When an Exception Becomes a Rule: The Hidden Costs of Invoice Exceptions in the Supply Chain

Invoice exceptions. They should be a rare but necessary part of a healthy supply chain. But for many companies, that couldn’t be further from the truth. Discrepancies, missing or wrong PO numbers, and human bottlenecks plague Accounts Payable departments.

When invoice processing and exception handling become bogged down by manual touchpoints, efficiency stagnates while costs creep up. Staff are overburdened. Exceptions slip through the cracks.

Luckily, a large portion of invoice exception management can be automated. It’s simply a matter of establishing parameters and filters to streamline the process within acceptable tolerance and allowance rates. But without building automation into their processes, companies can expect to continue paying a lot more than they need to—and the additional costs may be even higher than they assume.

Increased operating expenses

With a manual process, every invoice exception requires time, energy, and additional payroll hours to push down the line. And since global companies can expect to encounter thousands of invoice exceptions every year, even a few extra minutes here and there rapidly add up to hours of additional manpower.

CTSI-Global has found that on average, companies spend $5 more per freight invoice when they process and pay for them on their own compared to those that leverage our freight audit and payment (FAP) services. For those that process thousands or even millions of invoices annually, the lifetime savings far outpace the implementation costs.

Missed discounts

One of the biggest benefits of an efficient, automated system is the ability to process and pay invoices early. Why? Because early payment is one of the best ways to secure huge savings—if a company has negotiated an early payment discounts (EPD) from its suppliers.

Manually processed invoice exceptions hold companies back from taking advantage of this potential windfall. In fact, many supply chains don’t even account for EDPs due to a running backlog of recurrent invoice exceptions.

Lack of visibility

Paper invoices and manual exception processing tend to go hand in hand, and both prevent companies from gaining a holistic and detailed picture of their supply chain spend. Team members aren’t going to hold all that information in their heads to compare later, and the filing cabinets that invoice receipts inevitably end up in only sit gathering dust. This makes it impossible for companies to really understand where their money is going.

Moving towards a paperless supply chain and automated invoice processing system dramatically increases spend visibility. By bringing all that data together in one easy-to-access place, companies can see what they’re spending and identify opportunities to save.

This move may, for example, illuminate where a huge percentage of a company’s invoice exceptions are coming from, empowering it make more successful interventions to combat invoicing errors.

Helping supply chains grow, without exception

Without an automated process in place, companies will struggle to scale their supply chain effectively without paying the high price of missed or mishandled invoice exceptions. But it doesn’t have to be this way.

With CTSI-Global’s robust freight audit and payment services, companies can maximize their savings and take the burden off their staff. Our experts can review, modify, reject, approve, and audit each and every billing exception, putting those dollars back where they belong—in the bottom line.

Stop paying the hidden costs of invoice exceptions. Contact us today.

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