3rd September, 2020
Cloud software and innovative data handling processes are beginning to solve an issue in purchase order data matching that’s been about since 1948, writes Roger Gregg.
The Accounts Payable and procurement space is changing quickly, and boy does it need to. It has lagged behind other business functions — burdening businesses with endless data entry and disjointed systems — until now.
Just look at what’s already occurring in time and attendance and payroll. Most businesses already have their time and attendance function outside of their accounting systems. Rosters are generally created externally (but linked to employees within MYOB’s payroll, as an example), distributed to staff externally, and approved externally before syncing with MYOB for seamless processing and payments.
And that’s the way that both Purchase Orders (POs) and Accounts Payable (AP) are heading.
In this article, we’ll discuss how new AP software works with online accounting software like MYOB to reduce the need for paper purchase orders and bills, reduce the amount of time and effort in admin and enhance accuracy of reporting. We’ll also discuss how innovation in PO matching is finally solving a problem that’s been slowing business down for over 70 years.
When we launched Lightyear, we were focused on creating a truly paperless AP solution that includes real time line-item data extraction from AP documents, such as bills, credit notes and statements.
This work has now led us to reinvent Purchase Orders with a specific module, allowing staff to raise and approve POs external to their accounting software in an easy to use cloud interface.
The supplier bills that then follow come into Lightyear and get automatically matched against the POs, line by line, in real time. And those bills then get immediately written to the accounting software. That way, the business and their accounting software receives rich, clean, pre-approved data in as close to real-time as makes no difference.
From here, you’re ready for payment, and early enough to take advantage of any early settlement discounts that may be on offer.
Lightyear Purchase Orders is due for Beta release at the end of this month.
Purchase Order matching technology doesn’t sound particularly advanced when compared against some of the other innovations we’ve seen recently, but that doesn’t mean getting here hasn’t come without a world of challenges.
Most of the historical issues around PO matching come down to the fact that systems are not connected and that the bill data written by one system is not extracted by the other.
You can only automatically match a supplier’s bill to your own PO if you have clean and standardised supplier data to match to your PO data. But suppliers’ systems are generally different to a customer’s systems.
Globally, there are tens of thousands of supplier ERP systems producing sales invoices for their customers in millions of different formats. And, not surprisingly, there have been attempts to deal with the issue for more than 70 years.
Back in 1948, during the Berlin airlift, the first attempt at Electronic Data Interchange (EDI) forced suppliers into using a standard shipping manifest. Enforced EDI compliance can work in some industries where you have a small number of large organisations working with each other, but there are more than 100 million SMEs globally, and you simply can’t mandate that they all send bills in a certain format, right?
Well, as it turns out, now you can.
Today, every ERP system in the world can email a PDF containing clean metadata directly from the supplier’s own system. And that is where Lightyear’s proprietary tech does its thing.
In real time, Lightyear standardises the data-set of every supplier bill. It’s like EDI, but the supplier hasn’t had to do anything other than email a PDF, putting Lightyear well ahead of the rigidness of EDI and with far greater accuracy than what you’ll get from technologies that use optical character recognition (OCR).
We are on a mission to rid the world of paper documents, and with more than three million documents received digitally in the past 12 months we’re off to a good start. That’s nearly five million pieces of paper saved, equating to numerous trees left standing.
Paper bills will still be sent with some deliveries — that’s just the way of the world. But just because you receive a paper bill, doesn’t mean that you need to process it. But over the years we have been indoctrinated to do so.
At Lightyear, we’ve always said that if you start with paper, you end up with rubbish. Rubbish systems. Rubbish data. And also the inevitable pile of physical rubbish.
Not only do you really have no idea where a paper bill came from (and we have all read the stories of fraudulent paper bills being presented for processing), but in these COVID-19 times, we probably shouldn’t be encouraging the handling of paper except where absolutely necessary. Paper bills often go through numerous sets of hands before landing on the flatbed of the scanner, and that’s probably something we should look to avoid doing both from a hygiene standpoint, but also from a business efficiency perspective.
The cost to process paper bills is significant. You won’t see the cost as a line-item on a P&L, but it is there, buried in wage processing costs, missed settlement discounts, overcharging, duplicate payments, desk space, print and stationery costs, and so on.
Saying goodbye to processing paper bills is the first step in eliminating those costs.
Find out more about Lightyear and how it can work with MYOB to simplify your Accounts Payable and procurement systems today.