30-Minute AP Automation Webinar. Wondering if AP Automation if Right for Your Accounts Payable Department? Find Our With This No -Cost Webinar! Have you been thinking about paperless accounts payable processing or AP automation? Confused by all the choices? Curious to learn more? Not sure if this will work in your AP department? Then this webinar is perfect for you! Register today! 30-Minute Webinar: AP Automation in 2017 - When: Thursday December 8th, 2016 - Times: 11:00 am & 2:00 pm (EST) There is NO-COST to join this webinar. Many organizations are considering ways to reduce the manual processes associated with processing, routing, coding, approving and entering supplier invoices. Want to find out what it takes to go paperless and streamline your accounts payable processing? Then you don't want to miss this webinar. Who Should Attend: AP Managers, Controllers, CFO"s, IT Managers or anyone interested in improving their AP process and going paperless to reduce costs, save time & money. - No Software to Purchase - No OCR Software Required - Capture Inbound Supplier Invoices - Route Invoices Automatically - Simplify GL Coding - Perform 3-Way Matching - Eliminate Manual Invoice Entry - Prevent Duplicate Payments - Generate Month-End Reports - Accounts Payable Dashboard - Reduce Invoice Processing Costs - Streamline Your AP Processing During this webinar we will review challenges in accounts payable, costs associated with processing invoices, drivers for improving accounts payable, paperless processing, integration with systems like Oracle, SAP, JDE, MS Dynamics, building your business case and then Q&A's. Past attendees include industries like manufacturing, retail, healthcare, higher education, biotech, pharmaceutical. transportation, financial, distribution, legal and many, many more! This is a great webinar for anyone who is wondering if AP automation, invoice workflow or paperless AP processing is right for them. Space is Limited! This Webinar Will Fill Up FAST! Past Attendee Feedback: "Excellent webinar" "Very informative" "Great information" "Thanks to your webinar we've decided to take a closer look at our AP process" "Thank you for taking the time to answer our questions" "We had no idea it was this easy" "Great webinar, right to the point
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Accounts payable automation’s attractiveness as an investment is well documented. Studies by The Hackett Group, the Institute of Finance and Management, Nucleus Research, Aberdeen Group, the Institute of Financial Operations and many other independent industry experts document broad and substantial cost savings. In a straightforward example, the Aberdeen Group’s May 2012 report, AP Invoice Management in a Networked Economy, measures efficiency leaders at less than $2 to pay a bill, while the majority pays $6 - $25 or more, indicating available savings of more than $40,000 for every 10,000 invoices annually in most organizations. How can the majority resist the attraction of investing in technology that pays for itself? Creating your own business case for change in how you do AP is a good starting point – there is enough evidence to give you confidence that your case will be compelling. In addition to the reduction of personnel costs for the capture and entry of invoice data, organizations also benefit from a reduction in duplicate invoices, increased discount capture, and the elimination of late payment penalties. So where should you look when estimating the benefits that can justify your investment in end-to-end AP automation? Here are some of the common areas that yield the greatest return:
About Vision360 Enterprise and BlueCreek Software: BlueCreek Software is the developer of industry leading accounts payable automation system, Vision360 Enterprise. Vision360 Enterprise provides accounts payable automations services, systems and solutions to leading companies across the United States and Internationally. For more information about our Vision360 Enterprise accounts payable automation solutions please contact us www.Vision360Enterprise.com or call (603) 437-1400. Accounts Payable invoice processing is one of most proven automation areas that yields a higher ROI in both hard and soft costs to any organization when done correctly. However, AP Automation requires bringing the right solution, the right level of automation and implementation methodology in order to succeed. WHAT IS ACCOUNTS PAYABLE (AP) AUTOMATION? AP Automation is the process of digitally handing a supplier invoice from the point it is received until it is processed, paid and archived in the most efficient and effective manner. It essentially allows you to manage the lifecycle of an invoice with least amount of manual interaction and effort. Every organization has invested in an ERP or a financial accounting system which handles the AP process. The goals of AP automation is to identify the missing pieces of your ERP or financial system and fill the gaps which are repetitive, labor intensive, costly non-essential and error prone processes when done manually. WHY AP AUTOMATION IS REQUIRED? Accounts Payables function is an information intensive business process that usually requires a lot of manual data entry and data validation. AP teams needs to deal with a verity of invoices that arrives from suppliers in different formats. When an invoice arrives, data needs to be keyed into the finance system. If you are processing a large number of invoices per month this is a time consuming and an error prone task. Once invoice data is entered it needs to get approved from line of business managers before it is made available for the payment process. Therefore, automating this process allows organizations to reduce costs, improves process visibility and