3 ways accurate invoice data drives business success and how to achieve it

Blog AP Automation Industry trends May 28, 2020

In the second entry of our business digitalization blog series from our North American team, learn why your company needs complete, accurate invoice data. Erik Modh explains what accurate data does to help business growth, and how to achieve it.

Why your business needs accurate invoice data

As a finance leader, you strive to make the smartest financial decisions for your organization. In order to do that, complete and accurate data is fundamental. If you’ve read our article on the benefits of streamlining your purchase-to-pay process, you already have a glimpse into how much easier your job can be if you have access to the right information. The next step is how you can easily acquire this information and use it to your advantage to optimize both your finance and procurement decisions. Keep reading to learn three reasons accurate invoice data is essential to business growth and how you can make it happen.

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Reason #1: Make smarter financial decisions

When making a financial decision, would you rather base your choice off of correct or incorrect information? I’m sure you chose the former. But, trying to access correct data is easier said than done. Without the right information, it’s difficult to answer questions like:

  • What are we buying?
  • How much are we buying?
  • Are we buying from the right vendor?
  • Are we aligned with our budget?
  • Where can we make efficiencies in cost savings?

The good news is that the answers to these questions can be found on your suppliers’ invoices. Most companies are collecting their information at header level – meaning they can only see the summary of what they ordered in broad terms. Consequently, the header level does not show in detail what you ordered. In order to find this information, you need to access the line-level data. Line-level data provides in detail what you are paying for and the cost breakdown.

Getting access to this information unlocks a world of opportunities. First, it improves the accuracy in your financial statements and reduces the risk of error. Second, this data will reveal exactly what you’re buying and how much. Knowing these exact numbers will enable you to effectively analyze your organization’s spend, understand purchasing patterns and make improvements. Without line-level data, you aren’t getting the full exposure you need to improve operational efficiencies and best use your money.

Getting the complete information on your invoice down to the line-level data creates a domino effect in your financial forecasts. Once you have correct and complete data upfront, calculations and documents such as your spend analysis and balance sheets will be of higher quality, empowering you to make smarter decisions with your money. On the other hand, without access to all the data, calculating these points with incomplete information will increase the risk of error which will hinder your organization’s ability to grow.

Reason #2: Know exactly how much you’re buying and paying

When you have the oversight of knowing exactly how much you’re buying and paying from your supplier, you gain the power to unlock the potential of saving even more.

Improving procurement through analysis and follow-up can quickly lead to both savings and changed purchasing and behavior patterns. It is not uncommon for purchases via framework agreements to provide an average of 20% reduction in price. This means that a 1% increase in contract loyalty for a purchase volume of $50 million will result in a savings of $1 million and by analyzing spend, you can also quickly identify your spend by category and how large spend in the category that suppliers without contracts stand for. When these suppliers are detected, areas are quickly identified that could possibly be included in your most important agreements, or perhaps new purchasing areas where new agreements must be prioritized.

By visualizing what you are buying and at what price, you ensure the conversion from contracted to realized savings. When you review purchasing data, you easily find discrepancies in prices, maverick spend and product substitutes. This creates visibility to allow better decision making and the realization of all potential savings.

Reason #3: Avoid discrepancy between supplier invoices and contracts

Complete and correct invoice data helps you avoid a range of issues caused from invoicing discrepancy. Invoice discrepancy is when data on the invoice is different from the purchase order you created for your supplier. These issues can range from discrepancies in price, quantity, freight costs, missing information and other valuable data. From an accounting standpoint, discrepancies can cost you even more time and money as a buyer.

Catching discrepancies is a pain because it steals more of your resources:

  • Risk – the risk of not catching a discrepant invoice can cost your company
  • Time – the time it takes to dispute an incorrect invoice
  • Costs – time is money and if you miss the discrepancy, you could be paying much more for what you really ordered

That is why having accurate and complete invoice data is ever more crucial to aid your business in its success. And the way to achieve that is through accessing everything down to line-level. With this detailed data, you can confirm that information on an invoice is precise before you pay it and save costs because you will see exactly what you paid for.

How to efficiently achieve accurate invoice data and use it to your advantage

Now that we’ve talked about why getting the full picture of your invoice data is critical for business success, we’re faced with the next challenge: Just how do you acquire this information without spending too much time manually processing each invoice? I mean, it’d be impossible to actually go through every invoice down to line level without spending hours or even days – or would it?

Investing in technology that will capture all invoice information at line-level will save you exponential amounts of time and money. It will empower your AP staff by reducing their workload while giving them the right details at their fingertips to make the right decisions.

If you’re looking for the most sure-fire way to efficiently access all of the right invoice information, invest in a technology to automate the very first step of your invoice process which only allows correct data into your system. Automating this step will streamline communication with your supplier if there is missing or incorrect data, further helping you save costs and time, reduce risk and make smarter decisions with your budget.

At Pagero, we have a spectrum of solutions to help you achieve all the invoice information that your business needs to protect your costs and make the smartest decisions. Protect your finances, maximize your resources and enable success with Pagero.

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