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EFFECTIVE ACCOUNTS PAYABLE AUTOMATION: 3 PILLARS TO SUCCESS

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AUTOMATION

By Kyle McNabb, SVP of product marketing

 

Ineffective accounts payable (A/P) processes are costing UK—and global—businesses considerably. According to the US’ Institute of Finance & Management (IOFM) each payment costs an organisation twice as much to process in an organisation with less effective A/P functions than it does in best-in-class companies.

With a dogged focus on cutting wasteful spend in many organisations, A/P should not be overlooked. Automation is one way leading organisations are finding points of savings in A/P, as doing so can significantly improve effectiveness and efficiency, reduce human errors and missed payments and ultimately boosts satisfaction ratings thanks to faster payment processing.

When done right, automation is also embraced by A/P staff, as it allows them to cut down the time spent on manual processing and instead gives them more bandwidth to focus on managing exceptions, developing relationships with suppliers and taking on new tasks.

Deploying the right software solution is a first step in a successful A/P automation project, but that effort must also take into account best practices in order to realise the greatest results.

 

AUTOMATION

Kyle McNabb

Centralisation

Centralisation and organisation are key to any effective accounting process. But in many organisations, the data leveraged by A/P comes from disparate sources. The company’s enterprise resource planning (ERP) system usually serves as the main source, but there are countless others. Consider, for example, the systems that reside with sales staff, external vendors, customers or other points along the supply chain, such as transportation carriers and manufacturing and warehouse facilities.

If the information needed to streamline the management of exceptions is not centralised—with data from different source systems connected via unique identifiers such as vendor ID, account code and customer name—then it cannot be leveraged seamlessly to automate payment processing.

Furthermore, a lot of content is available only as paper, PDF, image, etc. That content must be scanned to have critical data elements—such as the date, account number or amount—electronically captured and metadata created. Then, and only then, the content can be indexed and stored in a repository and database. From there, the invoice and associated supporting content can be linked and processed via workflow.

Some automated A/P solutions can integrate myriad information and content formats with their data repository. It’s important to confirm the solution you select can, in fact, cover formats such as Microsoft Word and Excel, PDF, email, video, scanned capture documents—and uses a variety of standardised methods to exchange information in electronic formats (e.g., XML, JSON and EDI). They should also intelligently index, archive and organise this content so that users can easily find and access necessary information. An effective automated A/P platform also includes auditing and reconciliation capabilities, which alert users to errors such as duplicate, short or delayed payments.

 

Integration

Centralisation entails storing all critical accounting documents related to A/P in a single place. However, in even the most streamlined enterprises, these documents still touch several different systems. Some documents are stored in an ERP system or a content-collaboration platform, but other crucial information often resides on paper, in sales contracts, on inspection certificates or elsewhere. Disparate systems that function independently and without effective integration only prolong accounting processes.

To be most effective, the payables software solution must be able to communicate with all core systems that house relevant documents. If it can’t, records can become “lost in the loop” and put the organisation at risk. To prevent this, any A/P automation solution should integrate with the company’s content services platform (CSP) and ERP systems. Integrating systems and federating content across them leads to substantially reduced processing times.

 

Unification

A/P-related systems aren’t the only software in the company that contains information relevant to A/P processes. Marketing, customer service, operations, manufacturing and legal, among other major departments, have some bottom-line impact on business operations.

Because A/P staff spend most of their time dealing with transactions that are not PO-based or with PO exceptions like mistakes in amount, quantity, price, payment terms, etc., having this information is critical to their effectiveness. And although this information exists in other departments, it is rarely made readily available to A/P to use when resolving exceptions.

Automated A/P solutions can centralise enterprise content beyond the documentation that is typically considered central to payables processes. When evaluating solutions, assess if the system uses standards-based REST APIs, low-code web-hook enabled content-centric workflows and content federation to access content stored in repositories used in other parts of the organisation. This approach will improve transparency and yield improved cost savings within A/P and the broader supply chain.

