Conundrum: how can anything on an invoice be wrong if the agreement with the vendor allows just about anything? Moreover, if you’re using a managed service provider, how do you detect problems when you have little to no visibility into how those services are designed and delivered? We think this is an interesting problem, and one that can be solved. However, it requires decision makers to make a bit of an uncomfortable decision.
Namely, that it’s okay to be wrong. That it’s okay to not know what you don’t know. Bad service design relies on the very human foible that you – as a good manager – don’t miss a beat. Intentionally bad service design capitalizes on this idiosyncrasy and makes you think that wrong is right.
CAN YOU KNOW WHAT’S WRONG?
First and foremost, if you can’t detect a thing that is wrong, then you can’t very well fix it. That much is obvious. As we’ve discussed before, if that thing that is hard to detect is designed to be hard to detect, then even the best managers in the world will not perceive it. There’s one very simple reason why – you don’t know what to look for. If you’re color blind, no matter how hard you try, you just can’t see red or green clearly. Not your fault, that’s just how your eyes and brain are designed.
Similarly, your invoice is designed in such a way – as well as your services – that some things just aren’t clear. Furthermore, the nature of the services, a lack of domain expertise and the agreement itself all allow and create murkiness. In other words, anything that isn’t exactly right is actually right – at least from the vendor’s perspective, and certainly from an invoicing perspective.
WHY WOULD YOUR VENDOR INTENTIONALLY OVERCHARGE YOU?
We can’t answer why. Only your vendor knows that answer. What we can tell you with 100% assurance is that vendors do overcharge, both intentionally and unintentionally. Either way, you diminish your company’s profit every time you miss an overcharge. Unfortunately, it happens quite often without anyone knowing. In most cases, the error or problem is not noticed because the standard invoice-to-pay process fundamentally ignores bad service design.
Decades of standardization in the accounts payable process has made businesses more profitable, there is no doubt about that. But it has also created a status quo about best practices. To a certain extent, AP is a necessary evil of a business. How else would you pay the bills? Imagine a business without an accounts payable department. Really – think about it. What would that look like? We have our vision – what’s yours?
IS ACCOUNTS PAYABLE READY FOR A PARADIGM SHIFT?
But we digress. We started out discussing right and wrong, and where your ability to determine those things on your invoices stands. Our data is clear – many of your invoices are wrong, yet they’re still getting approved. Why is that? Is the approval step of invoice-to-pay the problem? Are managers simply approving payments because they don’t see anything wrong? They don’t have time? Are all of your invoices correct? 85% correct? Was the invoice accidentally wrong? We don’t have all the answers, but we do know one thing about invoices – they’re either right OR they’re wrong – not both.