Third party vendor management software : Every organization, whether sole proprietor or a corporation has some kind of procedure for invoice processing.  And for as long as there have been invoices, processing them has been time-consuming and expensive.

When it comes to measuring the performance of an account payable department, the two biggest questions are: how much time does it take to process an invoice, and what are the costs? The answers are often higher than you might think. It costs companies INR 400-450 to process an invoice, on average, with over 40% of invoices being paid after they are due.

Driving efficiency in AP is clearly an opportunity for cost savings, but digital transformation in this space has been tough, as invoicing operations and technology have multiple points of friction and inherent complexity that includes digitization, reconciliation, PO matching, vendor lookups, etc.

The biggest challenge in Accounts Payable is that it has always been a document-intensive function. Larger organizations receive immense quantities of invoices from different vendors, each of which usually has its own format and nuances. The reality is that 70% of invoices still received in the form of documents, whether they are furnished by the vendor over email, or sent as paper via snail mail.

Third party vendor management software can be handy in such organizations. They let vendors raise invoices that can be shared with multiple stakeholders for review, feedback and acceptance. They are also called business risk management software. It virtually reduces churning out of hundreds of paper invoices and their manual audit by a large team of clerks. All the corrections, objections and any other suggestion is handled digitally that fast paces the bill payment cycle and reduces handling cost.

Here are some of the benefits of modern invoice automation:

  • Less friction and more efficiency during growth: Organizations are empowered to remove friction from the process, especially as they grow or add new vendors. An intelligent automated system enables companies to repurpose head count and improve human resource management. One clerk might process just 100 invoices per day in a manual process. With human-in-the-loop automation technology, a single clerk can process upwards of 500 invoices per day with unprecedented accuracy, freeing up the rest of staff to focus on more valuable and cerebral work.
  • Minimal exceptions: It costs a lot to process invoices on the first pass, and exception handling is even more expensive.  In fact, research shows that it is at least 5x more expensive to process an invoice through an exception flow than a standard procedure. While automation of data entry is the biggest lift from invoice automation, a leaner and more precise exceptions flow yields additional benefits.  Accurate classification and extraction drives more efficient lines of communication, both internally and with vendors. With an intelligent automated system, organizations can minimize exceptions and maximize throughput.
  • Early payment discounts:  Many vendors will provide a discount if an invoice is paid in 10-15 days. With traditional workflows, organizations struggle to process invoices in a timely manner, and thus will miss out on prepayment incentives. An intelligent and automated system enables organizations to stay ahead of deadlines in order capitalize on discounts and promote better supplier relations.