improves supplier relationships and interactions. Most AP automation projects when done right bring a return on its investment (ROI) within 6 - 8 months. WHAT LEVEL OF AP AUTOMATION DO YOU NEED? There are different levels of an AP Automation solution. Your current AP process analysis will reveal the process intensity points where your AP staff spends most of their time. Your goal is to identify those repetitive process intensity points and bring the right level of automation. Process automation increases the process visibility, efficiency and ensures compliance and prevents fraud. The level of automation you need depends on the number parameters such as the volume, velocity and variety of supplier invoices. In addition to the volumes of invoices, questions such as; is AP currently centralized? What percentage of supplier invoices are PO based? Do you key the line items of the invoices that are PO based and NON PO based, do you perform receipt matching? Is there a current hierarchy structure of approval based on dollar thresholds? The answers to these questions and more will start to determine how the workflow should be configured to support your unique business process. A workshop with the key stakeholders and the AP team leader is what we need to find answers to the above questions. Depending on the AP module functionality, once you find the answers to the above questions you need to plan your project. As there are multiple technologies out in the industry that brings different levels of outcomes it is important to select the right technology. The following tips will help you assess, evaluate and make a knowledgeable decision in making your project head in the right direction from the beginning. TIP #1: DISTRIBUTED INVOICE CAPTURE AND CENTRALIZED PROCESSING AP departments have to deal with a variety of invoices and related documents from different suppliers. The general rule of thumb is 80% of the invoices come from 20% of the suppliers. If you focus on identifying that 80% of the workload and treat it carefully you will naturally move in the right path. 20% of the workload always requires case by case handling due to the nature of the AP process. Depending on how the business is structured invoices would arrive at a central location or branch offices. Most AP operations today are distributed, and multiple teams are collaborated from different geographical locations. Your AP automation solution must be flexible enough to support distributed invoice capture and centralized processing model. It also should be flexible enough to support to distributed AP teams. TIP #2: PLANNING FOR EXCEPTIONS AND INVOICE ALLOCATION/APPROVAL WORKFLOW Planning to handle exceptions upfront is very important step. The system should be able to route rejected invoices back to suppliers with reason for rejection in an automated manner. What’s your strategy in handling non-PO invoices? How would you handle credit notes, multi-PO invoices in the automated world? How would you handle suspended invoices waiting for internal buyer approval? You would also need an audit log of all inbound and outbound supplier correspondence in a centralized and compliant manner. Once invoices are digitized and invoice data is extracted it needs to be sent to the right departmental manager for approval. This allocation is sometimes decided by the value of the invoice and delegation of authority established within your organization. Unless this functionality if handled well within via your ERP module invoice allocation and approval workflow needs to be part of the AP automation solution. TIP #3: FINANCE SYSTEM INTEGRATION The goal of a solution is to extend the functionality of your ERP or accounting application. Therefore, it is important to get the right level of integration between two systems for data lookup, data validation and data injection purposes. Secure CSV and XML based data integration is more popular with ERP systems. TIP #4: AP PROCESS ANALYTICS AND PROCESS COMPLIANCE What gets measured gets managed. It is important to measure the success of automation though process analytics. Constant process analytics help you identify bottlenecks early and resolve them as early as possible. Process analytics should be part of the AP automation solution that provides 360 degree visibility of the overall end to end operation. Top performing AP departments has SLA’s and key performance metrics that they need to report on. TIP #5: INVOICE FINDABILITY, RETENTION AND ARCHIVAL Once invoices are captured, processed and sent to the ERP system those digitized invoices must be retained for 7 years in most cases as per the organizational document retention schedule. Even though most ERP systems allow you to attach the invoice copy to the transaction it has never been an efficient or practical solution. Having all supplier invoices organized in a meaningful manner in a document repository gives you the best experience and efficiency when retrieving digitally filed invoices. It also gives your AP and customer services team the ability to retrieve invoices quickly and easily without having to access your ERP system with powerful search and meaningful index fields. If you’re considering accounts payable automation for your company or just simply looking for information to decide if this is right for you or your AP department, feel free to register for one of our informational AP webinars. ELIMINATE: LOST OR MISSING SUPPLIER INVOICES Nothing is more frustrating to the accounts payable staff than when invoices suddenly go missing or vanish completely! How many times have you sent an invoice out to the buyer for approval and when you follow up to on the status of the invoice and the approver responds to you with "I never got it", "resend the invoice to me". How frustrating