AP Automation

Automation in the AP Process [Webinar]

Transforming Accounts Payable: Critical Areas to Consider




Michael Creeden, Solutions Consulting Manager at Tradeshift, joined Jordan Mullins, SSON’s Head of Editorial, to discuss the strategic points of automation in the AP Process.

“Just asking sellers to change the way they invoice and submit invoices digitally isn’t always enough to help truly digitize those relationships right. It’s critical that enterprises understand that their digital transformation must offer value not only to their own business users but also to their sellers too.”

Filmed during SSON’s AP Automation Digitial Summit, Michael discussed the three key areas enterprises often overlook in their AP automation strategy and the golden rules that organizations should follow to achieve the best possible result.

Watch the Transforming Accounts Payable (AP) – 3 Key Areas full length webinar video below, or view it on the Tradeshift YouTube Channel.




Michael Creeden: Enterprises are really itching to implement more automation within their AP process which in and of itself is fantastic. However, there are three key areas in my opinion that are either forgotten about or glossed over when enterprises look to transform AP.

The first, in no particular order, is that enterprises really want to automate more of their workflow and approvals with the intent being to encourage fewer manual touches on invoices and a general increase in overall straight-through processing rates.

The problem with only prioritizing workflow automation is that the challenges that AP teams face with that workflow are often due to a result of poor data quality from the seller invoices being received on the front end of that process. So process automation and workflow automation as a goal is fine in theory, but really only if the data coming into either the customer’s ERP system or AP automation solution is digital, clean, and compliant.

Otherwise, the issues that AP needs to deal with in the workflow end up being more tactical. Things like, you know, does an invoice have a missing PO number? Is there a missing customer reference ID on the document? And other fields that are critical to AP being able to process the document.

So before automation can actually improve workflow, enterprises really need to focus on ways to engage sellers and help digitize those relationships so that digital invoicing becomes the standard and the priority. And then while invoice digitization, as I mentioned a second ago, is certainly critical to driving an increase in straight-through processing for enterprise AP teams, just asking sellers to change the way they invoice and submit invoices digitally isn’t always enough to help truly digitize those relationships right.

It’s critical that enterprises understand that their digital transformation must offer value not only to their own business users but also to their sellers. It’s too often enterprises are evaluating technology like supplier portals, which promise sellers a way to submit invoices to their customers, as well as the ability to check on the status of an invoice, or its eventual payment.

But those portals are often built in a buyer-centric fashion, which actually forces sellers to join multiple ports to transact with multiple customers. Not to mention that some or many of these solutions even charge sellers for these features diminishing the overall ROI and value offered to that group.

So the moral here is really that enterprises should need to evaluate solutions that offer optimal value and low cost. And in the case of Tradeshift, no cost, for sellers to maximize the impact of that digital transformation for the sellers.

And then last but not least, enterprises cannot almost never just replicate their existing processes and workflows in a new AP automation solution. And too often I see enterprises evaluate technologies that are hyper customizable really to accommodate each and every unique workflow they currently have in place. And the reality is that digital transformation and AP that implies actual transformation. Meaning that implementing a solution can actually allow an enterprise to review processes and workflows and actually determine how they can achieve maximum efficiencies, ROI, and higher rates of straight-through processing.

So that evaluation of technology really has to come with a willingness and an openness to work smarter whether that means you know reducing you know old workflow steps; eliminating unnecessary points of friction in the process; and have that willingness to toreevaluate as they’re purchasing new technology.

Jordan Mullins, SSON: I would like to know from your side then; what are the critical elements to digital transformation that enterprises do not consider in their solution evaluations?

Michael Creeden: Sure and for this one I want to focus a little bit on on enterprises who are actually just entering the world of AP Automation for the first time. Meaning that you know the lion share their process is done in the ERP system or manually via email and spreadsheets but for those enterprises who are entering the world of AP automation for the first time I often see an intense focus on things like document OCR, RPA, scan and capture, as the obvious in their minds right next step in their digital transformation journey.

And while OCR can certainly be an aspect or OCR/RPA can certainly be an aspect to an AP automation strategy, the value that those technologies provide is really very buyer-centric and limited. And if I’m a AP user at an enterprise and I think well I want my invoices OCR’d so they can be digital for me and my company right, it’s very buyer focused.

