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Home / The Financial Advisor / How Automating Purchase Order Matching Improves Early Payment Success

How Automating Purchase Order Matching Improves Early Payment Success

Early payment program success is based on adoption and speed. Adoption comes from ease of use. The simpler the process, the more supplier sign-on you can achieve. And the sooner inbound invoices are approved, the more valued the early payment becomes to both the buyer and the seller. Any processes that reduce the payables cycle time can enhance the success for early payment programs. Specifically, that includes the purchase order matching process used to add payables governance and approve invoices, and a touchless invoice workflow.

It’s a mantra we’ve repeated often. AP before EP.

How Automating Purchase Order Matching Improves Early Payment Success 1

Reducing PO-Invoice Cycle Time

You’d think that adding PO governance processes would add bureaucracy and slow down operations. While that is true on the early requisition side, it doesn’t have to be the case on the matching side.

Tipalti recently announced its PO matching capability to its suite, which tightly integrates with invoice (bill) payments and its early payment program. Header and line level matches are completely automated, with full threshold and exception control. These exceptions are fully configurable based on your internal policies. Best of all, any exceptions are sent by email to approvers for quick confirmation or refusal. This goes for two-way matching and three-way matching.

Assuming the large set of invoices match the purchase order, the payables team may never even need to be involved. They can rely on the system to maintain the proper spending controls.

How Automating Purchase Order Matching Improves Early Payment Success 2

What does this mean for early payments?

Maximized Dynamic Discounts and Early Payment Impact

The sooner the early payment offer can get to the payee, the greater the value of the offer. If they submit an invoice and by the next day (or even the next hour), they’re able to trigger an early payment order and get the maximum benefit.

For the payer, the discount will also be of the largest possible percentage. Enacted at scale across the entire supplier base, the results can be astounding.

Take rates for early payments hover around 5 percent in the industry. That’s actually best in class. Early payment programs are notoriously difficult because of the manual negotiation and intervention involved. By automating all of this at Tipalti, we’ve seen 20 percent – even 30 percent. That was before PO matching.

Automated PO matching, as mentioned, cuts the approval cycle when the invoice comes in. It doesn’t go on PTO. It doesn’t have a weekend escape. When the invoice lands, it’s handled. And if the match is a fit, the supplier is offered the early payment. Tipalti executes payment to the supplier that day through whatever the payee has chosen for his or her method (ACH, wire transfer, local bank transfer eCheck, etc.). As the payer, you pay the already-approved invoice according to its due date (all the details of which have already been coded in automatically from the purchase order).

Learn More

About the Author

Derek Cheng

Derek is the Senior Director of Corporate and Content Marketing at Tipalti. Notoriously lazy efficient, he's fiendishly dedicated to showcasing how businesses can reduce their back-office operations and still achieve greater scalability and results.


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