Latin America is a great territory to work in, and I am lucky enough to be the Esker’s Business Development Manager in the region. When you travel through my region, you experience diverse cultures, cuisines and landscapes, and you never tire of something new. I am originally from Argentina and have worked in regional sales roles in the past, so the environment is not entirely new for me, but I have to admit I find new experiences all the time.
Working for a French document process automation provider gave me a new appreciation for how complex things really are while seeing them from the perspective of my colleagues. You see… with diversity sometimes comes complexity.
AP Automation Diversity
As soon as I started my journey with Esker in workflow automation software, I realized that (comparatively speaking) there was more interest in automation here than elsewhere in the world especially around finance processes. In other latitudes, some of the other solutions in Esker’s portfolio are more represented than accounts payable (AP).
Because of this concentration on finance, I have dedicated most of my time to selling to local Accounts Payable managers in charge of AP departments or Shared Services Centers located in Latin America that process invoices originating from Latin America vendors. The perspective of local decision-makers is much more focused on the local issues and skeptical of “imported” solutions conceived for other markets.
Let me stop right here and explain what our typical value proposition is outside of Latin America and then come back to summarize how things are different.
In general, we find customers are receiving invoices in a number of ways like fax, email, postal mail, EDI or some other electronic means. OCR technology and some intelligence allow us to extract all the relevant information from the invoice regardless of the means of delivery. We use matching logic applied to features of the invoice to find the vendor that sent the document; we process the invoice following different logic for those that originated from a PO and those that did not. At the end of an optional approval process, we post the invoice in the ERP, as if someone had done so manually. At this point, the invoice is archived and accessible through a link from the ERP with a full audit trail. We also provide a vendor portal where vendors can follow the progress of the validation and approval process and thus keep from calling into purchasing and the AP department with questions.
Invoice Processing Workflow Differences in LATAM
In Latin America, we find several aspects of AP are considerably different from other markets:
- Companies are not receiving invoices via fax. This eliminated one of our value propositions in the capture of a document. Depending on the degree of electronic invoicing, invoices are received mostly via email or postal mail.
- Handwritten invoices in Latin America are still a factor. This varies greatly from one industry to another, but AgriBusiness and others that rely on local onsite services performed by small vendors see a relatively high percentage of them.
- Invoices are sometimes created to be electronic, and sometimes they are not. This has such profound implications that I will dedicate other posts to talking about it in more detail. For now, let me say in some cases OCR is of great value. There are different validations required with different tax authorities and are enforced to varying degrees depending on the country and the size of the company.
- Companies are required to keep hardcopies of invoices that were not created electronically for a period that ranges from seven to ten years. While paper can be eliminated from the validation/approval process, some hardcopies still need to be archived the old-fashioned way.
- AP departments cannot pay invoices they have not received hardcopies for (unless they were created electronic). This is something we can easily handle in our approval workflow—having a hard stop requiring someone to validate the existence of the original paper invoice before removing a specific payment block.
- AP departments often need to let a vendor know the payment is ready to be picked up. The vendor sends a courier service to pick up a paper check at the customer location. This requirement encouraged us to revisit our vendor portal functionalities because in the past we had only dealt with the approval process up to the last payment approval in AP.
- Tax-withholding certificates need to be presented to vendors after processing their invoices. As a result, we implemented this functionality in our vendor portal.
I hope I have presented a high-level overview of how automated invoice processing can be different in Europe and the US than in the Latin America region. I’d imagine it must be very difficult for AP automation initiatives conceived in Europe or the USA to address the local requirements of every location where a global organization may be receiving and posting invoices.
In future installments of this blog, I will address in detail some of the gaps that I mentioned here at a high level. I will also explain how our Accounts Payable on Demand solution is able to address all of these requirements from a single platform seamlessly.
Click here to read Alex’s next blog post of this series.