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The electronic invoicing renaissance
The phone rings and John answers, "Accounts payable, how may I help you?" It's the fourth call John has received from ABC Supply this week. Why? ABC Supply wants payment for an invoice that was sent more than 60 days ago. How is this possible? Actually, it isn't surprising. There is tremendous variability with regard to the purchase to pay (P2P) cycle. Just think of the typical steps required to pay an invoice.
First, ABC Supply prints a batch of roughly 150 paper invoices. After sorting, stuffing and metering, one to two days have already passed. Then there is typically a two-day transit time in the mail. It's day five before the buyer, John's company, even receives the invoice in the mailroom. (By the way, John also received an invoice in error that was supposed to go to another ABC Supply customer. Yikes!) There is a day of interoffice mail and then, on day six, John finally sees the envelope. John puts the invoice in the stack of invoices on his desk and, about three days later, he finally begins to process the invoice.
On day nine or 10 (there goes the early pay discount), John bursts open the invoice and gets ready to key it into his A/P system. Uh oh, this invoice doesn't have a PO (purchase order) number on it. John calls ABC Supply and leaves a message. On day 12 he gets a returned call and is informed of the PO number. I could go on and on - but you get the picture. We're on day 12 and we haven't entered the invoice into the system, routed the invoice through the appropriate approval workflow, or even thought about making a payment. Inbound paper invoices are a real pain for A/P departments.
Generally speaking, A/P departments are responsible for paying valid claims to vendors in a timely and accurate manner. A/P departments have - or at least would like to have - service level agreements (SLAs) with their internal supply chain stakeholders and their vendors.
Companies that have earned good credit would like to dictate favorable terms with their vendors. Finally, A/P departments want to accomplish all of these things at the least total cost. However, none of these goals can be achieved with manual based paper processes. Paper results in slow, unpredictable processes, fraught with errors and dispute resolution with vendors.
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