Electronic invoicing gains momentum

Posted by Mark Brousseau

Accounts Payable (AP) functions are still drowning in paper, but that may be about to change. According to APQC’s Open Standards Benchmarking in accounts payable, on average 69.4 percent of invoices still require manual re-keying of line-item data, and only 20.1 percent of invoice line items are received electronically. Although myriad technologies perform an incredible array of tasks in successful companies around the globe, APQC (www.apqc.org) notes that AP departments are only now approaching the crucial tipping point where electronic invoicing will overtake manual, paper-based processes, a milestone expected to occur in 2011.

Electronic payment systems now on the market promise efficient communication, reliable audit trails, and faster/smoother data processing between internal departments and external suppliers. Differing systems offer various levels of transparency, approvals, and monitoring from procurement to payment. However, the common theme is less paper and less manual keying of data.

APQC says a typical transaction begins when a purchase order request is entered into the buyer’s system; once a supervisor provides approval, the appropriate vendor is notified. The vendor then generates an invoice while simultaneously arranging delivery of their goods or services. The invoice is then routed electronically to the AP department, which matches the invoice to the purchase order and, often, other documents that prove that goods or services were received as expected. Once the verification is complete, the transfer of the payment is then triggered.

The level of automation and sophistication can vary widely; a PDF of an invoice sent via email sits on one end of the automation spectrum, with a fully “touchless” integrated system that connects buyer and seller at the other end.

Automated payment technology has been in place at many large companies for years, but the systems were often large-scale customized initiatives, expensive both to build and maintain. As more advanced technology tools arrive on the market, the costs as well as the barriers to implementation continue to fall, APQC concludes.

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