Business Process OutsourcingInvoice Processing

Discover the True Cost of Processing Invoice Exceptions

By February 19, 2021 No Comments
Discover the true cost of invoice exceptions.

While the word exception indicates a rare occurrence, nothing could be further from the truth as most companies struggle to reconcile discrepanciesmismatched or missing POs, invoice errors and more for supply chain efficiency 

As per a sharedserviceslink survey, 64% of finance and shared services professionals reported that more than 20% of all invoices require manual intervention. Additionally, in many cases this figure went up to 30-75%. This suggests that exceptions may, in a quite a few cases, just present the majority of incoming exceptions.  

As you can see, not only are invoice exceptions a frequently occurring issue in monthly invoice processing, they are also quite an expensive problemCounting all the time and effort that goes into locating down a piece of missing information or chasing down the original PO for matching, handling exceptions actually ends up raising the cost of invoice processing 

The same survey also conducted a sample experiment with the following parameters. They found that on average it took at least 15 minutes to handle an exception. For a company processing let’s say 500,000 invoices, if 20% of those are exceptions, then based on the above information, we can conclude that it would take nearly 25,000 hours or 12 full-time employees to simply handle and resolve these exceptions.  

As you can see, the matter of managing exceptions is not one to be taken lightly. Before we move on to discussing the art of handling exceptions, let’s take a look at how they represent a major liability for your business operations: 

Higher Operating Costs 

Exceptions can drive up the cost of invoice processing.

As demonstrated above, identifying, tracking down, and resolving exceptions is a time-consuming, labor-intensive and expensive proposition when handled internallyEven if you bring on more people to handle these exceptions when faced with a surge of incoming invoices, you will still end spending money and time to hire and train these resources which may not be ready in time. Additionally, hiring and then letting go of any temporary employees once the surge is over can actually end up costing you more. Find out how! 

Missing Out on Discounts from Vendors

Exceptions cause delay in invoice payment causing you to miss out on vendor deals and discounts.

Apart from the increased cost of processing and time, exceptions also cost companies in terms of missing on discounts and exclusive deals with customers 

Companies that are capable of processing their invoices and clearing their payments on time can strike deals with their vendors for early payment discounts and special deals. On the other hand, delayed payment due to mismatched or lost invoices often invokes a heavy penalty or fine. So, by not processing your invoices and paying them on time, you not only miss out on special discounts and deals but also end up paying way more than you were originally supposed to. 

Processing One-Off Invoices

One-offs present another major hurdle in invoice processing.

A company can receive up to hundreds of invoices per month including one-offs that can occur once a month or even once a year as opposed to subscription invoices that are received periodically. As these are not regular invoices, they need to be sorted, matched against the original PO and processed. This requires greater agility on the part of the team processing the invoices as every one-off comes in a specific format favored by the company sending it.  

As one-offs pile up, your manual resources can come under heavy strain while processing each and every format; thereby, incorrectly processing these invoices or contributing to an already accumulating backlog.  

Lack of Visibility and Insights  

Delay in invoice processing results in delay in data reporting.

In today’s data-driven world, the ability to utilize your enterprise data for mapping out market trends and patterns in advance is crucial to smarter decision-making. However, if you are unable to process your invoices in time, this prevents from gaining timely insights or even a complete picture of your current consumption and spending. This means that not only do you miss out on crucial insights for core business growth, you also lack the data required to bring about much-need internal changes.  

The ARDEM Advantage in Exception/Invoice Processing

The ARDEM Invoice Manager offers additional efficiencies for faster invoice processing.

Discover how ARDEM’s invoice processing knowledge, gleaned from over 16 years’ worth of experience enables us to resolve issues such as exceptions, suspects, and incorrect/mismatched invoices using tried-and-tested protocols to execute a successful invoice processing cycle for you. 

The Art of Managing Exceptions in Invoice Processing

According to a study by Ardent Partners, nearly 23.2% of the incoming invoices in a company require expertise in exception handling. According to the same study, nearly 3 out of 4 vendors/suppliers still send paper invoices; thereby increasing the need for manual intervention and processing.  

In an age where the benefits of invoice automation are highlighted as a cure-all remedy for all invoice processing woes, can we truly eliminate all manual processing? The answer is a clear no, given the current challenges of processing manual invoices, automation needs to be supplemented beffort-based processing to create a truly responsive solution for invoice processing.  

Here’s how ARDEM combines advanced invoice automation with human intelligence to successfully resolve  

  • Once the invoices are received by ARDEM’s team on behalf of a client, they are immediately ingested into the processing cycle. In case of paper invoices, once they are forwarded to us, we scan and convert for OCR data capture.  
  • Once this is done, the data from incoming invoices is captured according to different schema and templates. As we receive invoices from different sources/suppliers, our automation team sits down and maps out each template individually to ensure future efficiency and faster processing.  
  • In case certain data fields cannot be extracted or processed, they are immediately flagged for review.  
  • The flagged invoices are checked by our experienced analysts for quality and missing data fields.  
  • Any incomplete or suspect fields are corrected via a manual review against the invoice image. In case the data is found and corrected, the invoice is forwarded for quality-control checks. 
  • If the data from the required fields is found to be missing, the invoice is sent for resolution processing
  • In our resolution processing, our team reaches out to your vendors/suppliers for a clear copy of the original invoice or purchase order. The received file is used to fill in the missing data correctly and the invoice is forwarded for QC. 
  • The accurate data is processed faster and delivered in accordance with the specified deadlines. The processed and standardized invoices are sent for faster approval and prompt payment.  

Our invoice processing platform, the ARDEM Invoice Manager comes with advanced reporting capabilities. You can upload files directly and even view your processing in real-time. You further get access to a personalized dashboard that lets you view the number of invoices received by data, week, month, quarter, etc.  

If you are wondering about how our team can build additional efficiencies into your invoice process, then get in touch with our experts for a free consultation today!