Advancements in expense management technology have begun to focus on empowering businesses with the ability to combat wasted or excessive spend before it happens.
Whether through card products that automatically adhere to corporate spend policy or integrated tools that can submit planned expenditure for approval, these offerings take a proactive stance to combat fraud and save money.
It may seem curious that organizations have not deployed similar tools in all areas of spend, particularly accounts payable (AP). The reality is, however, that the invoices ingested by AP departments can be so complex, lengthy and in formats not easily read that the time it would take for professionals to analyze each line item is likely not worth the pain.
David Krigger, chief procurement officer at PAAS Advisors, recently told PYMNTS that telecommunications invoices are a particularly convoluted challenge to tackle. But when thousands of dollars, or even hundreds of thousands of dollars, a month are at stake, failing to analyze telco spend before any payment occurs can be a fiscally risky decision.
Managing By Exception
Krigger recalled on PAAS client, a small, regional car dealership, struggling with this very problem.
“Their telco spend on just two suppliers is $100,00 a month,” he said. “Each invoice has about 60 lines. That’s a lot for a small company.”
Telco invoices can be deliberately difficult to read, he noted — not to mention, suppliers will submit these bills in a variety of formats, including paper, PDF and electronic data interchange (EDI). And while a rise of electronic payments adoption supports AP professionals’ efforts in gaining visibility into spend, there is no way to determine whether a telco vendor has erroneously or over-billed from transaction data alone.
To tackle this pain point, PAAS recently revealed the rollout of Invari, an invoice management portal for telco bills that can aggregate data from those documents onto a single platform. Invoices that increased by a certain threshold from one month to the next will trigger an alert, allowing AP professionals to review any potential red flags, rather than having to analyze every single bill to uncover a possible issue.
It’s a strategy of “managing by exception,” said Krigger, which is vital for a high volume of complex, data-heavy invoices.
Proactive Spend Management
Identifying areas of spend leakage before payment is made is vital to supporting the financial health of organizations. And it’s not just smaller cash-strapped businesses that can benefit from a proactive approach to telco spend management either.
Krigger also pointed to another client with thousands of locations and brands under its umbrella.
“Each of those locations has telco bills, and they just didn’t know how to wrap their arms around it,” he said. “They know there are errors there, they just can’t figure out how to fix it.”
Automated technology able to handle such a massive volume of unstructured data offers the ability for organizations to go back into the invoices they have paid over recent months and, if necessary, request a refund from a supplier. But Krigger noted that, while this is valuable for the start of an organization’s telco spend management journey, it’s important for those firms to then begin identifying errors for invoices that haven’t been paid yet.
“It’s great to go back and get refunds — there is an immediate benefit there,” he said. “But once they’ve fixed the errors in arrears, they can manage by exception monthly as errors come up. So you clean up past mistakes, then you can clean things as they come up.”
Of course, telecommunication spend is not the only category notorious for complex invoices. Indeed, Krigger pointed to other areas of spend that could benefit from this kind of invoice-level approach to accounts payable spend management, particularly in the freight, logistics and transportation space.
Franchise businesses and retailers shipping goods to multiple locations face the similar challenge of a high volume of complex shipping invoices all sent in various formats.
By applying the same principles of employee expense management to the accounts payable department, organizations of all sizes have an opportunity to have a major financial impact on the bottom line. According to Krigger, businesses are investing significantly in top-level efforts to widen their margins. A similar focus should be paid to the back office.
“You can increase margins through sales efforts — you wouldn’t believe the amount of money companies spend on consumer behavior intelligence,” he said. “Well, what about spending a little bit of time and effort on the back-end, and cutting costs? Because that’s certainly going to add to the margin.”