is that! How many times have you gone to the vendor files and the invoices you need have simply vanished! Lost and missing invoices can be completely eliminated by capturing invoices electronically when they arrive. With an AP Automation system you can capture invoices that are emailed from vendors directly into the system WITHOUT the need to print them to paper. Invoices that are received by Postal Service or as paper need to be digitized. Once the invoices are in the electronic accounts payable system they will NEVER disappear ever again! ELIMINATE: SLOW INVOICE APPROVALS Do you get so many vendor inquiry calls that you've put a message on your voicemail greeting that says, "Leave your company name, invoice number and we will contact you as soon as we can"? Getting supplier invoices approved and processed in a timely manner is very important to any business including your company and your suppliers. You may have some vendors who offer "early-pay discounts" if the invoice is paid within a certain number of days. You may have vendors who charge "late-payment fees" for invoices that go beyond their due date. When invoices fall behind this creates an enormous amount of additional work for the accounts payable team to track, follow up and pursue the status of all of the invoices that are out for approval as well as the new invoices that arrive each day. So how do we keep invoices flowing through the approval process and getting approved on time? This provides many levels of visibility to the accounts payable staff as well alerts approvers when that have invoices that need to be approved. Approvers can access, see and approve invoices right at their computer with a click of the button. If the business rules require additional approvals or coding to be applied, the invoice will systematically follow a set of business rules to simplify the approval process. In the end approved invoices automatically route back to the AP Staff for the final step of payment processing and no invoice will ever go untouched, sit still or be lost, ever again! ELIMINATE: MANUAL DATA ENTRY OF INVOICES Let's face it your accounts payable process is relying heavily on manual process and one of the most error-prone is, "manual invoice entry". How many times has a keying-error caused more work and headaches. A simple wrong keystroke can create a bad transaction to be entered into the ERP system which could cause another set of challenges. Manual data entry is slow and cumbersome taking a huge amount of time away from more important and productive tasks. Accounts Payable Automation Systems like Vision360 Enterprise have the ability to capture and validate the data from invoices and feed that data to your ERP Accounting System, electronically. By doing so this eliminates the need for the AP Staff to manually enter invoice data, ever again, freeing up time, eliminating error prone mistakes and significantly improving efficiencies. Check out our blog post the "ROI of AP Automation for AP Managers" for more information on the ways that ELIMINATING these three things from your Accounts Payable Process will do for you and save your company money.
“Productivity” and “Visibility” are the rallying cries of today’s financial executives - and they’re also the promise of ERP systems like SAP. But ERP nirvana can’t be attained until SAP extends to all of an organization’s core financial processes, particularly the function that pays the bills - accounts payable! The benefits - increased productivity, reduced costs, strengthened vendor relationships and better compliance - are too good to stop short.
By integrating the accounts payable process with your SAP financial system, AP Departments can now take full advantage of productivity and efficiency gains that an accounts payable automation system provides. The benefits of integrating accounts payable processing with the SAP system. - Seamless integration with SAP reduces the need for technical resources - Accounts payable dashboard provides 100% visibility to supplier invoices - Eliminates 100% of paper invoices - Captures email invoices electronically - Eliminates the need for manual invoice entry - Powerful GL coding engines - Powerful 2, 3 & 4-way matching engines - Powerful tax rules engines - Powerful freight rules engines - Data validation engines ensures accuracy - Apply cascading business rules and cross level validations - Centralized processing and financial controls - Accruals visibility and reporting - Complete audit trail of approval activity - Generate instant efficiency reports - Instantly access invoices from electronic archive - Enforces your security, processing rules and compliance - Always know EXACTLY how efficient your AP department is functioning We do not take a one size fits all approach to any engagement. Our strength is in our ability to objectively evaluate the business problems and challenges that affect every day. By leveraging our business process solutions experience, coupled with our technical expertise we are able to effectively analyze and recommend a variety of viable solutions to fit the needs of any business problem and challenge we are faced with. By connecting accounts payable processing with your SAP system, AP Departments can now take full advantage of productivity and efficiency gains that an accounts payable automation system provides. Managers across the country dread the call from accounting at this time of year — we need your accruals. Many managers feel that the process of putting together their accruals is tedious, and, dare we say, a waste of time. They wonder, “Why does accounting need this information? Is this another piece of information that goes into the black hole of a spreadsheet, never to be seen again?” Accruals, especially at this time of