3 reasons why AP automation projects fail and how avoid the mistakes

3 reasons why AP automation projects fail and how avoid the mistakes

Posted by Pete Loughlin in Electronic Invoicing, Intelligent Data Capture, Purchase to Pay, Purchase to Pay Process, Purchasing Process 20 Mar 2011

AP automation has got a bad name for itself in some quarters. You will often hear of projects that meant well but either failed to meet expectations or were abandoned completely. There are many reasons why projects fail such as poor change management or lack of sufficient resource but for AP automation projects, there are three particular issues that crop up again and again in failed or disappointing projects.

Supplier Master Data

Take for an example a project that uses invoice scanning and intelligent data capture to automate the invoice matching process. In order to get a sufficiently high level of correct matches, the intelligent data capture software relies on the supplier master data to validate the OCR data. Where the master data is managed by the purchasing function, the quality of data can be the weak link in the chain.

If an exercise to cleanse the master data has not been brought into the scope of the project early, the intelligent data capture results won’t be what your vendor promised. And it’s no use looking across to purchasing and blaming them for not managing the data. For them the data may be perfectly suffiecient for their purposes.

It’s important to recognize that high quality vendor master data is a prerequisite to the project and that a cleansing exercise is funded as part of the AP automation project.

P.O. compliance

Purchasing InsightSuccessful AP automation does what it says on the tin. It allows a 3-way match – a match between the purchase order, the goods receipt and the invoice – to be performed automatically. It does assume however that there actually is a purchase order and there is an accurate goods receipt. In many organizations this is not a safe assumption. If the AP team spend most of their time dealing with requesters and buyers, chasing reciepts and retrospectively creating POs then AP automation can’t help.

Engage with the purchasing people

The AP process doesn’t start and end in accounts payable. There’s an intimate relationship with suppliers – one that can mean the difference between commercial success and failure. Late payments, caused by whatever and consequential supply chain disruption can have a devastating effect on the relationships that the supply chain team may have nurtured for years. AP automation approaches such as electronic invoicing directly impinge on the supplier relationships. It’s critical to collaborate closely with the purchasing teams to increase adoption rates and to ensure that important relationship are maintained.

It’s all about taking a holistic approach

The quality of vendor master data is a critical success factor. Why would you ever start a project where your CSFs are outside of your influence? Poor P.O. compliance – it is pointless trying to automate a dysfunctional process. Fix the process first, then automate and make sure you engage closely with procurement.

This isn’t 3 reasons why AP automation projects fail – it’s a single reason. For an AP automation project to succeed it must – absolutely must – be run within the context of holistic purchase to pay environment.

  • tim woodhouse March 23, 2011 at 5:54 pm /

    I absolutely agree – your vendor data doesn’t have to be exact as we can use an aggregation of all data to produce a best candidate match – but an example I saw was an identical vendor created 236 times – you tell me what you’re supposed to do here?
    On PO’s it’s so much simpler to just do it right – an organisation I was involved in said an exception cost them £7 per transaction whereas if someone got it right it was less than £2 – multiply that by a few hundred thousand and…
    I have never understood why purchasing are not more involved in this process because if they knew how important they were to making it work and that it’s a distinct purchasing advantage because purchasing and payables can make a company millions by working together on the back of an automated P2P process – in fact at we are able to check every invoice against a purchasing contract to make sure the early payment discounts are actioned and taken – this can be worth about 1.55% of AP spend when you harness Supply Chain Finance and you don’t lose your cash flow benefit either – to me its free money if only purchasing and payables would work in tandem there’s millions out there if you adopt the right solution partners

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