Coke or Pepsi?

In a recent podcast I was listening to, one of the presenters was challenged to a blind taste test to see if he could correctly distinguish between Coke and Pepsi. 

This reminded me of a visit to a restaurant in New York City.  I don’t remember the food, but I do remember when placing our order that the server asked what drinks we would like. 

Without looking at the drinks available, I ordered a coke.  A few minutes later our drinks arrived but when I tasted mine, I realized that it was Pepsi and not Coke.  The server had not mentioned that they didn’t serve Coke and had just given me Pepsi, probably assuming I wouldn’t notice the difference. 

At OnePosting, we see something similar occurring to clients that use our supplier invoice automation software platform to perform three-way invoice matching. 

3-way invoice matching occurs when our software checks pricing of products on invoices against purchase orders, it checks quantities on invoices against receiving transactions, it automatically applies the correct GL code to each line item, and can then post the fully validated invoice to the ERP or accounting software used. 

In sectors with significant food and/or significant beverage orders, it is not unusual to see: 

  • Alternate products supplied in place of the products ordered. 
  • Alternate serving sizes supplied instead of the ones ordered. 
  • Where items are sold by weight, there can sometimes be significant variations between orders and invoices. 

Ok, so the last one is difficult to control, especially with fresh products like whole fish, but what are the implications of the first two issues and how does accounts payable automation software help? 

  1. Taste 

Take my restaurant example above.  If I had known that the restaurant only had Pepsi and didn’t serve Coke, I might have ordered Pepsi.  I prefer Coke but I could live with Pepsi. 

However, it annoyed me that the server didn’t tell me they didn’t have Coke and just assumed that Pepsi would do.  When I tasted the drink and queried it with the server, the response I received was “it’s Pepsi…we don’t serve Coke here”. 

That assumption left me with a bad impression of the restaurant.  A product switch by your supplier could lead to a similar issue for one of your customers. 

  1. Unexpected ingredients 

Substituting a product may have more serious implications than failing a taste test. 

What if the alternate product contains an unexpected ingredient and because you may not have been fully aware of the switch, a customer has an allergic reaction to the alternate product? 

That would be very damaging to your reputation even though it was caused by a supplier switching a product. 

  1. Serving size – financial implication 

What if the correct product is delivered but in a smaller serving size. 

What if you ordered a case of 12 Coke’s with a serving size of 2 liters but received and were invoiced for a case of 12 Coke’s with a serving size of 16oz. 

On OCR systems where data cannot be extracted with 100% accuracy and the total value of the substitute product is less than the value ordered, the invoice may get through the approval process. 

However, the cost per serving may be significantly higher, leading to financial leakage that may not be very visible. 

How Does Accounts Payable Automation Software Help? 

Accounts Payable automation software that can reliably perform automated 3-way matching will identify product substitutions. 

For OnePosting, reliability comes from our unique technology that extracts data from PDF invoices with ZERO Errors. 

Having line-level data that is 100% accurate means that our accounts payable automation software can accurately compare invoiced items against ordered and delivered items. 

Of course, tolerances are built in to cater for minor variations, but exceptions are caught and routed to a workflow for human review, thus closing off potentially a major source of financial leakage for a business. 

We have seen financial leakage of this type amounting to a large 6-figure sum.  And before you say this could never happen in your business, there were good processes and procedures in place in the business, but this leakage was hidden because invoice checking and coding was done manually. 

It was only through the OnePosting Accounts Payable Automation software that the issue was discovered. 

Is There Financial Leakage in Your Business? 

The full extent of financial leakage in your business is only possible if OnePosting processes all your invoices electronically. 

However, we do have tools that allow us to quickly assess if there may be financial leakage in your business before installing any software. 

If you receive more than 500 invoices per month and operate 5 or more locations, all you need to do is to book a short 15-minute online meeting and I or one of my colleagues will lead you through the process. 

There is no fee and no strings attached so it is completely risk free. Book an appointment today. 

Finbarr McCarthy