In the accounts payable process the accounting of provider invoices is a task that puts a heavy demand on resources. The invoices with purchase order process takes up 65% of the area resources. Automating the process involves proceduralizing adequately and efficiently both the matching and exception resolution tasks. The use of invoice workflow tools helps with this task.
Let’s look at the automation of matching.
Invoice matching automation
The process improvement translates into direct savings. In a company with 100,000 invoices per year, for each 10% of invoices automatically matched, a resourced is saved.
A standard implementation, such as those provided by leading ERP manufacturers, achieves automatic invoice reconciliation rates of 40%. Achieving reconciliation rates of 85%–90% is not that difficult if we use the right tools and processes.
The difference between both options depends on the types of use supported in the matching and the imposed design limitations. Generally, the matching motors only support matching in two ways, one invoice-one purchase order and matching by total.
What do we have to take into account if we want to break the barrier of 90%?
We are going to separate the points to consider into the three phases of matching: localization of order and/or entry (three way matching), matching by total (matching invoice to order/entrance by amount totals without taking positions into account) and matching by line.
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Localizing the order and/or entry.
- The data of the order number and/or entry are not always identifiable in the invoice or are erroneous. The use of alternative elements for order search like: part of number, delivery dates, purchase amounts, delivery address, allow for its localization and later treatment.
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Matching by Total.
- Total reconciliation refers to the reconciliation of invoices against orders/entries by total amount without taking items into account.
- More than 20% of invoices refer to more than one order. Considering the possibility of automatic invoice reconciliation against multiple orders significantly increases the reconciliation ratio. In terms of the tolerances to be applied, supporting complex amount tolerances rather than fixed or linear ones improves the matching percentage and mitigates risk (1% of €100 is not the same as 1% of €10,000, and €2 may be excessive for a €100 invoice but insufficient for a €10,000 invoice).
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Matching by line.
- The true differentiator in automatic matching resides in the capacity to match at the line level and the combinations of invoice lines – order line – supported entries. Here we detail some of the points to consider:
Support both two way matching (2W Match) and three way matching (3W Match)- Support automatic matching of invoice ‘n’ lines with purchase order ‘m’ lines on different purchase orders.
- Possibility to match part entries.
- Support partial consumption of orders.
- Allow the localization of lines based on alternative elements, product code is not always identifiable on the invoice nor coincide with that used internally.
Additionally, the possibility of parameterization and specialization of provider level matching is a defining element of a quality process.
