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As the global product manager of the TIS AP automation solution, I have the pleasure to meet with customers and hear how their automation journey is going. One lesson learned is that no two organizations are alike. Once you get into the details, organizations are as individual as people.

Because of this individuality, it’s fascinating to sit with organizations who are on an automation journey and learn how they have chosen to optimize their processes and what successes they’ve achieved and challenges they’ve faced.

By Ethen Schachle, Product Manager

I recently met with a utility company in the US that has been using the Top Image Systems eFLOW AP for SAP ERP solution for over a year and a half. It was a great meeting and I’d like to share a few lessons I learned (or re-learned).

AP automation rocks!

We started our conversation with a review of their AP process. A large portion of the invoices they process are for services related to the creation or maintenance of power generation facilities and supporting activities. Classic in many respects, the process starts with the creation of a purchase requisition, then the purchase order itself, followed by goods receipt (GR) or service entry sheet (SES) creation, invoice receipt and posting, and payment.

Key in the process is the SES or GR entry, which impacts when the costs hit the P&L and is a key trigger in the invoice validation steps. The goal in the project was to gain efficiency in the process between the points of SES/GR entry and payment.

A multi-tiered workflow approach is used to classify invoice approval needs based on the underlying conditions. Invoices with all process steps prior to invoice receipt completed can be automatically processed by eFLOW AP straight-through to posting in SAP. Those missing a SES/GR entry or even a PR/PO entry are automatically routed in workflow to the responsible party to get the process step completed, which then facilitates the automated posting.

There are additional workflows for invoices that face classical problems like price variances, locked vendors.

And now for the good news (who doesn’t like good news?).  Before employing the eFLOW AP automation solution, the invoice approval process took almost two and a half months on average! But this got better, MUCH better:

This improvement was due to several factors. A few key issues were:

Reducing the time needed to receive the invoice into the process

eFLOW AP comes with a robust invoice ingestion and data capture engine as the first step of the process. Invoices by email and postal mail are automatically recognized as invoices, and the information on the face of the invoice is being extracted, validated, and placed into the SAP environment for further automation steps.

Business issue identificationInvoices could have a variety of issues to handle. Missing PO, missing SES/GR, high value approval required, etc. The eFLOW solution can automatically identify those issues and kick off a workflow to handle it. Before eFLOW, this was a manual and time-intensive investigation. Often, that had to be repeated when there was more than one business issue to solve.Automated workflow

Users who can solve an issue (like missing SES/GR) are automatically identified and mailed a notification to open the workflow tool and provide the missing information. When action is not taken in the timeframe defined in the process, reminders and escalations are automatically sent out. Previously, the communication was manual and often had to be followed up by phone calls and emails.

“The system is taking care of it”

Now the bad news, which brings us to the main point of this article. After realizing tremendous gains in processing time and accountability, the company spotted a trend moving in the wrong direction.

Analysis of the processed invoices showed that the ideal process flow described above was being achieved 1.5% less than before eFLOW AP came into the game. Let me explain that by going back to what should happen.

The ideal process started with the creation of a PR, then a PO, entry of the SES or GR, invoice receipt, and posting. Users involved in the process were never perfect. Busy days and competing work tasks meant there were always invoices being received that were missing a PO or missing the GR entry. Users knew they were not following the prescribed process in some cases, but the pending phone call from accounts payable was helping to keep them honest most of the time.  Vendors upset about a lengthy time to get paid added to this pressure.

Then they learned there was a new player in town, eFLOW AP. And this new player was doing two things. It was automatically telling the participants when their part of the process was missing and giving them an easy way to remedy the issue. And, it was handling invoice processing time overall with such speed that, from the outside, life was actually better from the point of view of payment to vendors for services rendered.

In essence, users were learning to relax a little bit and just wait for the automation solution to tell them when they had not completed their part.

Lessons learned

As in many parts of the business world, change management is key for AP automation success. And due to the number of service and business areas involved, it’s simply not enough for a savvy AP manager to champion automation.

After listening in to the story above, I gave a few suggestions. And many of the ideas had already been put into action.

Involve the CFO or Finance Manager as the champion of process automation. The benefits of automation will ultimately improve the lives of all, but selling that message to process participants beyond central finance/accounts payable usually takes a senior executive. If everyone gets on board, the finance executive can enjoy the benefits.Faster invoice payments lead to happier vendors who will be more receptive to favorable terms and contracts in the future.Visible and predictable invoice processes help treasury better manage cash.Speedy invoice processing leads to greater capture of discounts.Introduce some form of gamification between the process participants. Allow participants to understand their performance in the overall process and reward them for meeting or beating the target. eFLOW AP’s reporting component allows this visibility.Repeatedly evangelize the ideal process and bring the story not just up in the organization to management but also down to those on the ground who start the processes in the first place. Complement that with historical data to show improvement over time.

Change in finance and procurement processes are not always exciting for those out in the business areas, and it’s a challenge to get investment in process improvement. But when users understand how a solution like eFLOW AP can change the game and deliver real benefits both locally and to the organization as a whole, then you’re more likely to find allies in delivering end-to-end process automation.

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