Let’s be honest: There is always going to be some level of non-purchase order (PO) spending at an organisation – and POs do not always add value. “No PO, no pay” policies simply do not work and there are certain categories of spend that will mostly stay non-PO (e.g. utility bills) – and that’s ok. At Basware we do not believe in straining your supply chain or eliminating non-PO invoices, we believe in automating these invoices – and in this blog, we show you how.
Throughout your AP automation project, you may hear providers telling you that you should instate a “no PO, no pay” policy with your suppliers before processing their invoices, or that you should get more spend under management by focusing on the procurement side of the house first and issue more POs.
But POs do not always add value and sometimes even hurt end users. When there is a plumbing emergency – are you really going to require someone to issue a PO? No; that’s not realistic. Do your utility companies accept POs? Probably not. And if one of your valued suppliers invoices you without a PO, are you really not going to pay them for the goods and services rendered? Hopefully not.
How to approach non-PO invoices differently
We recommend an iterative approach that helps you realise ROI quickly and enables automation of non-PO invoices.
At Basware, we go against the grain of many other providers by recommending that companies focus on AP automation, before looking at their procurement process.
Why? There are a few reasons:
Capture 100% spend data: Basware captures your spend data from your invoices, not your purchase orders. This means you are getting a realistic view of ALL spending, whether it was on a PO or not.
Get faster time to value: Automating AP is a relatively faster project than automating procurement or your full P2P process.
Minimise organisational impact: Change management is make-it-or-break-it for procurement automation projects – success is only reached if everyone uses the solution to request the goods and services they need to buy. AP automation on the other hand mostly just affects how the AP team works, while making approvers’ lives easier and suppliers happier.
For more details, you can also download our recent article with Spend Matters and learn why starting with AP automation is the best way to structure your P2P deployment.
So, assuming you agree with the idea that a “No PO, no pay” policy isn´t the best way forward, let´s dig into how you can also automate invoices without a purchase order.
How to inject automation for non-PO invoices
Automate non-PO recurring invoices
Think about the invoices your AP team deals with every month that are essentially the same – utilities, mobile phone bills, rent, leases like copiers, etc. What if you could automate these invoices and remove them from AP’s task list? With Basware, you can. When these invoices arrive, they automatically match up to what we call a ‘spend plan’ that AP sets up and are processed in a touchless manner. This means you are removing the monthly “noise” in AP and you are giving your leadership committed spend visibility over these costs before they even happen.
Automate approval workflows for non-PO invoices
For your non-PO invoices, Basware will automatically send them to the right person for review and approval based on whatever attributes you define. This means the person who has the approval authority gets these invoices as soon as they are received.
Leverage AI to code invoices
When approvers receive non-PO invoices, Basware’s SmartCoding leverages historical coding and invoice header data from the solution to recommend to the user how they should properly code the invoice. SmartCoding speeds up invoice coding with accurate proposals making it more efficient and providing better control for the AP teams. They maintain the thresholds of the actual SmartCoding and decide when to apply it. By using SmartCoding you are removing the guesswork for your end user while ensuring accurate and consistent usage of your coding dimensions. Data quality for reporting purposes improves and advanced machine learning continuously improves the accuracy of coding proposals.
Auto-code non-PO invoices
Using technology similar to our auto-coding of additional costs on PO invoices, we can also automatically use coding templates to code non-PO invoices using attributes on the invoice (e.g., supplier, reference person, description, etc.). Then the invoices can be auto-routed for payment or sent to an approver to confirm.
How does that drive value for your Accounts Payable team?
Do not issue a “no PO, no pay” policy. Instead, automate AP to realise value quickly and collect data that procurement can leverage for their strategic initiatives. Reach out and talk to one of our subject matter experts, if you want to learn how your AP department can leverage these benefits.