Frequently Asked Questions about Accounts Payable Automation

On this page you’ll find a collection of questions and answers about accounts payable automation. These are the questions we are most frequently asked at meetings, and we hope you will find this information useful as well.

List of Questions about Accounts Payable Automation

1. How can OCR benefit our AP process?
2. What accuracy of OCR data extraction should I expect?
3. How long should invoices be stored in AP software repository?
4. What attributes are important for invoice storage and retrieval (i.e. search)?
5. How can I track changes made to invoices and the related invoice processes?
6. Why is it important to choose an AP software that can be customized according to our organization’s business logic?
7. What is three-way purchase order matching?
8. What options should AP software provide our organization if there is an exception to the established business rules?
9. How does AP software check incoming invoices? Does it do it automatically?
10. Can expenses be automatically allocated by AP software?
11. How does CFO or other controllers track the invoice processing?

Questions & Answers about Accounts Payable Automation

1. How can OCR benefit our AP process?
   Optical Character Recognition, or OCR, is a proven technology for automatically extracting data from paper documents. OCR clearly benefits organizations who currently use a manual process to enter invoice data and greatly mitigates errors that result from manual entry.


2. What accuracy of OCR data extraction should I expect?
   OCR accuracy is a critical success factor. The accuracy depends on the quality of the invoice PDF file. While the quality of invoices goes down with physical handling and copying, the AP software process should attempt to obtain the first generation (straight from the ERP or FRS) electronic copies. Further, the OCR process does not have 100% accuracy. As such, AP software should also support the OCR process with intelligent checks (such as e-mail source) to enhance the results.


3. How long should invoices be stored in AP software repository?
   When looking for a software, make sure invoices may be stored in the repository for any period of time, as defined by the customer. The AP software should support multiple retirement policies, but normally the retention period depends on the state law.


4. What attributes are important for invoice storage and retrieval (i.e. search)?
   The most important attributes are vendor, invoice number/category/amount, invoice due date, purchase order number, invoice lifecycle stage, invoice capture date, invoice validation date, invoice payment date, invoice approval date(s), and more.


5. How can I track changes made to invoices and the related invoice processes?
   It’s a good thing if your AP software records all actions performed by users (roles) within the organization as well as any automatic actions (such as lifecycle changes and access rights). You might need to track the invoice history in case of e-discovery and any other disputes.


6. Why is it important to choose an AP software that can be customized according to our organization’s business logic?
   It is critical as each company has its own approvers hierarchy, invoice categories, auto approval rules, approval procedures, business logic, etc. Your AP vendor should provide approval routing based on many classifications, e.g. by vendor, by invoice category, by other invoice attributes (such as business unit, project, site, and geography).


7. What is three-way purchase order matching?
   It is the process of verifying that invoice matches the purchase order (PO) and an approved package receipt.


8. What options should AP software provide our organization if there is an exception to the established business rules?
   Your vendor should offer comprehensive collaboration capabilities for established business rules as well as the option to break out of the rule and “sub-task” a new sequence of events in an ad hoc manner.


9. How does AP software check incoming invoices? Does it do it automatically?
   When choosing an automatic solution, make sure the AP software automatically checks invoices for duplicates, and matches them against the related purchase order and information stored in the system. Best-in-class AP softwares check the correct entry of invoice data programmatically so that AP staff only gets involved into invoice validation and approval.
10. Can expenses be automatically allocated by AP software?
    In the world of accounts payable automation, automatic allocating of expenses is a big deal. Best-in-class AP software can intelligently allocate default expenses of your invoices based on the predefined set of rules, e.g. default expense accounts of the vendor, invoice category or project. It’s a good thing if they can automatically allocate line item detail of invoices to default GL Codes. The only thing AP staff needs to do in this case is to verify the allocated costs.


11. How does CFO or other controllers track the invoice processing?
    Being able to give CFOs and controllers many ways to track invoice processing is a major key to success. There are numerous methods your AP vendor can do it, e.g. reporting, KPI dashboard, search tools. Most successful AP vendors can offer you various reports to track invoices at different stages, your relations with suppliers, etc. Another good way is a KPI (Key Performance Indicators) dashboard that provides transparency and control over each step of invoice processing. You should also make sure you can find any invoices and track their history whenever required as it’s vital in case of e-discovery and any other disputes.

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