Migrating away from paper continues to be a headache for enterprises of all sizes and industries, despite the added haste to digitize as a result of the global pandemic.
With so much physical paper flowing throughout organizations, ensuring that these documents can not only be digitized, but that the data on those documents can be seamlessly and accurately ingested into the appropriate systems, is no easy task. Yet it's one that is imperative even more so today as organizations face the demand to accelerate workflows and remain agile to navigate market disruptions.
Accounts payable (AP) is no exception. Paper can bog down processes, leading to slower or even erroneous supplier payments. Yet the AP department is unique in one aspect of its document management struggles, according to Don Dow, director of software development at Metafile Information Systems.
Speaking with PYMNTS, Dow explained how this unique challenge presents an opportunity not only for individual enterprises, but for the AP industry and worldwide supply chains as a whole to drive efficiencies through cooperation.
The biggest hurdle in AP department digitization — getting rid of paper — is made even more difficult for many firms because this point of friction is driven by external actors.
"The AP process is more labor intensive than other areas when it comes to processing documents," he told PYMNTS. "This is due to the fact that documents coming in are produced and controlled by other companies."
There is a lack of standardization from one business to the next as to how invoices are presented on a piece of paper. All information may be relayed in different formats, and as Dow noted, many firms have varying business practices when it comes to sending and receiving invoices.
In order to overcome this hurdle, businesses have historically relied on human expertise to manually take information from these documents and sort it into their back-end systems, like enterprise resource planning (ERP) platforms. It's a labor-intensive task, and one that continues to present the risk of errors and slowed-down vendor payments. Even as suppliers digitize their invoices, a lack of standardization means this particular pain point remains stubbornly in-place — whether a document is received via email, in the mail, or other electronic system.
Data connectivity between AP processes like invoice receipt and back-office platforms is key to overcoming the standardization hurdle, said Dow.
"To automate document processing and related business processes — and to do it well — a solution needs to interact and tightly integrate with other systems," he said.
For many business users of Metafile, that main system is Microsoft Dynamics 365, an ERP and customer relationship management (CRM) solution that can act as a single point of reference for many other processes in the enterprise. As a result, Metafile recently announced an integration with Microsoft Dynamics 365, which, noted Dow, reduces manual labor costs by automatically and intelligently capturing data from invoices and integrating it into the ERP without human interaction.
The technology is not necessarily perfect, but it is more accurate than human data entry — and immensely faster. Dow pointed to artificial intelligence (AI) and machine learning (ML) as important technologies. While industry experts disagree how to exactly define AI and ML, the technologies can enhance the data capture and ingestion process with even greater accuracy and efficiency.
New Motives To Digitize — And Standardize
While invoice standardization is not a new concept, businesses have taken to developing their own proprietary standardization models. Yet by default, this, too, lacks standardization, and as Dow explained, these data models "were never able to get a critical mass for adoption."
What the global pandemic has done is fostered an environment in which it's even more important than ever to overcome this barrier of a lack of standardization. With work-from-home mandates now rendering paper-based processes not only inconvenient, but next to impossible, the need to automate AP workflows like invoice processing is critical.
That's particularly true considering the cash flow challenges that so many businesses today face.
According to Dow, integration of invoice data means the ability to accelerate payments to vendors. In doing so, organizations can improve the overall financial health of their supply chains by connecting suppliers to capital more quickly while also capturing early payment discounts for themselves. At the same time, nixing the need to spend valuable time on manual tasks like invoice data capture and entry also means the costs of human capital can be spent more wisely.
"Before the pandemic, the goal was to reduce costs with processing payables, increase accuracy, and provide more visibility into AP processes," he said. "After the pandemic, the goals are the same, but with an added focus on enabling a remote workforce... This increased focus on remote employees is further driving the need for digitizing documents, and further automating the processes that surround them."