Here at PayStream, we believe that the technology available for optimizing AP processes should be used by businesses of all types and sizes. Research results prove that these systems breed success in organizations, and the many diverse offerings of today’s software can reach into every area of back-office activities. However, we have noticed a trend among businesses who utilize AP automation  to a high degree: some companies began to show an infatuation with technology that can result in over-stimulation. A heavy dependence on automation sometimes gets in the way of the simple efficiency these technologies were made to bring.

The current technology for Invoice Workflow Automation (IWA) breaks down invoice processing times by high degrees, prioritizing approval routes and bringing approvers transparent invoice history. Accountants sometimes rely on robust systems to incorporate advanced validation software to send documents for approval or enable invoices to be pre-approved based on pre-configured specifications. This method of pre-validation is a major component in process simplification, as well as an invoice approval best practice, but it has not seen very high adoption among companies’ IWA strategies. PayStream believes this is because many AP departments do not realize the relevance of the problem or the simplicity of the solution.

What is the problem? It’s found in the differences of invoice amounts. Approval of small-value invoices distracts organizational managers from reviewing more strategic, higher value invoices that need their closer attention. This is especially true for email-based approvals—approvers’ inboxes are clogged up with invoices for lower dollar values, the majority of which are for under $500 and are nearly universally approved.

 In many cases, the overload of similar invoices cause approval fatigue, which leads AP staff to approve invoices without even looking at the invoice images.  For example, monthly recurring (cyclical) bills (telecom, utilities, small value cleaning bills, plant maintenance) come with such regularity (and sometimes at such high volume), they can all blend together for approvers. Another example is seen in the receipt of small invoices against an existing PO.

The overwhelming number of invoices results in an over-stimulation for approvers that can keep them recognizing high-priority invoices. In other words, low-value invoices that flood inboxes and demand attention act very much like the boy who cried wolf in the classic fable. By the time an invoice that requires extra attention reaches the approver, they may be have become immune to the difference between low-priority and urgent.

While IWA should route each invoice for approval with the greatest accuracy and speed possible, for many invoices, much of the work can be done in validation soon after invoice receipt. An invoice approval best practice, assumptive approval, shows that small value and recurring invoices do not need to be physically approved, but can be assumed to be approved. Instead of sending the budget owner an approval request, they can receive a notification only email letting them know that the invoice has been sent on to payment.

Assumptive approval brings faster invoice routing times, higher touch-less processing rates, and more early payments discount opportunities. It also ensures that managers spend less time reviewing low-priority invoices and are able to give a more complete review of higher-value, higher-risk invoices. For example, assumptive approval can be applied to all of a company’s utility invoices under $1,000. This clears up an approving manager’s task load and enables them to focus simply on invoices from services providers for verification of rates, services and fees.

There are more strategies companies’ can take to enhance existing IWA technology. While automation is a great benefit for company efficiency, organizations should still utilize best practice techniques to fully take advantage of what the software has to offer. Next week, we will be exploring other ways AP departments can rearrange their approval structure to ensure the most efficient activity.

Also, be sure to download a free copy of our latest research release, the 2014 Invoice Workflow Automation report, today.