Historically, in the accounting process of provider invoices, the only time variable consider was the payment date. That the tasks of invoice accounting and registering were finished before the due date, normally 30 or 60 days, was sufficient. For no one with experiencein AP does the metric "invoice paid by due date", with an optimal success rate of around 90%, appear strange.
As a consequence of some not very demanding objectives the Accounts Payable departments have based their performance on manual tasks, eminently administrative and of a repetitive nature, which require a low level of qualification.
AP cycle: from days to hours
Why is the process cycle important?
There is a basic rule for process improvement that applies especially to the invoice accounting process: "longer processing time = more opportunities for error." In addition to the cost of the task itself, the longer the process, the more opportunities there are for other, less easily detectable costs to arise, such as cash flow forecasting, sending duplicate invoices, dealing with suppliers and incidents, damage to the company's image, mistrust from suppliers, etc.
AP Cycle: Benefits of Reducing Average Time
Through automation and procedurization it is possible to go from 21 days of average invoice accounting to 18 hours. As a result of this improvement we have benefits like:
- - Improve the treasury visibility ;
- - More precise and trustworthy accounting states
- - Possibility to undertake "confirming"projects with providers
- - Error reduction of an accounting nature
- - Decrease in incidents, complaints and requests for information from the providers
- – Elimination of duplicate payments
- - Development and professionalization of the accounts payable departments
- - Provider loyalty
The strong reduction of cost and the strengthening of internal controls are also collateral benefits of a well-implemented automation.
