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Improve AP Performance BY MAKING KPIs COUNT 2 of 5

Paper 300Paper to Invoice Migration Example

An international energy company was able to migrate 27% of its invoices from paper to electronic within the first month of implementing such a solution. Electronic invoice volume doubled in the second month and has been increasing ever since, with the company achieving its goal of 75% of invoices received electronically within two years post-implementation. The company mandated electronic invoicing to suppliers, as they worked closely with supply chain and operations departments to manage supplier relations and collaborated with ADP on the supplier enablement process. Similar organizations have seen electronic invoicing initiatives produce outcomes of 95% or greater electronic invoice volume received within a desired time frame.

Percentage of Invoices Needing Dispute Resolution

Exception invoices, or invoices that enter a dispute queue, generally take more time to process and can cost more than invoices that flow straight through without any issues, as disputed invoices may need the manual intervention of multiple people—AP staff, approvers, and suppliers. Exception invoices can also delay payments and result in missed discounts. An objective of any AP department should be to help reduce the percentage of exception invoices coming in by tracking exception invoices, identifying the root cause of these exceptions, and then putting steps in place to help eliminate them.

A 2013 survey of more than 200 international finance professionals, conducted by sharedserviceslink.com, revealed that nearly one-third of PO-related invoices experience an exception that requires manual intervention before payment can be approved. For companies processing approximately 350,000 invoices annually (the average volume across survey respondents), exceptions cause 32% of late payments, 36% of supplier phone calls, and require 160,000 man hours a year across the enterprise to resolve. This is equivalent to 79 full-time employees. According to the survey, the top three causes of invoice exceptions were price or quantity variance (81% of respondents), lack of valid PO information on the invoice (56%), and goods not received (56%).

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This article was orginally posted on Paytech.com in January 2015

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