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EDI, B2B and Electronic Invoices are Not Always the Answer for Accounts Payable Optimization

I spent much of today working with a client that had accounts payable challenges. They were receiving more paper invoices than they could manage. I (being an EDI/B2B guy) immediately thought that converting the paper invoices into EDI or other B2B formats for electronic invoices might be the easy answer. I was wrong. The primary problem was not the numbers of paper invoices, it was a problem of what to do with the data on the invoices.

Many of these invoices were from small service providers and their services were not associated with a purchase order. As a result the Accounts Payable department struggled with the time and effort it took to track down the original person that requested these services. Once found, the person needed to review the details of the invoice and approve it. This process was manual and took huge amounts of time and effort from many different people involved in the AP process. Although the calories burned were a blessing, the problem was real.

The solution to the problem was to implement a “pre-authorization” process so invoices could be associated with a person and approval process. There needed to be a better business process implemented and an automated work flow applied to move the inbound invoices through an approval process efficiently.

The secondary problem was how to handle the large number of vendor inquiries and complaints that resulted from inefficient invoice processing. The solution was to get these suppliers of services on a Supplier Self Service portal where they could monitor the progress and status of their own invoices without overwhelming the Accounts Payable department with calls.