strategic, manufacturing, and inventory planning.

“Historically, SaaS has enjoyed a significant market presence only in the transportation management market,” according to Steve Banker, Service Director for SCM at the ARC Advisory Group, “but that is changing. SaaS solutions will grow significantly faster than traditional software and services.” Steve is the principal author of ARC’s “Supply Chain Management Worldwide Outlook: Market Analysis and Forecast through 2014”.

The Emergence of SaaS in the SCM Market
Software-as-a-Service (SaaS) can encompass either multitenant solutions or hosted solutions particular to an individual customer. The Transportation Management Systems (TMS) market is the only SCE market where SaaS is well entrenched. In TMS, SaaS solutions win not just because of lower price points, but also because they leverage the power of the network. Transportation optimization has little value if companies can’t successfully tender the optimized loads. Networked SaaS TMS solutions have a key advantage in on-boarding new carriers and in the data quality of the messaging with those carriers.

But in 2008, we saw SaaS emerge in the production management and supply chain planning markets. In 2009, SaaS made significant progress in the warehouse management systems market.

Ten years ago ARC began referring to production management systems as “Collaborative Production Management.” This reflected our belief that production management was not just about better processes at an individual factory. That for factories to operate well they needed to collaborate with suppliers and customers, that the network of factories needed to synchronize their work, and that increasingly that network would be composed of not just company owned factories but factories run contract manufacturing partners. In WMS, network centric solutions are emerging, that potential exists in production management as well.

Perceptant, a SaaS Supply Chain and EDI Solutions Company
Perceptant is a leading provider of fully-managed SaaS solutions that drive Supply Chain Execution, Integration and Collaboration. Our hosted, on-demand service encapsulates over 20 years experience in process improvement, inefficiency removal and cost reduction. Perceptant has its headquarters in Sheffield, Yorkshire, UK.