Blog__Invoice Processing
The Significance of Analytics in Invoice Processing
The power of Analytics is such that it can reveal bottlenecks that affect your operations and identify slow processes that prevent you from achieving optimum growth. Analytics plays a pivotal role in improving how your Accounts Payable (AP) team processes invoices. An interactive, intuitive, and comprehensive analytics dashboard will provide insights into the entire invoice processing cycle.
68% of CFOs are investing in digital transformation over the next 12 months, including in technologies like cloud and analytics – PwC 2021
Furthermore, you would be able to conduct supplier analysis, check the performance of your AP team, identify needless costs, and manage your cash outflow, plus help you extract maximum value from your AP team. As part of the Invoice processing cycle, analytics will control current liabilities, regulate cash management, maximize cash flow, and more. Let’s uncover the true potential of Analytics.
An advanced analytics dashboard will help maintain a solid understanding of your Accounts Payable team's activity. This insight can elevate an organization's ability to optimize payment timing, manage funds for maximum benefit, and even help to identify problematic vendors.
Businesses can leverage a powerful automation solution with advanced analytics in the invoice processing cycle for their Accounts Payable team to accelerate the speed with which they can deliver on the above objectives and drive increased profitability for their business.
You can't manage or better what you can't measure. You automated your invoice processing, but now you have to benchmark specific KPIs to measure how your department accepts the new automated invoice processing system. Ongoing analysis will reveal the actual value of automation.
- Are we paying suppliers too late, too early, or on time? How does that timing effect our working capital?
- Are there any overdue payments to some of our key suppliers?
- What was the discounts we have lost over the years?
- What are the invoices “on hold” from our end, and how does that connect to the POs?
- identify the top invoices with regards to discount amount offered that are “on hold.”
- How efficiently do we process these invoices? What percentage of the invoices we receive are manual? How long does it take on average to process an invoice?
- Which department generates the highest expenses?
Use the cutting-edge, integrated, and actionable analytics in your dashboard to understand the working of your AP team and make changes. Furthermore, know how it affects your costs, cash flow, and relationship with suppliers. The data out of this dashboard helps the leaders see how AP isn’t just a cost center but a valid business value driver.
Unmatched invoice processing awareness and analysis
Performance assessment and optimization - anytime, anywhere, and for anyone
Unique, graphical, and intuitive visibility for improved decision making
Labor-intensive processes - Creating spreadsheets, breaking down numbers, and forwarding reports to higher-ups for a detailed review is a tedious process that requires several resources to pull data manually. You don't want your AP team to invest their precious time collecting and sorting data. Plus, the whole process is susceptible to errors due to the volume of data in question.
Companies now spend 27% of time gathering, collecting,
and verifying data compared to the 53% in 2013 – PwC
Time-consuming - The entire procedure will waste the valuable time of your AP clerks. More time is spent compiling data than analyzing it, which could be better utilized in expanding your business or improving customer experience. With embedded analytics, organizations can allocate more hours to business-critical initiatives.
Detailed Reporting - Drilled down reporting isn't as easy when doing things manually. You will spend a lot of time dissecting data without any algorithm or AI running on the backend – zero automation means you will have to handle it all on your own.
No "one-click" report creation; all workers will have to work without a template and start from the ground up. You don't get to access every little aspect of your invoice processing cycle from an intuitive, graphical dashboard that drills down into the original invoice information.
Visualization – In the absence of automation, you will be left to transfer all the tabular and mundane data into visual elements. Unlike in the case when you use a dashboard that automatically pulls and plots all the KPI's into stunning and easy-to-consume graphs and charts. There is less workload on the AP staff and more reliance on a dashboard.
Excessive Excel – Spreadsheets are good for collecting data, but it becomes intimidating when the same data piles up. Most users find it challenging to run through data in a static tabular format. Excessive use of spreadsheets also leads to reporting errors due to careless copy-pasting of numbers. Plus, higher ups have a hard time decoding this dataset.
Inconsistent findings – Multiple users engaged in analyzing data often lead to multiple inferences - different users come up out-of-sync and produce varying insights. This practice leads to conflicts, trust issues, and creates multiple versions of the truth. Disparate datasets are not the best way to conclude anything about your AP department's efficiency and productivity.
Data Silos – A centralized interface accessible to all keeps a unified record of every activity in your AP department. If you go through with it manually, all the data will be spread out across the board, and no user will be able to access it simultaneously. With an analytics dashboard, every AP head has end-to-end visibility and complete transparency of the invoice processing cycle.
