Do You Feel Like Your AP Department Is Operating in the Dark?
Studies show that best-in-class companies outperform other businesses by automating their invoicing processes, and other key business processes, with document imaging and workflow stems. According to Aberdeen Research’s “businesses that automate their account payable operations reap significant advantages—including processing their invoices significantly faster and at much lower cost. For companies that fail to automate, the study found, “Paper invoices and manual processing continue to hamper accounts payable operations, keeping suppliers in the dark and failing to give accounts payable the visibility it needs to actively manage organizations’ cash positions.” Best-in-class companies, on the other hand, overcome this impediment by pursuing “comprehensive accounts payable automation to drive continued performance improvement.” The end goal is to maximize the impact of automation on all accounts payable processes, from receipt to scanning to approval workflow through payment. How well does automation improve invoicing operations? According to Aberdeen’s research, best-in-class companies outperform their peers by a considerable margin, taking 3.8 days and a cost of $3.09 to process an invoice vs. the industry average (middle 50%) of 9.7 days and $15.61 per invoice. For the bottom 30%, it takes 20.08 days at a cost of $38.77 per invoice. Respondents who implemented document imaging and workflow automation reported 21% lower invoice processing costs than others, while also securing early payment discounts on more than twice the number of transactions. Further improvements, the study found, can be gained from integration with back-end financial and ERP systems and the use of performance-monitoring dashboards. A Surge in Workflow Deployment Aberdeen Research’s findings jive with those of PayStream Advisors’ latest survey, which showed that electronic invoicing and automated workflow are both experiencing increased adoption, as more companies strive to migrate from a manual paper-based invoice system to an efficient automated system.” As PayStream Advisors notes, “Skeptics may still doubt the ROI ofautomated approval workflow, but it is getting harder to defend that position in the face of the facts.” PayStream Advisors’ study, which surveyed 500 accounts payable professionals, showed that the top three financial automation technologies that have been most useful include eInvoicing, workflow, and front-end imaging/OCR. Electronic invoicing and automated workflow are the top automation goals for accounts payable in 2013, the study showed. The number-one benefit cited for approval workflow was the quicker approval of invoices (76 percent), while one-half were able to increase employee productivity, and nearly 60% reported lower processing costs. As PayStream Advisors notes, invoice processing can be expensive and time consuming when performed using manual processes and paper documents, while electronic invoicing and automated workflow can lower costs and speed up processing. Overall, more than one-half of companies that adopted eInvoicing solutions cited a reduction in labor or processing costs and faster approval cycles as key system benefits, as well as greater visibility into spending, improved cash management, and an increased ability to capitalize on early-payment discounts. As workflow technology becomes easier to deploy and more affordable, including software-as-a-service offerings, more businesses are able to obtain the benefits. As PayStream Advisors reported, “The market for electronic invoicing and automated workflow continues to open up as adoption trickles down from large organizations to small and medium enterprises.” - See more at:
0 Comments
Labor-intensive manual accounting systems and paper-based invoices have been plaguing accounts payable departments for decades. Departments relying on manual systems are finding that adding staff does not solve the inherent problems of unrecorded liabilities; duplicate, inaccurate, or unauthorized payments; and misappropriated cost allocations. These departments are struggling to meet their organizations’ basic need for visible, timely, and accurate financial reporting and control. And compounding the problem, their manual systems make it difficult, if not impossible, to address the critical issues at the heart of compliance.
In a study by the Aberdeen Group, organizations reported between 40% and 60% savings by implementing the right invoice automation solution. Although results can vary based upon the package, in many cases the investment pays for itself in a matter of months. 1. Reduce costs. In these tough times, cost reduction is still on the front burner for corporate financial execs—and they are looking to their operational departments to deliver more savings. Also, they know that basic transactional processes can be done cheaply overseas. This is not a welcome thought to AP. Fortunately, this can most often be avoided by using automation. Many AP departments have slashed costs up to 75 percent and more using automation. Of course, there are many different approaches to take and many tasks and subtasks that are candidates for automation, including the entire invoice process. Overall, an end-to-end automation process can bring your per-invoice processing costs down to a few dollars. The primary way to cut costs in AP using automation is to use it to get rid of the paper invoice (or paper expense report). You can use imaging, where you scan your paper invoices and route the images for approval and payment. Along with this, you can eliminate manual data entry and input of the invoice data. On the other hand, you can avoid paper altogether by going to electronic invoicing— that is, receiving the invoice from the vendor in an electronic format that goes right into your accounting system. 2. Increase efficiency. Hand in hand with cost reduction comes increased efficiency. This is triggered because automation can create a touchless process for invoice processing. With certain electronic invoicing setups, AP doesn’t even see the invoices coming in—they are automatically received, matched to purchase orders (POs), and then paid. For non-PO invoices, the electronic bills are automatically routed to approvers. All AP sees are exceptions and any invoices that do not come through the e-invoicing process. Many AP benchmarking studies have found that efficiency levels increase as automation increases. For example, at AP departments with a low level of automation, a staffer can process about 2,000 invoices a month—but that figure doubles to about 4,000 with a high level of automation. 