year, are critical to good accounting. They help to ensure you have good information about the financial health of your company. And, they help to keep the books “clean,” that is, keeping things that happened in 2009 in 2009 so that the picture your company presents with its financials tells the 2009 story in its entirety. At its core, accrual accounting is fairly simple: the numbers in financial statements should reflect the work and activities that occurred in the time period of those statements. So, if the income statement is for December, then the revenue and expenses in that statement are for the revenue that was earned (for example, was the product delivered in December?) and the expenses that it took to make that revenue (for example, the cost of materials for the revenue that was earned in December). (A related and important accounting principle here is the matching principle: match expenses to the revenue the expenses helped to bring in.) Here’s the problem: invoices, bills and cash don’t always line up in the same month the activities occurred. Say an invoice comes in for something that happened a month ago. It should have been “accrued for,” so that, even though there wasn’t any invoice, the amount is in the books for the month that the activity occurred. On the revenue side, say a product was delivered, but the client didn’t pay until two months later. That revenue had to be “accrued” for in the month of delivery, even though neither the invoice, nor the payment for the product happened in that month. Another example of accruals is when we pay for something in one month, but we get the benefit for more than just that one month. Say you pay your insurance bill for the whole year in January. That insurance covers 12 months, not just January. So, the company accrues for that, and the books reflect 1/12 of that payment in every month of the year. Too much accounting? Just remember that you are part of the process of creating as close a picture as possible of what happened in 2009. And that is important for a whole host of reasons, because the financial statements are used to help make lots of decisions, including those about hiring (or layoffs), raises, capital purchases, new product plans, and so on. Finally, here are four key things to remember about accruing:
Not sure what AP automation is all about? Come for the ROI, but stay for the efficiency, security, and compliance benefits.
Since the birth of the Industrial Revolution in the mid-1700s, automation efforts have proven to be one of the key catalysts of successful business growth and innovation. One of the most celebrated models of automation and business success was Henry Ford’s car company. His implementation of the assembly line is seen as the automation success model of his century. Of course, the advent and proliferation of advanced IT systems have automated nearly every aspect of a business. Surprisingly, however, despite the tangible and rapid ROI of automated accounts payable (AP) processes, a majority of companies have not taken advantage of the technology. In a recent AP Department Benchmarks & Analysis survey conducted by the Institute of Finance & Management, only one-third of companies surveyed have implemented document capture and only 25 percent use some form of e-invoicing. This indicates that many companies are still tied up in manual paper processing. The same study notes that those companies that have implemented automation systems are twice as productive. Part of the reason a surprisingly large number of companies are still manually processing their AP transactions is they are often not aware of the factors that are sucking time from staff and costing the company money. One of the more costly elements of getting an invoice paid is the waiting involved in gathering all of the necessary approvals and associated paperwork. This workflow typically runs across multiple departments and requires the attention of busy decision-makers. By automating the AP workflow, most of the waiting periods are shortened as the system simplifies, automates, and secures approvals and decisions. But saving money by saving time is just the start of the benefits of AP automation. Other significant benefits include improved efficiency, improved protection from fraud, reduced errors, reduced need for storage space, strengthened internal controls, as well as better analysis, planning, and forecasting capabilities. To set the context for the benefits that Accounts Payable Automation processes can bring to companies, consider this example of a typical manual payment process: The McDuck Widget Company gets an average of 100 invoices each day from its various vendors that supply its production plants. The mail room receives these invoices, stamps the received date on each, and then stacks them together for delivery to the AP department. An AP clerk then starts the work of matching each invoice to a purchase order or some other pre-approval form to document which department manager made the purchase request. Once that’s done, the appropriate transactions are entered in the ERP/Accounting software. If no matching approval form is found, the invoice is copied and filed, and then a copy is sent to the department manager for justification of the expense via the completion and return of the required purchase approval forms. The AP department then reattempts processing the invoice. After the invoice has been recorded, it is sent to a senior accounting manager or executive for check-run approval. Typically, each invoice is reviewed and checked against the budgets and then approved or disapproved for the check run. Once each day, the check run is executed, and checks are printed, bundled, and sent to the mail room to be folded, stuffed into envelopes, sealed, stamped, and