What butter is to bread, the nail to a hammer, paper is, or has been, to accounts payable.
In a world of paper, it can take a lot of smoke and mirrors to get an invoice approved. But many organizations are willing to deal with the mirrors and smoke because they can’t conceive how you could pay an invoice when you can’t hold it in your hands.
Or, put another way, they just can’t believe you can approve an invoice you’ve never seen.
This thinking is the result of a narrow focus, where the invoice is considered the beginning, and end, of a process. But in the real world, an invoice results from a purchase that may or may not be subject to some control. Maybe it’s a purchase order. Maybe it’s a contract. Maybe it’s a service entry sheet. Or maybe it’s just people buying whatever they want, from whomever they want, with little thought to the consequences.
Of course, there are consequences, and that’s why many organizations have policies and procedures in place to control what to buy, whom to buy from, and how much to spend. Are you among them?
If you aren’t, consider how a devious bank client robbed fellow bank customers of their savings, back before ATM machines were widespread. One day, the man entered the bank and replaced the generic bank deposit slips that the bank provided with his own. For several days, everyone using that “generic” deposit slip put money into the man’s account.
Blocking the cash drain
With your smoke and mirror invoice management process, you may be experiencing a similar cash drain. This is not from devious behavior, where someone is looking to siphon money to a personal account. But the result is the same. When you approve an invoice subject to no, or limited controls, the losses to the company can be staggering. And these losses can’t be prevented by placing two hands on a paper invoice.
In a digital economy, however, there’s an opportunity to control spend and manage transactions via business networks. Top performers are embracing them. That’s because a business network can bring together key transaction documents and business processes across the source-to-settle spectrum, and capture detailed transaction data to analyze later.
In this new world of e-commerce, documents are managed electronically over the network, where business rules validate the data and audit trails track the process. No one touches an invoice. With this approach, you can achieve high rates of straight-through processing, manage spend like never before, and make your accounts payable process a business advantage.
For top performers, touching an invoice is not good policy. With a business network, a collaborative process, and proven controls, they know that you can approve an invoice, even if you’ve never seen it.