Today, almost all companies face the same challenge: "do more with less". It occurs in practically all sectors and the recent globalization has dramatically amplified its effect.
As a result, companies are no longer able to address this challenge while attempting to compete in efficiency, prices, and innovation. Nevertheless, companies cannot neglect the opportunity to free up human capital.
Human resource optimization attained at specific departments can also be transferred to other departments through an appropriate strategy and leadership. Hence, improving the quality of services, the agility of processes, as well as avoiding the underutilization of human resources assigned to repetitive tasks. Withal, allowing them to use their talents more appropriately and effectively.
When we apply these concepts of personnel cost savings to the case of the automation of accounts payable, compared to the manual realization of the same process, companies can make the mistake of not paying the necessary attention.
Given that it is a back-end process, the business is undoubtedly not seeing it as a point where the company should focus its efforts to make it a competitive process and provide them with an advantage over its competitors. It is often a process that managers leave in the background when it comes to priorities.
On the other hand, optimizing human capital is one of the processes that should become strategic. Many times companies have numerous people in charge of processes that could be automated. What’s more, commonly wrong strategies are used, such as lengthening the process as long as possible, so that employees have time to carry out all the necessary actions.
All of the above applies when business is going well. However, it is even more critical in times of crisis such as the one we have been experiencing for months, marked by the COVID-19 pandemic. In this case, the ability to do more with less is not an efficiency of the business that we would like to achieve but a real necessity for the company to survive.
To know how this problem affects different types of companies, we must keep in mind the following key points:
- The greater the volume of invoices that the company works with, the greater the benefit it will find with the automation of this process. As we know, due to its typology, the tourism sector (like other sectors of the industry) is highly exposed to this problem.
- Various types of companies can benefit from these process improvements. Again, Hotel chains, especially those that work with high volumes of commissioners, travel agencies, or tour operators will definitely fall into this category.
- The complexity of actual business processes, makes difficult to adopt this automation through software. It is often believed that their internal processes are already being managed correctly, and that the time, disruption, and investment required for a software implementation is not worth it, and that the risks outweigh the benefits obtained.
- There are companies that already operate with centralized contracts, thousands of annual invoices, a wide range of suppliers, and a complex business structure.
These companies have complex requirements to properly conduct the verification of invoices, the validation and reconciliation of provisions made based on contracts, approval flows, and complex payment processes, which must be carried out in an agile way.
All this complexity leads to an additional problem. Due to the slowness of this process and its opacity, reservation distributors do not know how much they will get paid next month, so working on a budget is practically an impossible task.
Minsait, an Indra company, with its 25 years of experience in the travel sector, has identified the following risks, caused by the errors made by companies when adopting non-optimized processes according to the needs of the industry as a whole:
- High human capital costs to carry out the actions
- Dependence on manual processes that are prone to contain errors such as billing for approval of reconciliations, manual scans, and non-automated supplier payments
- Slow approval of invoices
- Difficulty determining if the invoices agree with the contractual conditions
- Difficulty of access to contracts
- Lack of processes to avoid overdue payments, duplicated invoices, invoices with losses or invoices below or above their amount
- Inefficient management of company resources
Although each company adopts a personalized process, Minsait has developed a system based on SAP technology that fully integrates with its financial backend, capable of allowing the adoption of good practices to govern this process.
The centralization of this process for the entire company enables the establishment of a single point of truth already consolidated and the application of common rules and practices throughout the company, which immediately translates into agility and cost savings. Today almost all large companies have ERPs such as SAP FI implemented that allow this practice to be covered.
Invoices have to be entered into the organization's systems in an efficient, timely and accurate manner. For this, various mechanisms can be used, such as OCRs, integration through Electronic Data Interchange (EDI) or XML file, forms that can be filled out online or with print-to-cloud solutions that validate PDFs and notify suppliers in real-time if your invoice is missing an item.
Configurable solutions such as the one created by Minsait for reconciliation, allow to define in an agile way the relationship between invoices and cost provisions based on an open rules engine:
- Allows relationships between fields such as invoice number, voucher number, or reference fields in 1-1, 1-N, N-1 relationships.
- It must be possible to establish relationship criteria for amounts that do not match exactly, based on percentages defined by the administrators, or with an offset of absolute values.
- The reconciliation should also happen between documents with different currencies, so there is a need to change the type of reconciliation date.
- It must be possible to define direct reconciliation providers, in which the invoice is always consolidated, subsequently opening incidents to follow the differences that may exist.
- It must be possible to define different levels of rules, executable by companies, suppliers, or invoices.
The objective is to create a set of rules adapted to each business, capable of directly and automatically reconciling 80% of all invoices. For this, we may have to execute different sweeps that are capable of matching the largest number of bills and supplies.
For cases in which a dispute occurs, the system must be able to generate an incident workflow for follow-up, based on roles and authorizations, indicating who can resolve this difference, and what actions can be taken to do so.
The system must be capable of having a series of automatic resolutions, which can be associated with an incident, so that when the end of the workflow is reached, it is executed automatically, allowing the user to carry out the fewest possible interactions.
Among these actions, we can find:
- Create a debit note
- Carry out a cost regularization
- Send notifications to suppliers
- Make cancellations.
- Internal notices for regularization of contracts
The automation of all the above dramatically reduces the need to send all these cases by mail, calling controlling to generate new cost forecasts because, I have fallen short..., after all, the contract was wrong...
It allows the payment department to break, sweep all the remains of provisions, group them and release them to be used in other processes.
Make transfers between suppliers or companies in case an invoice was expected from one supplier and then finally it has come from another.
Cancel provisions by making massive offsetting of invoices that, although they do not match, I have manually seen that they were fine.
Define actions to be taken with provisions for which the invoice has not arrived on time.
This entire process is also linked automatically with SAP's automatic payment process, with which manual intervention is once again reduced to a minimum.
We can finally conclude that the benefits obtained are of great value for the company, and we can summarize them in:
- Approve and pay bills more efficiently
- Increase in employee productivity
- Reductions in processing costs
- Greater visibility on flows and responsibilities
- Reduction of penalties for late-payments and interest
- Greater compliance with legal regulations