sorted for delivery to the post office. As you look into this scenario, you can see that although the process of manually managing the payment of vendor invoices is well-organized and can be completed within a few days, real life happens and things don’t always work as planned. Mailroom clerks typically have multiple responsibilities and when the work load gets to be too much, invoice routing can get delayed or otherwise fouled up. AP clerks are often spread thin, adding to delays and errors. Department managers are always covering multiple bases, making it difficult for them to sit down and work through their stack of invoices. Senior executives have many heavy responsibilities and, when traveling, find it a challenge to consistently review and sign the stack of waiting documents. In short, the above scenario is not unusual, and given the imperative of many companies to do more with less, manual processes put an increasing burden on all participants. In the case of AP processes, there are inevitable delays and errors, and worst of all, and the compromised accuracy and speed of the process means critical decisions get made on compromised information. And yet this is still not the whole problem. The costs that could result from the opportunities for security, privacy, and financial fraud in manual AP processes stand to well eclipse the costs resulting from AP delays and errors. Core Components of AP Automation With the introduction of AP automation covered, let’s now look at the basic components of AP automation solutions in the context of how these are used to streamline AP processes. Document Scanning and Data Extraction When the invoices from suppliers arrive, they are scanned into a workflow system and the image is automatically date stamped. The scanned invoice is passed through an automated optical character recognition (OCR) process that extracts the invoice number, vendor name and address, and associated PO number. The paper invoice is stacked by batch date and stored for 30 days before being shredded. In an ideal world, a vendor has electronic document processing systems of its own, so it simply sends electronic versions of invoices to customers, which can automatically be received and processed by the customer’s AP automation system. Archive/Retrieval in Content Management Systems In fact, some document scanning systems can index any information that’s on the invoice for electronic archive and retrieval capabilities. Because the invoice is scanned, images are indexed and archived by date, invoice number, PO number, vendor name, or just about any information on the invoice for quick future retrieval by any department needing access. Matching and Workflow Within seconds of being scanned and OCR-captured, the electronic data from invoices is automatically brought into the accounting systems and matched against outstanding purchase orders. If there is no PO match, the transaction is put in a separate queue for review by an AP clerk or, if required, department managers who instantly review invoices and approve or deny them online. For the bulk of the invoices with a positive match, AP clerks are notified via email that the batch is ready for processing and the successfully matched invoice information is automatically forwarded to senior management to review prior to the initiation of the check run. Because of these automated electronic systems, even if a manager is out of the office, the information can be easily and quickly accessed online so that delays are minimized. A scheduled daily check run triggers bank-to-bank electronic payments where possible, and for the rest, a file is automatically created that goes to the AP group (or even a designated third party via secure FTP), where the checks are printed and mailed. An electronic image of the check is automatically associated with the invoice and archived in the content management system. Because of these automation steps, invoices are often turned into checks or electronic payments the same day, and very few hours of human intervention are required during the process. Reporting and Analysis Reports are generated and automatically routed to managers, showing the status of all incoming invoices, unmatched POs, outstanding approvals, and other information as needed. Analysis reports on financial performance by department, turnaround times, discounts missed, etc. are also automatically generated and routed to management. Rapid ROI…and More It’s not difficult to see that these components of AP automation significantly impact the efficiency, security, accuracy, and speed of payment processing in an organization. Directly and indirectly, an organization can clearly save a lot of money, which quickly pays for the necessary AP automation technology. The Aberdeen Group recently released a study that calculated the average cost of invoice processing in AP departments at $16.33 per invoice for companies that don’t automate payment processing systems. On the other hand, those that have AP automation processes in place can bring the cost down to around $4.80 each. Based on this, if a company processes 100 invoices a month, they will realize $13,836 in saving each year once AP automation system is in place. In addition, AP errors are costly in dollars, productivity, and reputation. Paper-based processing is known to have higher error rates, which in turn affects quality of service. The wasted time caused by errors ripples down through other processes, multiplying the cost factor. By implementing quality-improvement programs in conjunction with AP automation technologies, these improvements can drive costs down and improve quality measures. Some of the other obvious benefits of AP automation include these: Increased Visibility Visibility entails the ability