The Bottomline:
The Devil’s in the Details

Using Invoice Line-Item Visibility to Your Advantage

Getting a handle on corporate spending can be difficult. It requires the ability to quickly review line-item invoice data and track it over time. Yet for many finance departments, the vast majority of spend information remains locked in paper invoices, dispersed to a hierarchy of approvers across the organization. In a business climate demanding greater visibility and control of expenses, a growing number of finance directors have sought alternative approaches to streamlining the payables process – adopting a wide range of solutions from in-house data capture and automation tools to the paperless workflow of electronic invoice exchanges.

While the most basic benefit of these approaches is the ability to significantly streamline the time-consuming and labor-intensive processes of invoice receipt, discrepancy resolution and approval, each of these tactics delivers the ability to cost-effectively track top-line totals at best. The key to real-time visibility and control, however, lies in the power to efficiently route, track and report on invoices and expenses at the line-item or cost-code level aided by an automated, non-linear workflow.

Getting Down to Business
In the absence of industry standards for electronic invoicing, the costs of traditional Purchase-to-Pay cycles for businesses processing tens or hundreds of thousands of invoices each year can add up quickly. On average, studies show that organizations spend between $7 and $20 to pay a single bill – a sum that includes the cost of handling and receiving invoices, verifying them, approving payment and cutting a paper check.

In an attempt to reduce transaction processing costs within accounts payable departments, some organizations have looked to P-Cards for an answer. While there has been partial success in reducing processing costs and increasing visibility into corporate discretionary spending, the P-Card alternative does not provide a total solution, nor does it eliminate paper from the process. Likewise, given the small fraction of vendors today who submit invoices electronically, customers of invoice exchanges – offering captive vendor networks and facilities for uploading invoice data online – are frequently underwhelmed by the limited efficiency gains realized without the dual ability to handle paper invoices.

Managing Today’s Paper Reality
As paper-based trading remains the norm for the majority of business-to-business transactions, the first step to increasing line-item visibility and control is the ability to process detailed invoices, both paper and electronic, in an automated fashion with equal speed and effectiveness. According to a 2004 study by the Hackett Group, the average cost to process an electronic invoice line item is about 15 percent of the cost to process a paper-based invoice. For the average company, electronic processing amounts to $0.58 per line item, compared to $3.84 per line item for a paper-based invoice.

As a result of ongoing paper invoice realities, forward-thinking organizations have pursued varying degrees of accounts payable automation via one of two paths: by partnering with an outsourced services provider to transform paper into electronic invoice data, or by leveraging in-house document capture solutions as an on-ramp to more advanced automation. In-house solutions utilizing highly sophisticated character recognition technology and basic document routing rules can provide good results at the invoice header level, where only information regarding total amounts and supplier details is required. In general, however, these solutions are difficult to implement and do not provide granular information required for line-item cost coding, approval and analysis.

Many large, successful organizations have addressed the paper challenge by working with outsourced service providers to deliver a more complete on-ramp to fully automated corporate spend management. Employing advanced scanning technologies, Bottomline Transaction Centers (BTC) receive paper invoices and quickly, accurately and cost-effectively extract invoice data at both the header and line-item levels. Clean, workflow-ready electronic invoice data files are then returned to a client’s finance department within 24 hours to be fed into an ERP system or Bottomline’s Sprinter® Invoice Manager for more advanced workflow, such as automated purchase order matching, discrepancy resolution and approvals.

Towing the Line
Offering complete accounts payable automation capabilities, Sprinter not only accommodates the receipt of paper and electronic invoices, but also provides the ability to code expenses by line item and split costs across multiple cost centers and codes. Depending on business requirements, non-purchase order based invoices can be individually cost-coded by total or by line item in accordance with the cost centers attributed to the nominated authorizer, managed through an automated corporate approvals matrix.

With Sprinter, approvers receive email notifications advising them of the specific line items that require their attention. Mandatory cost-coding facilitates budget management, while user-specific cost center/code pull-down menus or “pick lists” within Sprinter minimize mistakes, virtually eliminating the need for re-coding by the finance department.

Unlike other commercially available solutions, Sprinter manages sophisticated sequential and parallel line-item approvals from the same invoice – with audit trails to help organizations maintain accurate and up-to-date information on every invoice. This speeds the approvals process and eliminates the primary disadvantage of systems that route only the first line of a multi-line invoice, making it the responsibility of the first approver in the queue to forward the invoice on to other departments for approval of additional line items.

Visibility into the status of each line item as it moves through the process not only provides the basis for effective spend management and analysis, but also presents an entry point for dynamic discounting and trade financing opportunities. In an un-automated environment, there’s simply no way for accounts payable to pinpoint the location or status of the invoice, track cash flow for accurate spending forecasts or provide suppliers with estimated invoice approval or payment dates.

Getting Payback from the Process
Studies show that automation can reduce invoice cycle times by up to 85%, creating a tangible financial return for the organization. Without electronic workflow, companies often struggle to pay their bills within 60 or even 90 days. By processing invoices electronically, companies can choose to pay in 15 days or less, thereby improving supplier relationships. Accelerated cycle time also gives businesses the option of negotiating discounts for prompt payment, often in amounts exceeding the time value of money provided by delaying payment.

To learn how Bottomline Transaction Centers and Sprinter can improve spend management capabilities within your organization, download a Sprinter brochure or contact a Bottomline sales representative at 1.800.472.1321.