So OCR on its own really offers minimal transformation right as the enterprises will still be dealing with sellers sending paper invoices, they’ll still be dealing with high volumes of paper and unstructured PDF invoices, and frankly the sellers don’t receive much value from that process at all.

So enterprises really should partner with their technology provider that they’re evaluating to develop a strategy to move sellers to more digital-first submission options, so a Tradeshift, for example.

We provide sellers of all sizes, sellers that are invoicing very high volumes a year sellers invoicing very low volumes a year, we provide those sellers of all sizes the ability to submit digital invoices.

Whether it’s through direct integration with the seller ERP systems for your for your highest volume sellers, or through things like the ability to receive a digital purchase order through Tradeshift, and turn that purchase order around into an invoice and delivered back to the customer.

But whether that’s through PDF connectors so some sellers have the ability to send a structured PDF out of their ERP system right we provide the ability to leverage a connector take

that data convert it to Tradeshift native format to deliver a true digital invoice to the customer.

Or lastly, if you’re talking about very small sellers that invoice very infrequently right we provide a way for those sellers to digitally invoice directly through our user interface.

So the point being here is that the combination of digital invoice submission options for sellers, (not just OCR not just RPA) along with the ultimate transparency and visibility into the approval and payment processes around that invoice, are really the keys for value-driven AP automation.

The next thing I want to highlight around items that enterprises don’t always consider in their evaluations, is that enterprises too often can desire that big bang approach with their digital

transformation instead of taking a more phased and calculated approach.

One of my former bosses liked to say, “You can’t boil the ocean”. And I use that mantra when I encourage prospects, especially those that have a global presence or have sellers based in in countries beyond North America, to really have a plan in place for a phased approach to automation, right, consider a rollout that focuses on one country, one region perhaps, one group of suppliers at a time if possible, because shorter-term, smaller business wins can really lead to better overall digital transformation success as time goes on, both with internal stakeholders as well as with your participating sellers.

And then lastly right engaging sellers and including them in your AP automation journey is absolutely critical to overall transformation success. And while sellers need to be activated

into your program at the outset right there also needs to be an incentive for them to stay transacting with you digitally.

And how are you engaging your sellers? Are you making it easy for them to use your solution? How do they get trained when they get active on your network or your platform? Do they have self-service tools to remove barriers to transacting with you? How are they informed of new solution features that might actually make their lives easier as well? Do they have any “skin in the game” when we talk about a product roadmap development or feature functionality enhancements?

And so enterprises really should make sure that the solutions they’re evaluating and selecting, help reduce friction not only for their internal users, but for the sellers for sustained and valuable engagement from that group.

I hear a lot about manual processes in AP and primarily that’s due to a lack of an AP automation solution right, there’s a heavy burden placed on manual efforts. I mean a lot of enterprises are still dealing with invoice matching exceptions via spreadsheet, they email spreadsheets to the next person who needs to approve the exceptions and approve the invoice. There’s no transparency and visibility between internal stakeholders to see where an invoice is. Like too many times invoices have to be emailed from one person to another. There’s not a humongous source of visibility within ERPsystems. Oftentimes, ERP systems only allow you know AP users, AP managers, visibility into that system a business user or somebody might need to approve an invoice doesn’t have visibility into the ERP system so the results here make a lot of sense.

And I think the reality is that all of these challenges can can aggregate into a lot of friction in AP. Whether it’s friction internally in getting invoices approved and paid quickly. Or friction with your sellers. All of these issues; high paper volume, high seller inquiries, like limited visibility all of that adds up to if I’m a seller and I have to reach out to the organization to look for invoice or payment status and that invoice hasn’t been resolved yet, I’m getting paid late, I’m unhappy.

So the idea of evaluating AP automation, really is not not just about helping your own organization deal with manual processes, right, that’s a goal. But can also be to get your sellers into the fold and on the same page and give them some value because really digital transformation starts with the sellers sending you invoices that are digital compliant, free of exceptions, so that your AP process flows more smoothly again either in an ERP system, or in an actual AP automation solution.

Jordan Mullins, SSON: Justifying ROI for automation initiatives when there’s lower scale can also be a really big challenge, do you offer a light version that can address such challenges at all?