Number of Invoices processed
The dashboard shows the total invoices processed out of the total received so far. Learn how many invoices can an AP clerk handle on average. If the number is high, then it shows your AP team’s capacity to handle a higher volume, but if it is on the lower end, then its time to make some changes around your AP team.
Cost per invoice
Average cost per invoice can also be a KPI that affects your organization’s costs. A high invoice cost may be depleting your cash reserves, so its time to evaluate this metric. Armed with all the info you collect, you may be able to lower the costs, thereby increasing the profitability of the AP department.
Invoice processing time
The longer it takes for invoices to be processed, the more likely it is that your AP team is not as productive. Identify any inefficiencies that are slowing down your resources and make changes accordingly. See if you need more AP heads or there are other concerns that have resulted in longer processing and therefore longer payment times.
Number of touchless invoices
Many straight-through invoices don’t require human intervention and go straight into payment. Such invoices get received, processed, and paid without any manual interference, and it only applies to invoices that have a matching Purchase Order (PO). More of these mean you can may be cut back on your AP staff.
Late payments
See where you are going wrong with late payments, that results in fines and penalties. Identify and avoid additional costs, such as fees or interest payments. Your AP team can track all the invoices of a supplier that are paid late to help you make improvements and maximize savings.
Duplicate Payments
Erroneous payments can drain the company’s finances and leave a gaping hole in your coffers. Analytics will help you identify holes and errors that lead to repeat payments to the same supplier.
Discount capture rate
Is our AP team successfully capturing these early payment discounts. If yes, at what rate. Also, you may want to know the loss of discount as a percentage of invoices processed so far. Both late and early payments, also reveal your payment accuracy rate, which is how often you get your payments right.
Time spent handling supplier disputes
How long does it take on average to resolve discrepancies, disputes, queries and concerns with suppliers? Are we wasting a whole lot of time and money in addressing supplier grievances? The longer you spend addressing this, the less your utilize your AP team in other business-critical areas.
The data you see in numbers or visuals help to understand the productivity of your AP team, the behavior of your suppliers, lost discounts, previous penalties, and much more. These metrics are your eyes on the AP team’s behavior, which helps you make more informed business decisions. Here are all the benefits your business stands to receive vis-à-vis your AP team by incorporating analytics:
Data-driven decisions – What would have been done manually or skipped entirely is now left to the product that crunches essential metrics to help make crucial decisions in your finance department. If this were not the case, your analysts would be left in the dark and taking decisions out of thin air, without any reference points, KPIs, and visual elements.
Lower costs and improve profits – You can lower the costs from the invoice processing cycle by avoiding overpayments arising from the fines and interests from paying late. Businesses can also capture early discounts, avoid duplicate payments, and lower the budget reserved for the labor (AP clerks). More automation and a few AP heads will reduce the processing cost per invoice. This improves your bottom line.
Improve Supplier relationships – A sorted, transparent, and streamlined invoice processing cycle with fewer errors helps serve your suppliers better. As the frequency of early payments goes up, your supplier relationship grows stronger – to the point where you can negotiate better prices or even better early payment discounts.
Companies now spend 73% of time analyzing data compared to the 47% in 2013 - PwC
Invest time elsewhere – The valuable time of your AP resources can be better invested in other business-critical processes. This may include improving customer experience, marketing initiatives, business development, and other activities that can enhance the visibility of your business.
Establish a single and consistent version of truth across your data
Enable visual consumption of data via graphical charts and models
Remove all pre-defined reporting rules and standards
Automate data preparation and invest more time on data analysis
Eliminate all the siloed data sources or information
Eliminate the use of excel and error-ridden tools to compile and clean data
Businesses can use analytics to assess the critical KPIs that establish the efficiency of their invoicing processes. Use the analytics dashboard to slice and dice the needed data and create detailed reports. Overall the entire analytics program helps identify the root causes of hidden processing issues and uncovers areas where you can improve.
The analytics dashboard will give you a real-time view of the activity as far as invoices are concerned. Through analytics in the application, any AP team can reduce costs, streamline the AP cycle, and improve supplier relationships. Use a single centralized interface to extract insightful data to optimize the functioning of your AP team.
The InSITE Accounts Payable invoice processing product features an advanced dashboard that helps extract helpful information about the invoice cycle time, cost per invoice, time to payment, number of touchless invoices, approval time, and much more. Analyzing these parameters will help your AP team reduce costs, improve productivity, and help serve your suppliers better.
