Digital disruption is making way for new entrants and new models in the banking and financial services arena, a.k.a. “fintech.” While fintech is revolutionizing banking and finance for the business-to-consumer and consumer-to-consumer markets, enterprise finance departments can get the fintech bug too to innovate and streamline their workflows and supply chains for better, faster outcomes and to empower both customers and suppliers.

Accounting and analysis with laptop and calculator
Image: Adobe Stock

One area ripe for enterprise fintech innovation is accounts payable. Considering that the current market approach to invoice automation and the associated digitization and OCR technologies have been around for over 30 years, it’s no wonder that AP operations are in dire need of a major overhaul to meet today’s modern-day requirements.

Aberdeen Group’s survey report, “Reap the Benefits of Invoice Excellence with AP Automation,” highlights this need. Forty percent of respondents said the need for real-time availability of data is a key AP challenge, and 29 percent said difficulty locating/managing paper-based documents was a struggle. Given this state of the AP nation, it’s not surprising that most organizations, even after investing significantly in legacy AP Automation solutions, are only realizing 20 percent automation in their invoice processing.

The quest for improved automation is only half the journey for finance however. As initiatives such as dynamic discounting continue to grow in adoption, the nature of the accounts payable function has fundamentally changed from mere overhead to profit center – at least for progressive, forward-thinking organizations that are adopting a strategic approach to AP and finance operations.

The struggle is real
In the current technology age, how is it possible that AP is still experiencing such poor results?

Part of the answer revolves around the fact that when it comes to invoice automation, the devil is in the details. Industry statistics show that 82 percent of all invoices will have at least one exception. Exceptions are the bane of invoice automation solutions which were originally conceptualized to eliminate paper and manual data entry. When an exception rears its ugly head, no amount of digital imaging or optical character recognition technology will save the day.

To this end, the ideal AP automation solution isn’t simply focused on straight-through processing – because the path to payment isn’t always straight-through. It’s over/under, in and around various check points and decision trees. Moreover, it isn’t exclusively focused on optimizing exception processing in the classic business process improvement sense, but rather the goal is to make invoice processing as exception-free as possible.

Therein lies the ultimate question: How do we make invoice processing exception-free?

Invoice exceptions are the governor of AP automation – you should be cruising over 65 miles per hour in the HOV lane, but instead you’re crawling along in rush-hour traffic. Exceptions are caused by legacy invoice automation systems’ inherent lack of deep and real-time integration with the Enterprise Resource Processing (ERP) system. The prevailing approach is to simply pass the buck over to the ERP system to identify and later resolve exceptions. Many vendors call this “integration,” which is where data is simply thrown over the fence to the ERP system, forcing manual exception processing work streams in the ERP system that are costly, time-consuming and error-prone. Some vendors go as far as requiring the periodic replication of AP master file information within their system in an attempt to get around the ERP integration gap—only to still encounter exceptions due to batch processing delays and worse, introduce new data synchronization challenges. Net-net, these loose integrations fail to deliver the degree of automation necessary to deliver optimal results.

In pursuit of AP innovation
In the pursuit of AP innovation, organizations must pursue the new – i.e., the truly better way that challenges conventional business-as-usual thinking. Implementing incremental improvements in the imaging or ERP system to make accounting more efficient is not innovation. It may produce some productivity gains, but for real change and innovation to occur, organizations must take a fundamentally new approach to invoice automation that breaks away from legacy technology and solutions that merely image paper, collect data and upload information to the ERP system.

The goal: Real improvements and real change. Not just to business processes, but through a whole new transformative approach – a reimagining of invoice automation and finance operations as a whole. Given the pressure organizations are under today, they must take make bolder moves. There’s an old saying: Electricity wasn’t invented by making incremental improvements to the candle.

This new reimagined approach starts with real-time integration and interaction with the ERP system designed to eliminate exceptions as much as possible and early as possible in the process, as opposed to sending over bad data for the ERP system to address. Resolving exceptions before invoices are vouchered in the ERP system eliminates unnecessary manual intervention, process latency, cost and complexity – delivering maximum automation for optimal results.

Cloud, mobile and advanced analytics are key technologies that make this transformation not only possible, but much more accessible as well. These technologies allow next-gen AP solutions to deliver quicker results and more meaningful business insights than ever before.

Another essential ingredient to this transformation is breaking away from conventional siloed solution-think by combining invoice automation with supplier enablement and dynamic discounting to power the business to absolute peak performance. This approach is also ushering in another paradigm shift – moving AP away from a focus purely on operational efficiency to one of value creation for greater strategic impact. These next-generation capabilities provide the force multiplier necessary to make this sea change possible and transforming AP into a force majeure within the organization.

Bringing suppliers directly into the process allows invoices to be created, validated and made exception-free from the get-go, eliminating paper and accelerating operational efficiency. However, there are even greater gains to be realized: By providing valuable and frictionless self-service experiences for suppliers, companies will see a tremendous boost in early-pay discounts driven by an equally impressive increase in supplier adoption. This can literally translate into savings of millions of dollars (up to 2 percent of corporate annual spend), generating a new, fast and compelling revenue stream for the organization. Companies that fail to seize this opportunity are simply leaving big money on the table … not to mention the potential loss in competitive advantage.

As Aberdeen vice president and principal analyst Bryan Ball noted, “[I]n the modern business, the finance function is no longer looked at as simply the cost of doing business, with behind-the-scenes employees performing functions that, which necessary, are not the core components of organizational success.”

Rather, success favors the bold in today’s forward-thinking finance organizations, where incremental thinking is being left behind in pursuit of real AP innovation and value creation.

Nilay Banker

Nilay Banker is founder and CEO of


a fintech software development and innovation company specializing in accounts payable solutions.