Michael Creeden: Tradeshift specifically has several versions of our AP automation solution. Some enterprises will come to us looking strictly for just e-invoicing. So the ability to receive invoices digitally from sellers and then pass those invoices through Tradeshift to their ERP

systems where they would do the lion’s share of the invoice matching, invoice coding, and approvals. However, we also provide a solution that combines e-invoicing with full-scale AP automation which would include invoice and PO matching, three-way matching with invoices and POS and goods receipts, non-purchase order invoice coding, digital collaboration.

So there are different versions depending on the needs of the organization that we can uh that we can offer to enterprise customers.

Jordan Mullins, SSON: I would like to know what makes it a network different from a more traditional supplier portal?

Michael Creeden: This is a really important question and topic because again, when we have enterprises come and speak with us, they’re often evaluating technology that includes supplier portals and it’s important to distinguish between between a portal and a network.

So traditional supplier portals can and do promote the ability to have a seller submit an invoice, check on its status, receive payment confirmation, and remittance data, which are clearly all valuable benefits to the seller. There’s no doubt about that. But the challenge historically with portals has been that they’ve been built in a very buyer-centric manner. And what I mean by that is if I’m the buyer and I want to receive invoices from my sellers I just tell my sellers go join my portal. Which is great for me because I get my sellers to join. But what if another buyer or customer comes along and asks the same seller to join a different portal and then yet another of the seller’s customers comes around and asks that seller to join yet a third portal?

Portals historically have been built to allow many sellers to connect to one buyer. But not so often, for many sellers to connect with many buyers. So as a result sellers in order to

maintain and manage all of these different portals would need multiple logins for these portals to access different customer accounts. This is a ton of work for the seller and can often lead to what we call “portal fatigue”.

Tradeshift is different. Tradeshift is a true B2B network, think of LinkedIn when you think B2B network. Where sellers can connect and transact with multiple buyers and customers via the same set of credentials.

So for the sellers, I can join Tradeshift, connect with my existing customers, and connect with companies I might want to do business with in the future–all in the same network and it’s as easy as me sending Jordan a LinkedIn request, to add her as a professional contact. A request is sent, a request is approved, and then the two parties can begin to transact with each other immediately. Tradeshift really believe in low transaction barriers between buyers and sellers

Jordan Mullins, SSON: Most enterprises understand how AI can improve AP efficiencies that may be fearful to deploy it. What would you say to those enterprises or AP teams?

Michael Creeden: I would say I empathize with those enterprises right uh who might be fearful of deploying AI in their AP process. And I understand how difficult the idea of moving process decisions that historically have sat with you know human business users, and move them towards layers of AI. That can be scary. That’s absolutely true.

Tradeshift comes at the use of AI in a unique way in that we offer our customers the ability to leverage and roll out AI that is smart and works best for the enterprise. So what we hear is that enterprises often want the ability to leverage AI, right they they want to use it to increase trade through processing, but for a period of time allow business users to review and evaluate how that AI is performing right so get the best of both worlds; you get the automation but you can also double-check to make sure it’s working to your standards.

And as the business gets more and more confident with AI rules can be updated to allow for more touchless processing. A decrease in that human review element. And for lack of a better expression, Tradeshift finds that this crawl-walk-run approach to new automation tools like AI, really does help offer a level of comfort to our customers in rolling out AI, especially those that those customers that have have yet to really you know dip their toes in the water, you know so to speak, of of artificial intelligence.

Jordan Mullins, SSON: What is the biggest AP challenge you face in your organization? So you know too many manual processes in AP workflow is the biggest challenge and then it should come as no surprise then that increased automation would obviously, the beta, improve current AP processes the most, but I’d love to get your thoughts.

Michael Creeden: Yeah it’s interesting and I’ll go back to something I said earlier, you know which is I do uh often caution enterprises I speak with to be careful about trying to implement automation with with the expectation that they can fit their existing process that’s currently in a box right into a brand new piece of technology.

I think it’s important just to remember that in order to get optimal automation through whatever technology investment you’re making, the idea of moving into that evaluation and that decision saying I’m going to keep the same exact process I just want to automate it, can be (not always) but can be a recipe for disaster.

