The appeal of straight-through invoice processing (STP) is undeniable – a seamless pipeline that captures, validates, and processes payments for invoices, all without any strenuous effort.
This system promises enhanced efficiency, diminished errors, and significant cost savings. And, indeed, it fulfills these promises most of the time.
However, what happens when your automation relies on incorrect or incomplete data? The consequences can be substantial, leading to errors, late payments, or worse regulatory non-compliance.
Ensuring success with STP requires two key aspects:
Ensuring data is complete and correct
Monitoring and maintaining automation
In this article, we delve into:
- The risks associated with automated invoice processing
- The reasons why data quality should be your top priority
- Practical steps you can implement to ensure your automation operates as intended
When Technology Enables Problems Instead of Solving Them
While automation of invoice processing can be an effective tool, it also carries risks and hurdles, especially, when technology is set up incorrectly. Let’s take a closer look at some of the risks that come with straight-through invoice processing.
Accuracy issues
Automated systems rely heavily on standardized input, and when invoice formats deviate, or if there are errors in the data entry, the system can generate mistakes. Some companies might face challenges in dealing with suppliers who provide invoices in non-standard or complex formats. Implementing robust data validation and error control mechanisms can drastically reduce the error rates.
The threat of fraud
While many companies invest in cybersecurity and fraud detection, it’s important to understand that STP isn’t a control mechanism itself but a tool for efficiency. It requires oversight, especially with Purchase Orders (POs). The creation of a PO should initiate a control process, with central approval and verification of its accuracy. Regular checks should also be applied to invoices without a corresponding PO or below a control threshold. These measures ensure the integrity of the STP system.
Over-reliance on technology
While technology facilitates efficiency, it can’t completely replace the nuanced understanding and decision-making capabilities of human operators, particularly for exceptions. It’s important to maintain a balance between automated processing and human intervention. Automated systems should be designed to flag exceptions for human review, and staff should be trained to handle these exceptions appropriately.
Regulatory compliance complications
Automated systems need to be regularly updated to stay abreast of the ever-evolving regulations and tax laws. Companies should ensure a compliance mechanism is built into the STP, one that is frequently updated to reflect any changes in regulatory norms.
Integration challenges
When integrating the automated invoice processing system with other existing systems, potential compatibility issues might arise. Thorough testing and vetting, as well as seeking expert guidance, can help ensure the integration goes smoothly, avoiding disruption to the company’s operations.
The maintenance dilemma
Implementing automated invoice processing is not a one-and-done affair. It requires ongoing time, effort, and resources for maintenance – often more than companies anticipate. Systems must be regularly updated, bugs fixed, and performance monitored to ensure smooth operation.
High initial investment
Implementing automated invoice processing requires a significant initial investment. Although the long-term benefits can be tempting, you need to weigh these against the initial costs.
Garbage In, Garbage Out: The Importance of Data Quality in Automation
When it comes to automated invoice processing, there is one key player that can make or break the game: data quality.
If you feed your system with clean, accurate data, you will achieve efficient and reliable results. If you feed inaccurate and incomplete data, you risk undermining the benefits of automation, leading to inaccuracies, inefficiencies, and potentially damaging business relationships and reputations.
