B2B Payments

The Expense Analytics Challenge Of Complex Invoices

If a small business buys office suppliers from a vendor once a month, it can be relatively straightforward for the accounts payable (AP) department receiving that supplier invoice to notice if their company has been overcharged.

When it comes to businesses that procure complex products and services at high volumes and high frequency, the ability to detect anomalous charges from a vendor becomes far more complicated. Traditionally, companies will rely on exceptions management, or the strategy of taking a cross section of complex invoices, to validate these documents for payment — with the task of analyzing every single bill far too burdensome to tackle.

The problem with this strategy, of course, is that this method fails to consider every single invoice, leaving a wide opportunity open for inaccurate and excessive charges from a vendor.

Data analytics technology has luckily advanced enough for it to be possible to analyze every single piece of data on every single invoice submitted to AP departments, and as Synchronoss’ Chris Hill, senior vice president and general manager of Digital and IoT, told PYMNTS in a recent interview, this kind of technology is casting a greater net of applicability as the volume of complex invoices continues to grow.

The telecommunications and utility spaces are a prime example of the challenges of complex invoices, Hill explained.

“Validation [of these complex invoices] is done by exception or sampling, and that’s not surprising,” he said. “These files can contain billions of receipt codes, transactions and line items. The complexity of having to match those against the corresponding invoice charges or customer billing is incredibly complex if you don’t have an automated solution.”

One of the greatest challenges in this space is the complexity of the commodity a company consumes. In industries like telco and utility, organizations will have usage contracts and discount agreements with their suppliers. As usage shifts, a telecommunications company will turn up or down a circuit to address that capacity demand.

These changes must be accurately reflected on invoices, but when usage exceeds high volumes for a large, multinational conglomerate, it’s particularly difficult for an AP executive — likely not an expert in telecommunications technology — to assess whether their firm is being billed correctly based on usage and contractual agreements.

Expanding Use-Cases

Telco and utility are the most common industries in which complex vendor invoices can lead to over-charges or B2B payment errors, but Hill noted digitization of the global economy is introducing new markets that contribute to higher volumes of complex invoices, like cloud computing and storage.

Synchronoss recently announced a partnership with cloud computing company Rackspace, which will use the firm’s Financial Analytics solution to validate its own complex invoices received by vendors. Hill said the deal reflects the growing reliance on the cloud — and the increased opportunity for cloud consumption expenses to thwart invoice payment accuracy. Organizations can find it difficult, or even impossible to analyze every piece of data on an invoice from their cloud provider and assess it against their contractual agreements.

Data analytics technology has found an opportunity to address this point of friction with the ability to automatically examine those millions, or billions, of data points. Hill highlighted an array of benefits this can offer businesses and their AP teams.

Adopting automated data analytics technology allows a business to normalize invoices and consolidate that data into a single database, he said, meaning companies can have a unified view of supplier expenses to analyze. Synchronoss also offers GL (general ledger) coding to each expense on an invoice, while providing supply chain and finance teams with visualized reports to not only analyze past expenses, but aggregate historical data for accurate, actionable forecasting.

But perhaps the most valuable benefit for businesses is the ability to identify over-charges on invoices and recover those costs, which Hill said can lead to cost reductions of between 1 and 5 percent.

“Certainly for larger clients, when you look at 1-5 percent, that’s a significant number that can impact a company’s earnings-per-share and quarterly and annual results,” he said.

Deeper Data Troves

Corporates’ cloud migration will only yield greater volumes of complex invoices that will rely on sophisticated data analytics and automation technologies. Businesses’ elevating expense and cash management strategies will similarly add pressure for these technologies to both identify invoice and payment errors, and forecast future spending patterns.

Hill noted that businesses’ invoice-to-pay digitization journeys will help organizations step up to meet these challenges with their strategic technology partners.

“More and more clients are moving towards electronic payments and electronic invoicing, and that only helps us speed up analysis,” he said. “Our ability to ingest that electronic data immediately and start to analyze that and provide insights to clients is much faster, versus having to receive paper records and scan those and then analyze that information afterwards.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.