to see and understand all current and outstanding invoice transactions. Paper trail processes limit visibility as invoices and PO requests sit on various management desks waiting for approval or for forwarding to appropriate channels. This can be addressed by AP automation systems, giving decision-makers instant, secure access to invoice images and status notifications even during times that they may be traveling. Strengthen Internal Controls; Eliminate Fraud Increased visibility means decreased fraud. A PricewaterhouseCoopers crime survey found that 45 percent of companies worldwide deal with the issues of fraud, and many fraud issues are AP-related. By applying AP automation technologies, internal controls are simplified and centralized, and additional layers of security access controls are put in place. All of this decreases the exposure to fraudulent activities. Speed Up Closing of Accounting Periods and Give Managers Better Decision-Making Information Sarbanes-Oxley (SOX) regulations mandate that companies close their books quickly and accurately. In addition, speeding up period closing allows management to make timely tactical decisions. AP automation systems provide the standardization and infrastructure for more rapid closings. Of course, the more quickly accounting periods close, the more accurate the financial information that executives have. This results in faster and better decision-making, which on its own has huge benefits in terms of saving money and being more nimble to seize opportunities. Reduce Storage Space One small health insurance provider implemented technology to scan invoices (claims), turn the scanned invoices into readable data (OCR), and interface with their claims accounting system. This saved them $50,000 a year simply in the costs of storage space for all their paper claims. Centralize and Standardize Large companies can centralize all branches on one system to implement best practices, streamline financial services, and have necessary oversight controls. Such systems force companies to implement standardized vendor records and approval processes throughout the company, which can have a large benefit on its own. Making Henry Ford Proud The challenges of competing in today’s business climate requires the ongoing application of automation technologies in all aspects of an organization. Because of advanced IT systems and the falling costs of implementing technologies, AP automation for many organizations is among the “low-hanging fruit” when it comes to realizing an attractive ROI. Certainly, this would make Henry Ford proud, but the benefits to an organization reach well beyond just simply being able to quickly recover the cost of the technology. Note: Originally posted by inFORM Decisions.
Come out! Come out! Wherever you are! I know you're here somewhere AP invoices? I need to get you approved and process you for payment?
Are you over here? Nope. Are you under here? Nope. Are you over there? Nope. Where are you... supplier invoices? Our payments will be late unless you come out to play! Do you feel like your supplier invoices are playing hide and seek with you? One minute they're here and the next minute they're gone? You count to 10 and the search begins!
Don't let your supplier invoices hide from you any longer.
Paper-based vendor invoice processing is time consuming and expensive and creates chaos in business. Manual processing is error-prone with little or no controls or visibility and leads to invoice approval delays, late payment fees, and missed discount capture; in addition to creating delays in month-end, and year-end closing. When you factor in the countless clerical hours that AP personnel consume to manually reconcile, research and resolve invoice issues and exceptions rather than focus on strategic AP tasks, it’s no surprise why more companies are striving to increase automation and reap the rewards of straight-through invoice processing to save both time and money. An invoice automation system can reduce processing costs by up to 90 percent by maximizing straight-through invoice processing for both PO-based and non-PO or expense invoices. By streamlining invoice data capture and validation and applying powerful, flexible matching, automatic coding and approval best practice workflows, organizations of all sizes benefit from a truly automated AP solution delivering productivity and efficiency coupled with visibility and control. While many invoices lack a PO, invoice automation solutions have the ability to quickly process all non-PO invoices straight-through to the appropriate approver and eliminating long processing times. Vision360 Enterprise puts spend controls in place to provide pre-approval that reduces maverick spend, transforming expense invoices into order-based invoices that can be automatically matched; resulting in fewer expense invoices and fewer manual approvals. To further streamline the invoice processing cycle, any recurring expense invoices can be automatically matched against an invoice schedule as part of a procurement contract, further reducing manual intervention and maximizing straight-through processing including automatic invoice coding and approval against configurable business thresholds. This minimizes the risk for manual errors, while providing increased control and focus on handling invoice exceptions. To learn more about accounts payable automation and the benefits it can deliver to your company, please visit our website at www.Vision360Enterprise.com
There are many ways to approach solving the challenges in your accounts payable department utilizing an AP Automation solution. Many AP departments are struggling with a never-ending cycle of manual processes, slow approvals, cumbersome matching processes and error-prone data.
