Workflow and process automation are an ongoing part of the business in most organizations. Companies are continuously looking for ways to improve internal and external processes to accomplish many goals. Here are some examples of goals that workflow and process automation might help meet:
- Increased customer service
- Smooth out supply chains
- Reduced internal costs
- Improved vendor communications/relations
- Manage cash flow more efficiently
- Eliminate non-value-add tasks
Process automation is enabled by technology that performs tasks previously performed by human resources at a higher cost. The functionality available through most ERP packages and technology allows companies to convert largely manual, resource-intensive processes into automated tasks. Taking laborious human activities out of processes and replacing those manual activities with technology-based automation provides substantial benefits.
What is workflow management?
Workflow management, also known as business process management, is key to getting information to the right people at the right time. This allows them to make timely decisions based on the information received. The first step, as we have discussed, is to automate and streamline business processes. Next, workflow management takes that a huge step further. While process automation makes the information available to decision-makers faster, the workflow component ensures all the stakeholders will get the information, or a piece of the information, that they need to make decisions.
Applying process automation to AP functions like document and data capture, vendor inquiries, disputes, web-based invoice submission, vendor onboarding, or many other sub-processes can deliver significant savings. Utilizing tools such as vendor portals, dynamic discounting, PO flip, and OCR can offer even greater efficiencies and savings. However, the real win occurs when workflow management utilizes a rules-based approach.
A rules-based approach to workflow, while more complicated to implement, delivers greater benefits over the long run than a manual or email-based workflow system. In a rules-based workflow configuration, the AP automation system, through communication with the financial system of record and recognition of header-level data, will determine the characteristics of the payment and route that information to one or more of the appropriate parties.
Rules-Based Approach Example
For instance, a construction invoice for $2,000,000 routes much differently and is likely sent to more than one person for review and approval, compared to a services invoice for $500, which may only require one person to review and approve. Routing rules may be established based on a “delegation of authority,” which outlines approval authority based on many criteria, most importantly, the invoice total. In the example above, the delegation of authority requires the approval of a senior VP-level executive, as well as a line of business executive and a financial executive, before going to the ERP for payment. Other criteria evaluated to determine workflow routes are commodity or service, location, general ledger charging department, etc.
PO Invoices
In the case of a PO-based invoice, the workflow system will gather data from the financial system, AP application, and any other relevant systems, such as inventory or materials management, and attempt to do a 2, 3, or 4-way match. In the case of a three-way match, the workflow system may look for a match from invoice>receiver>purchase order. If there is a match, the workflow system feeds the results to the ERP to initiate the payment without human intervention. The receiver closes out, inventory levels adjust, and a deduction to the purchase order reflects the goods received.
Unsuccessful 3-Way Match
If a three-way match is unsuccessful, the workflow system routes the information to a worker to determine the nature of the mismatch. Again, the rules governing the nature of the product/service and the area of mismatch will determine the workflow route. For example, if the mismatch is an out-of-tolerance pricing discrepancy, the work item may be routed to the purchasing department. They may contact the supplier or decide whether to accept or not. In the event the mismatch is due to a unit of measure issue, like a liquid coming in quart containers when the PO specifies gallons, the ordering party may be the route destination, so they can decide if the shipment should be accepted as is or declined.
Conclusion
There are many different scenarios in a workflow and process automation management system. If implementing a well-thought-out design, information will flow rapidly throughout the enterprise to the proper individuals. These workflow management systems can also be configured to account for many different “out-of-the-ordinary” situations. For instance, escalations can be established if someone in the flow is not responding promptly or someone in the workflow is unavailable due to vacation or other extended absences. Finally, workflow participants can participate via mobile devices.
If you want to learn how your company can benefit from process automation or a robust workflow management system, contact ICG. We can show you and your team what is possible. Request a demo of ICG’s process automation and workflow management solutions.