Frictionless AP processing — It’s a process

On the latest episode of IOFM’s AP & P2P podcast, Tungsten Network’s Vice President of Customer Relationship Management, Sean Norton, talks with host Mark Brousseau about the issues facing AP departments, which he supports with data from P2P research conducted by Tungsten Network and IOFM. For P2P professionals who are still mired in manual processing as well as those who are on the path to full automation, it’s worth a listen.

Sean cited 5 major sources of friction familiar to AP professionals: excess paperwork, too many non-PO based invoices, high volumes of supplier inquiries, a lack of automated exceptions processes, and a lack of automated approvals. Paper is at the core of P2P friction, and it has a powerful impact on the P2P cycle. Unfortunately, over 60% of organizations still receive 75% or more of their invoices as paper, Sean says.

The slowness of many organizations to adopt digital invoicing processes further fuels the fire. Some suppliers can be especially resistant to change, which can exasperate their business partners. The best way to handle this issue is with patience. Sean says it takes time to eliminate P2P friction, and he warns organizations not to get frustrated over slow-moving adoption.

PO-backed invoices are crucial in eliminating exceptions, but implementing them widely takes concerted effort.  Keeping a strong alignment between AP and procurement is critical, Sean stated, noting that organizations that have good alignment spend 75% less on invoice processing.  

Teams that have married PO-based invoices to e-invoicing have yielded outstanding results. Highly automated AP departments process three times as many invoices per FTE as their manual peers, according to Mark, but AP departments that demonstrate a high level of automation AND a high level of PO-based invoices process four and a half times as many invoices per FTE as their manual peers.

P2P friction is a solvable problem. Sean mentions how Supplier calls regarding invoices can cost businesses hours of labor each week, and that automation can minimize that lost time. Likewise, digitization can also streamline approvals. Therefore, eliminating P2P friction is not a matter of how for most companies; it’s a matter of when. Fortunately, many organizations are moving towards automation, although the drivers can vary. For instance, over 50% of Suppliers are looking for increased integration with Buyers, which, as Sean notes, often comes in the form of e-invoicing and/or portals.

Digitizing the P2P cycle is a journey. Results won’t necessarily happen overnight, but the long-term impact can save businesses countless hours and boost efficiency.