Although AP Automation is a proven way to eliminate manual processes and ease the pain associated with mounds of paper invoices, still today payables departments are hesitant to adopt this era of automation. Let's face it automation is all around us! We see it every day! We are so used to it we don't even give it another thought, unless we're in AP. So why have accounts payable departments been slow to adopt? Is it fear, change, technology or the unknown? No matter what the reason "change is coming" and AP departments will be less reliant on manual processes and paper and spending more time on critical finance processes, analysis and cost control and AP Automation is how to get there. One of the biggest fears with AP Automation is "change". Let's face it the accounts payable department has been processing supplier invoices the same way for the last 20, 30 or 60 years! So how do we overcome this fear of "change"? How do AP departments become comfortable with "automation"? The answer is: "Start small and think big". There are many benefits to starting small and growing the automation process at a pace that your AP team can be comfortable with. There is no need to implement a full blown P2P system on day one! Talk about change! Yikes! Starting small can include getting all invoices into a standard electronic system where AP, accountants and users can access invoices all in one place. Then capturing the invoice data to eliminate the need for manual data entry. Adding invoice routing rules and workflow to streamline the approval process and eventually integrating the entire process with your financial system. If you're thinking about AP Automation and not sure how to put a plan of action in place because you're afraid it might scare of your staff or cause a wave of disgruntled employees across your company then starting small and thinking big might be the best plan of action. Sound interesting to you? Want to know what you could save? Then read our last blog post: The ROI of AP Automation for AP Managers?
If you’re the Accounts Payable Manager chances are you’ve heard of “accounts payable automation”. You’ve probably seen marketing materials or even done some homework to find out what this is all about. When you hear or read about AP automation the idea sounds magical, almost too good to be true! No more paper invoices to process! No more back and forth getting invoices approved! No more manual data entry into the ERP! All with a savings between 60 to 80 percent of costs! Sounds too good to be true, right? Wrong! And here’s why.
When it comes to AP Automation there are two types of savings, “hard dollar savings” and “soft dollar savings”. AP Automation encompasses both hard and soft savings which allows business to sustain long-term continued savings as opposed to one-time short term savings. Hard Dollar Savings: relates to reducing the costs from the current cost to a new lessor amount or a change in process/technology/policy that directly reduces expenses, and process improvements. Hard dollar savings are generally easier to calculate and quantify. Soft Dollar Savings: Soft savings relate to those areas that reduce costs through less labor, more efficiency, productivity increase, usable information, better compliance, better work environment, and other related areas. These types of soft savings are generally hard to calculate and quantify because there are so many variables and activities involved. What many organizations fail to understand and do not realize or accomplish is how to continue sustainable improved cost savings through both hard and soft cost savings. According to the trade associations like, Aberdeen Group, PayStream Advisors, IOFM and many other organizations who have studied accounts payable processing over the last several years have determined a few very important facts:
* Source: Aberdeen Group and PayStream Advisors Accounts Payable Report The best way to identify all of the potential costs is to create a “flow” or “map” of your current accounts payable process. This will help you to think through the entire process and identify areas of concern and bottlenecks which can be identified as areas of improvement and savings. In determining your own hard and soft costs to process supplier invoices there are a few things to consider i.e. the tasks involved, how many people within the AP department that are involved in each task, the amount of time it takes to complete each task, are there any people outside of the AP department, what is their task, how much time is needed etc. Also include any monetary costs or penalties caused by tasks that are not completed on time or incorrectly, i.e., fines, penalties, late fees, overtime, temporary help, etc. Typical tasks associated with processing supplier invoices:
These steps represent tasks that are accomplished typically within the AP department and don’t extend to others outside the department so it is important to consider and calculate those costs as well and how others are impacted, the amount of time involved, costs, etc. For each task quantify the amount of time it takes, i.e. if it takes 1 person 20% of their time to open and sort the incoming invoices from the mail and they are being paid $45,000 annually then the cost to open and sort the mail is $9,000 dollars. Task # of People % of Time Salary Total Cost Open & Sort Mail 1 Person 20% $45,000 $9,000 If it takes 2 people 60% of their time to key invoices into the accounting system and they are being paid $45,000 annually, then the cost to manually enter invoices in to the accounting system is $54,000 dollars. Task # of People % of Time Salary Total Cost Manually Key Invoices 2 People 60% $45,000 $54,000 If it takes 1 person 40% of their time to file paid invoices into the paper filing system and they are being paid $35,000 annually, then the cost to manually file invoices away s $14,000 dollars. Task # of People % of Time Salary Total Cost File Paper Invoices 1 People 40% $35,000 $14,000 Without quantifying and calculating