Invoices are treasure troves of valuable data. With everything from product descriptions to contract terms, invoices feature a wealth of vital information that AP can leverage to improve the organization’s procure-to-pay cycle.
Unfortunately, many departments are not doing this. Mining data from a paper invoice is a daunting task. It requires organizations to devote staff resources and time to a job that doesn’t help pay the bills any faster. The key to getting access to this data is to go electronic.
It is much easier to extract data from electronic documents than paper ones. There are a slew of technology solutions out there that can capture information from an electronic invoice file and use it to generate a variety of reports.
According to Thayer Stewart, vice president of e-invoicing provider OB10, the ability to record and study line item invoice data is one of the most important benefits of e-invoicing. In a recent article published in Supply and Demand Chain Executive, Stewart says data mining will increasingly become one of the key forces driving the spread of e-invoicing programs.
What kind of data is sitting locked inside your invoices waiting to get out? First off, vendor names, product descriptions, and price are found on most invoices. Looking closely at this data could reveal that your organization is not buying from the proper vendor or taking advantage of valuable early payment discounts procurement busted their humps to negotiate.
Contract compliance is a major benefit of mining invoice data. Electronic invoices allow buyers to look at the invoice price in a different way. Stewarts uses an invoice for office supplies as an example. When AP receives a $250 invoice for office supplies, they typically approve it and pay the $250. The contract compliance component of most e-invoicing solutions can dig deeper and list the price of each individual box of pens or paperclips. If something looks wrong, AP can act on it.
Electronic invoicing also gives AP the ability to audit invoices in real time, ensuring contract compliance before the payment is made. Real-time auditing all but eliminates the need for regular post-audits.
Mining invoice data seems like a no-brainer for any AP department currently receiving electronic invoices. Unfortunately, that number is still not very high. According to The Accounts Payable Network survey data, less than 40 percent of organizations have implemented electronic invoicing. And it is not cost effective to assign AP staff to analyze line item data.
Until more companies make the leap to e-invoicing, the wealth of invoice data waiting just below the surface will have to remain a buried treasure.
See Stewart’s full article in Supply and Demand Chain Executive.
