Inworks

There is a broad spectrum of accounts payable services providers, each offering some portion of the entire AP management pie. On the invoice management side, there are vendors offering electronic invoicing (e-invoicing), and others that provide scanners and workflow software. On the payment side, some services manage ACH payments, while others provide Commercial Cards. To achieve a truly paperless AP process, from receipt of invoice to payment, many hospitals have to rely on five or six vendors—and still those hospitals are finding that a completely paperless system is beyond their reach.

This reliance on multiple vendors reduces the efficiency that should be realized by AP automation, and drastically raises its cost—for the hospital and its suppliers. So how can hospitals maximize the efficiency generated from AP automation, yet not incur additional costs? The key is working with a single vendor who can help the hospital generate revenue through its electronic payment (ePayables) system, and then leverage that revenue to fund invoice automation and workflow.

Defining AP Automation

Since so many vendors label their offerings "AP automation," it's important to understand what constitutes full AP automation. To begin with, let's break AP down into two parts: invoice processing and payment processing.

Invoice Processing:
Turning invoice processing into a paperless process demands that the hospital move beyond e-invoicing and scanning. Each of the hospital's suppliers has specific needs and varying technological capabilities, so it's imperative to capture invoices in any format that suppliers transmit them. These methods can include:

• Mail
• Fax
• EDI
• Email
• Online forms

Once invoices become data records, they can be matched against purchase orders and routed for approval. Invoices that can't be matched to a PO should be automatically routed to the appropriate approvers, according to hospital protocol. Approvers should be able to access invoices directly through their email or an online portal, and receive automatic reminders of approval deadlines. The workflow system should return all unapproved digital invoices to the AP department for closer examination.

Payment Processing:
Meeting suppliers' accounts receivable needs is as important for payment processing as it is for successful invoice automation. If a hospital has limited payment method options, and its suppliers' receivables protocol or financial needs are not met by those payment methods, those suppliers will not participate in the hospital’s ePayables program—and will continue to require paper check payments. Thus the hospital is unable to achieve full AP automation.

To maximize ePayables, the hospital should offer its suppliers as many electronic payment method options as possible. These options include:

• Purchase Cards
• Ghost Cards
• Virtual Cards
• Push Cards: buyer-initiated push payments through the credit card network
• Electronic funds transfers (EFT)
• EFT with imbedded remittance information (EDI or CTX)
• Outsourced checks—processed through the submission of a payment file

The Importance of Working with a Single Provider

Let's consider for a moment what a hospital would need for a completely paperless AP system, if it were to combine the various single offerings from multiple providers. On the invoice processing side, the hospital would have to purchase equipment and software, and integrate multiple digital invoice file types into their AP system. On the payment processing side, the hospital would have to produce multiple payment files on a daily basis; they would have to manage remittance information, unprocessed payments, inaccurate supplier banking information, supplier enrollment, payments processed for incorrect amounts, and unapplied credit memos. And still, the hospital could fall short of achieving a fully automated system.

By working with a single, healthcare-focused AP automation service provider, the hospital is ensuring that it has one point of contact for all AP issues. The hospital can achieve greater efficiency because it only interfaces with a single invoice processing service; all the invoices approved in the AP system are transmitted via a single payment file, regardless of payment type, to the service provider for payment management.

AP Automation without Capital Outlay

Another benefit of working with a single AP automation provider is that the provider can capture a portion of the rebate revenue generated from ePayables to fund electronic invoice processing, with no capital outlay or liability entries for the hospital. Most hospitals with at least $60 million in supply spend are able to achieve this with relative ease if they work with a single provider.

Contact Information

Matthew Carlson
Director of Business Development
866.986.1684
mcarlson@inworks.com