As organizations make further steps into their digital transformation journeys, back offices can quickly become a muddled picture of paper, spreadsheets and digital documents in various formats. This lack of standardization can undoubtedly add friction to an array of workflows, with valuable data stuck in silos and no inherent method of connect information from one source to another.
The result is a major missed opportunity for organizations to optimize their back office workflows — despite any progress made in their digitization initiatives.
According to Ashutosh Saitwal, founder and CEO of newly launched data management platform KlearStack, one area of the enterprise that is struggling the most with this challenge is accounts payable (AP). Thanks to invoices and other AP-related documents flowing in in a variety of formats, businesses continue to face barriers to being able to easily extract vital information, integrate it into the necessary systems and obtain valuable insights from that data.
In a recent conversation with PYMNTS, Saitwal explored the most prominent friction points in accounts payable that result from unstructured and siloed data — some obvious, and some that remain relatively undetected by AP teams.
The Invoicing Challenge
Unstructured data can cause headaches all across the enterprise. But this paint point for accounts payable departments has been particularly acute thanks to the financial implications of the inability to efficiently extract key data from documents like invoices, which are flowing into the enterprise in a variety of formats.
Saitwal estimated that as much as 80 percent of data flowing into the enterprise is unstructured, forcing teams to rely on manual and legacy tools to extract that information, ensure its accuracy and rekey it into the appropriate systems.
“AP is the most talked-about, and most in-demand use case for our technology,” he said, adding that the challenge of unstructured data in accounts payable “has been an issue for several years — and maybe even decades.”
Between paper or emailed invoices and EDI (electronic data interchange) connectivity, unstructured data is slowing down workflows and causing cash flow bottlenecks for both a company and its suppliers.
Some of the most damaging consequences are the inability for corporates to capture early payment discounts, as well as the threat of damaging a vendor relationship due to late payments. But other consequences aren’t as obvious, said Saitwal.
“Things like how much time you spend responding to supplier queries because they’re concerned you’re not paying them on time,” he pointed out. “How much requisition loss do you see because of that? Some suppliers may not be willing to do business at aggressive prices because they’re not sure if you’ll pay them on time.
“The important thing,” he continued, “is how to do you recognize and deal with both these visible, and not-so-visible, challenges?”
Reforming Data Flows
KlearStack isn’t the first company to target the friction point of unstructured data in the back office, particularly when it comes to invoice processing. Indeed, governments around the globe have launched eInvoice standardization initiatives and mandates that would, in theory, erase this challenge by ensuring that all invoices sent and received are digital and format data in the same way.
But according to Saitwal, these initiatives remain slow to gain traction, particularly today as the pandemic has rearranged government priorities.
And while the pandemic is not necessarily the main reason organizations are demanding solutions to unstructured data in their AP departments today, Saitwal noted that it has certainly accelerated businesses’ efforts to address this issue.
At the same time, he highlighted the difficult decisions businesses will have to make in the coming weeks and months with regards to promoting business continuity, and that includes considering whether to outsource positions or maintain them in-house. For technology solution providers, the opportunity to address the issue of discombobulated and unstructured data could mean organizations are able to do more with less, wielding internal staff to focus on value-added activities rather than on detangling data webs.
What is clear, however, is that the challenge of unstructured data in areas like accounts payable is not going away anytime soon — and Saitwal urged businesses to “think outside the box” to apply novel technologies to optimize back office workflows in new ways.
Selected by Fintech Tube