3. Eliminate errors. Errors in the invoicing process waste a lot of time—you have to do a lot of unproductive re-work. Every automated invoice solution on the market addresses data verification and quality assurance, either before the invoice is received or while it is in the AP department being prepared for approval. In some cases, the invoices are "pre-screened," meaning that the solution applies various tests to ensure that they are complete and accurate. For instance, they may check for a valid vendor number or PO number. And they can do a match check by cross-checking the addition of line items with the invoice total. You can also define parameters, such as minimum dollar amounts or maximum variances, for your key vendor. 4. Prevent fraud. In many ways, AP automation can help prevent fraud perpetrated either by con artists sending phony invoices or dishonest employees. As already mentioned, automated invoice solutions can check for valid vendor numbers and POs. For invoices without a PO, the systems can compare an invoice to contract pricing, terms, and so on. This provides a quantitative, automated method of ensuring an invoice is right. Using an automated system for employee travel and entertainment (T&E) reimbursements also helps prevent fraud. Detailed business rules can be embedded in T&E systems that red-flag questionable expenses. Also, some T&E systems now offer complex analytical tools that, for example, can match actual travel spending on what was booked. On the payment side, moving from paper checks to electronic payments using ACH or other method cuts down on fraud because paper checks are vulnerable to tampering. But ACH is not totally immune to fraud, so features such as debit blocks and filters should be used. 5. Capture more discounts. Because invoice automation speeds up the payment cycle time, AP managers say they have a better chance of capturing more early-payment discounts. Also, invoice technology has given rise to automated discount management capabilities that many believe will become a significant factor in the evolution and growth of invoice automation. According to IOMA’s Paperless Accounts Payable: The AP Department’s Complete Guide to Invoice Automation, customers of one solution provider are reporting that their return on investment from discounting is five to 10 times as large as their return on investment from processing cost reductions. 6. Enhance cash flow. The vast majority (80 percent) of AP pros recently polled on AccountsPayable360.com said that AP has a "high" or "somewhat high" impact on their companies’ cash flow. There are traditional, nontechnology ways to do this, such as stretching paydates and decreasing staff overtime, but automation has triggered the ability to affect cash flow to a greater degree. Already mentioned is the ability to use automation for invoice discount management, but others include controlling the timing of payments by using electronic methods, such as ACH, or by using corporate credit cards to pay invoices. Also, automation improves cycle time, which reduces the chance of paying late-payment penalties. 7. Increase visibility. Automated invoice solutions give you a transparent view of every step of the invoice-handling process. Monitoring the invoices throughout the process allows for audit trails and strict financial controls to help ensure compliance with internal corporate policies and external legal requirements, such as the Sarbanes-Oxley Act. Electronic storage also helps ensure regulatory compliance and makes document retrieval much easier, especially when customers can do their own lookups of past invoices. This also helps during audit time, when invoices need to be pulled. This visibility also saves time during the month-end close because accurate accruals can be made quickly because all of the invoices are being tracked and can be captured and reported. 8. Free up staff time. Many AP departments that have automated find that they save so much time that they can eliminate head count. But instead of doing this, they have made great efforts to redeploy the staff. For example, invoice automation can reduce the need for invoice processors, so move them onto a help desk in shared services or train them to do analysis of spending, which has many benefits, such as leveraging the ability to negotiate better contracts with vendors, identifying repetitive purchases for better sourcing opportunities, and uncovering "by-passing" (purchases made outside existing contracts). 9. Improve AP’s image. As the work in AP becomes more automated, the department has a golden opportunity to shine. When technology projects are implemented, track the results and then make sure the top brass knows about the improvements, be they quantitative (e.g., costs and efficiency) or qualitative (e.g., better customer service and improved vendor relations). Document each change and the savings, be they in time or money, and pass them along. 10. Advance your career. Use the positive results of AP automation to get the credit you deserve by making upper management aware of the results. True, most people are uncomfortable bragging about themselves, but it’s necessary to do this to some extent. Not only will it give you the credit, but it will also make implementing future changes easier if you have a positive track record.  An Accounts Payable manager from Carolina Steel Group, LLC is heading to jail after being convicted of multiple counts of wire fraud and money laundering.
During her time at the steel company, Angela Womack, 51, allegedly opened personal accounts under the name ‘IBOCF’ and would create vendor cheques payable to ‘International BOCF,’ attempting to cover her tracks by including them on the company’s vendor reports... read the full story. |
AuthorVision360 Enterprise Accounts Payable Automation Solution by BlueCreek Software reduces time wasted chasing down paper invoices by automating invoice approvals, eliminating manual data entry, eliminating paper invoices and reducing processing costs. Categories
All
Archives
September 2023
|
RSS Feed