 

Reaping the Rewards

When a company is able to tighten its A/P processes, the entire business reaps the rewards. It eliminates the processing delays that result in inaccurate reporting, poor financial visibility, delayed business decisions, costly reruns and wasted money. It also allows money to flow into and out of an organisation faster. According to IOFM, organisations that apply A/P automation best practices can pay their non-PO invoices on time 96% of the time, compared to only 13% of those that are less automated.

The key to enabling that is to capture, manage, federate and audit content across the entire organisation and ensure systems work in concert across different departments and applications. Only with that centralisation, integration and unification can a company make more-informed business decisions and improve cash flow for the near and long term.

 

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Insurance providers must be ready to tackle quote manipulation as potential fraud rises

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Sam Marsh, director, product management at LexisNexis Risk Solutions Insurance

As road fuel costs reach a record high[i]  and inflation hits a level not seen in 40 years[ii], it is little wonder that reducing motoring spend, including shopping around for cheaper car insurance, is top of the agenda for many people. Indeed, recent reports indicate that 68% of UK adults plan to decrease the amount they spend on driving[iii]. As finances are squeezed, the fact that one in five motor insurance buyers think it is fine to manipulate details in their insurance application to obtain a favourable quote on their premium[iv], indicates that insurance application fraud looks set to rise.

To some, quote manipulation may seem innocent enough, but deliberately misstating key pieces of information is fraud. This can have the knock-on effect of increasing policy prices for all.  More concerning is that individuals deliberately misstating information in their application could find their policy is made null and void if this is discovered at claim and they may also find it difficult to obtain insurance in the future.  What may seem like a little white lie can have long-lasting ramifications.

What exactly is quote manipulation though? Manipulating a quote is when a person applying for insurance (the proposer) deliberately materially changes information on an application throughout the quote journey, to reduce the premium. It could be the address the vehicle is left at overnight, whether it has any modifications or years licence held. Often this is done across numerous quotes to compare results, cherry-picking the best.

‘Fronting’ is an example of application fraud and often involves quote manipulation.  This is where a person (often a father/mother/older sibling) declare themselves as the main driver/proposer, when really it is their newly qualified family member who would be a higher cost to insure.  They will try numerous quotes, swapping out different main drivers, to see how the costs compare.

So how can the shrewd use of data enrichment at point of quote help the industry move the fight against fraud from detection at point of claim, to prevention at the front door?  It comes down to using quotation data intelligence gathered from across the insurance market.

Fraud comes in many guises, but insurance providers cannot fight it in silo. A market-wide quote history database can help identify potentially fraudulent quote behaviour in real-time by comparing quotes across a specific period of time to identify the probability of data being manipulated.  This insight puts insurance providers in a position to check the facts with the customer before policy inception.

It’s not just fraud prevention this quote history data can help with, understanding the likelihood of quote manipulation can also help support pricing and underwriting practices, when used alongside additional data attributes at the point of quote.

Indeed, insurance providers could combine unique insight into how, when and if an individual has shopped for insurance with further insurance specific data sources such as policy history (cancellations, gaps in cover); vehicle history (MOT, valuation, mileage); the presence and performance of Advanced Driver Assistance Systems; and soon claims history to create a 360-degree view of the risk. This can help insurance providers consider the suitability of a product or price for a particular customer, offering them a significantly better customer experience.

Our research suggests that it is younger people who are more likely to manipulate quotes with nearly three quarters of 18–24-year-olds in our recent study thinking any or some adjustment of information is okay in order to reduce their insurance premium[v].  This may not come as a surprise given a recent report has found that the under-30s are disproportionately being forced to bear the brunt of the costs of social care reform and Covid via a 10% increase National Insurance Contributions and freeze on the student loan repayment threshold[vi]. So, the ‘Packhorse Generation’ as they are being dubbed, may, more than other generations, give in to the temptation of quote manipulation.

However, as stated previously, if an insurance provider knows up front the risk of a quote being manipulated, that is their opportunity to query the validity of the data and educate consumers who may be genuinely unaware of the risks of deliberate mis-statements, before policy inception.  This approach can help protect both themselves and the customer from the outcome of fraud.