So I what I would suggest is that when companies are evaluating opportunities to automate workflow and just leverage additional layers of automation, that they do look at the front-end of that process. And make sure if I’m paying a lot of money for a new Enterprise technology but my suppliers aren’t going to send me invoices through that technology, I have a great shiny piece of of new software or a shiny new network, that might go underutilized because I haven’t really focused on providing value to you know the other side of the equation which is the sellers.

I think the improvement in workflow and the increased automation can absolutely come and that is all clearly the goal. I mean the goal of Tradeshift you know in a small nutshell is increased rate through processing and AP but that can only happen if there’s you know buy-in from your from your sellers as well to evaluate new ways of sending invoices, which then allow automation to do its job because you’re getting better data, cleaner data coming into your solution to begin with.

Jordan Mullins, SSON: I would love to know what are some of the strategic points of automation in the AP process because like we know end-to-end processing in general is something that is like a long-term strategy for a lot of AP functions, but I’d love to hear from you a little bit about just kind of understanding where are the best opportunities to target bottlenecks and potentially processes that are primed for automation.

Michael Creeden: You know it starts with invoice receipt. Again I mentioned this earlier, too often too many sellers are sending paper-based invoices that are paper-based so they’re harder to process and get into systems they may also lack critical data points that buyers need to process those invoice.

And then add to that if your organization’s global in nature and you’re getting invoices from sellers from other countries then tack on country compliance requirements to that sort of manual invoice mess. So leveraging automation for invoice receipt to ensure invoices adhere to country-specific requirements as well as business specific requirements is going to be critical to you know, the buyer receiving clean invoice data and moving towards touchless processing.

The next thing I would say would be invoice and purchase order matching. Evaluating that as an organization; are there ways we can introduce more automation to two and three rematching processes? Are there tolerance levels that we can evaluate to prevent business users from needing to approve exceptions that amount to a few cents or a few dollars, between invoice and purchase order?

So enterprises should evaluate and review a solutions approach to invoice matching and what rules can be established again to to develop more automation and generate more straight-through processing.

The other area of focus should be on sort of the coding of non-purchase order invoices. So too many organizations that I talk to still do things like handwrite accounting codes on paper-based invoices so they can be shared internally and processed accordingly in the ERP system. This is really ripe for artificial intelligence and how it can play a role in eliminating the manual intervention here.

In Tradeshift for example we use AI to learn how AP teams have historically coded non-PO invoices and start to make automated recommendations for the VAP teams for future coding. So AP teams can leverage AI to auto-code invoices and bypass manual review as they get more and more comfortable with the technology.

Next, I would say approval workflow. Instead of relying on approving an invoice and emailing it to the next person in your approval chain, or you know goodness forbid, walking it over to someone else’s desk, leverage automated approval workflows and your solution to streamline the process and give all relevant parties that visibility into where the invoice is at any given time and prevent that invoice black hole from growing large.

Second to last, I would say–and this is under-valued–invoice discussion and collaboration. We want to remove the friction that decentralized things like email communication presents and instead leverage your solution that you choose, or you’re working with, to collaborate both with peers internally as well as sellers externally, to resolve invoice exceptions or disputes.

So, and keep in mind digital collaboration and conversation history should complement document audit trails themselves in the event that future research is required on a particular document.

And then last but not least, information being shared with the seller is ripe for automation.

Instead of requiring the seller to email you know, AP@company name.com for an update on invoice and payment status, use the solution to expose both invoice status and payment information to your seller.

Documented payment transparency is going to reduce the amount of inquiries the AP teams receive from sellers and as a result, it’s going to help improve your seller relationships.

Jordan Mullins, SSON: Beyond e invoicing and accounts payable what other areas are right for digital transformation in B2B today?

Michael Creeden: The natural complement to digital transformation in AP is really digital transformation and procurement. The ways in which companies today sell to, and buy from each other, it needs to change. Enterprises are really looking today for B2B purchasing to more closely resemble the B2C shopping that we all do in our personal lives in the evening and on the weekends.

There’s really no reason that can’t happen and that shouldn’t happen. At Tradeshift, we’re actually seeing more and more interest in our B2B marketplaces offering. Both from existing AP automation customers as well as net new prospects who’re looking for better ways of managing their B2B spend and shopping and procurement best practices. And they can use our network to extend that model that we bring to AP, they can extend it to their approach to procurement as well.



Learn more about Tradeshift’s B2b E Procurement Marketplace