As economic pressure spirals, insurance professionals have an immediate opportunity to leverage consumer quote information to educate, protect and price customers based on their shopping behaviour.

[i] https://www.rac.co.uk/drive/news/fuel-prices/diesel-fuel-prices-hit-new-record-high-as-uk-moves-away-from-importing-russ/

[ii] https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/april2022

[iii] https://www.themotorombudsman.org/press-releases/tmo-urges-motorists-to-keep-vehicle-servicing-front-of-mind-in-the-face-of-cost-of-living-hike

[iv] LexisNexis Risk Solutions was not identified as the sponsor of this research, which was based on a survey of 1,546 consumers who had bought motor insurance online within the last 12 months and was conducted during April 2022

[v] LexisNexis Risk Solutions was not identified as the sponsor of this research, which was based on a survey of 1,546 consumers who had bought motor insurance online within the last 12 months and was conducted during April 2022

[vi] https://www.if.org.uk/wp-content/uploads/2022/02/packhorse_inflation_press_release_FINAL.pdf

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Urban Company rolls out health insurance for service professionals in partnership with ACKO Insurance

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  • Health insurance plan to benefit 40,000+ service partners in India
  • Service partners can avail up to 12 free-of-cost online doctor consultations in a year
  • Urban Company already provides Group Life and Accidental Insurance cover to all the service partners associated with the platform   

Urban Company, Asia’s largest tech-enabled home services marketplace, today announced that it is introducing a comprehensive health insurance plan for its service partners in India. The company has tied up with ACKO Insurance to craft this insurance cover.

Under the newly launched health insurance policy, all UC Plus service partners will get an insurance cover of INR 2 lac. The policy will also provide family medical insurance for spouse and two children and up to 12 free medical consultations per year. This is in addition to the existing Group Life and Accidental Insurance cover. Service partners without UC Plus subscription will benefit from a health insurance cover of INR 1 lac, with up to 12 free medical consultations per year for self, along with the existing benefits of the Group Life and Accidental Insurance cover.

Commenting on the initiative, Varun Khaitan, COO & Co-founder Urban Company, said, “Health insurance provides a shield against unexpected medical expenses that can throw individuals and families in dire financial situation. To protect our service partners from such a scenario, we are introducing a specially designed health insurance plan. At Urban Company, our priority has always been the well-being of our partners and we constantly strive towards that through our continued focus on safety net and wealth creation for them.”

Brijesh Unithan, Senior Vice President of Partnerships, ACKO Insurance said “Health Insurance has become a critical aspect in financial planning, and kudos to Urban Company for planning this on behalf of their service professionals. We are excited about the partnership and will keep refining the benefits with more experience to make it a one-stop shop for Urban Company’s service professionals to access all their health insurance needs. 

ACKO Group Medical Cover (GMC) empowers partners to choose from a wide range of benefits offering flexibility to change benefits as per the changing needs of the family and reduces the burden of expensive medical care and the soaring medical inflation. In addition, ACKO GMC eliminates the tedious paperwork by making the entire insurance journey accessible on the app.

Urban Company has a structured approach towards partner development and well-being centered around 4 key pillars: improved earnings, safety net, training and wealth creation. This announcement is part of the Urban Company’s efforts to further strengthen the safety net it offers to its partners. All active partners on the UC platform in India are covered under the Group Life and Accidental Insurance cover. Some of the key aspects covered under the policy are life insurance (INR 6 lakhs), disability cover (INR 6 lakhs), accidental hospitalization (INR 70,000), accidental OPD treatment (INR 10,000), among others.

Recently, Urban Company also announced an industry-first ‘Partner Stock Ownership Plan (PSOP)’ initiative for its service partners. Under this initiative, the Company plans to award stocks worth INR 150 Cr. to thousands of service partners over the next 5-7 years. This will enable Urban Company service partners, including plumbers, electricians, cleaners, beauticians, and massage therapists etc., to become equal stakeholders in the company’s growth.

 

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