the entire accounts payable process from start to finish you can at least see that just by quantifying the three key areas of 1) opening mail and sorting invoices, 2) manually keying invoices into the accounting system and 3) filing away the paid invoices we’ve calculated an annual cost of $77,000. Once you quantify and calculate all of the costs associated with the tasks of processing supplier invoices and also take into consideration the monetary costs caused as a result of inefficient, error-prone manual processes the annual cost to process supplier invoices RISES significantly and fast. Here are five additional facts to help you in calculating your costs to process supplier invoices and potential ROI. 1) The average number of invoices with errors is approximately 3.6% (per IOFM). Now, that number may not seem like a ton, but consider if you organization has $100MM in payables pumping through it over the course of the year. If $3.6 MM was paid to the wrong vendor, or for the wrong invoice, or in the wrong amount...you get the picture. The sum of these errors equals a total nightmare for reconciliation in the accounts payable process and unnecessary extra work to unscramble the eggs. 2) The industries with the highest average cost to process an invoice are Non-Profit / Education at $16.78/invoice and Government at $15.86/invoice. While this doesn’t really come as a surprise, it underscores the need for accounts payable process improvement across all manner of organizations. With many corporate leaders having no actual clue to how much their inefficient invoice processing is costing them, it’s high time that they wise up to these AP process leaches and identify ways to make AP strategic and profitable (and no, that is not an oxymoron, it’s entirely possible). 3) Nearly 62% of invoice processing costs are made up of staff labor (per APQC). The real issue here is how much time is needed to advance an invoice in process. This includes data entry, data validation (matching the data from the invoice against disparate information like vendor master, PO table, and receiving data), GL coding, and approving. The bottom line is that the accounts payable process is very fat from a time consumption standpoint and needs to be leaned out if you have any hopes of dropping your processing costs and improving your AP process cycles. 4) For the average company, over 50% of eligible early payment discounts go uncaptured because of inability to process invoices and execute payment in a timely manner (per Aberdeen Research). This means that significant opportunities to pad the bottom line are squandered, again because of a grotesque AP process. Ironically, it’s our belief that, given the option, most CFO’s and Treasurer’s would likely want to capture discounts as they tend to be free monies to the payer, when done properly. This again is a compelling reason to pursue automation. 5) On average, only 32% of companies harness Accounts Payable process dashboards to monitor and optimize performance within their AP departments (per Aberdeen Research). This only serves to underscore just how in the dark most AP and finance leaders are. When you consider that most sales and marketing executives have rich insights into their customer and prospect pipelines you can understand that there is a definite gulf between investment in top line revenue generation systems and bottom line, back office systems. This kind of thinking must be challenged, because AP automation need not be a financial boondoggle, but instead could be a transformative organizational profit center, that catalyzes further finance and operations improvements. In addition to the costs saved there are a number of additional ROI and savings that are often overlooked. The ROI of Control: Though many in the AP industry feel they are giving up control by automating their AP process that just isn’t true. When you introduce these new found efficiencies into your AP department you’re not eliminating your role in the process. Rather, you are automating aspects of that process that unnecessarily consume large amounts of your time, cause errors and are simply inefficient. With AP automation, you are still in control of coding invoices, approving invoices and promoting them to the general ledger. You and your AP team will have greater visibility and insight into the entire AP process and with greater visibility means greater control. The ROI of Time: Once the immediate savings are realized and the process is automated, you might wonder, “What’s next?” After all, you just saved your AP department a lot of work. What will they do with their new time? With their new time, many companies have transformed their AP department from an expense to a profit center by pursuing higher-level tasks, such as: early vendor payments, performing more analysis, spend control, working with vendors, electronic payment incentive programs, and rebate programs. They are now generating revenue for their company. The ROI of Scalability: As captivating as the aforementioned immediate savings are, one of the greatest returns found through automation occurs years down the road. As your company grows, as invoice volumes increase, you will be able to retain the same AP staff, handle more invoice volume WITHOUT the need to add more AP staff. In a recent AP Department Benchmarks & Analysis survey conducted by the Institute of Finance & Management, only one-third of companies surveyed have implemented document capture and only 25 percent use some form of e-invoicing. This indicates that many companies are still tied up in manual paper processing. The same study notes that those companies that have implemented automation systems are twice as productive as those that haven’t. Part of the reason a surprisingly large number of companies are still manually processing their AP transactions is they are often not aware of the factors that are sucking time from staff and costing the company money. One of the more costly elements of getting an invoice paid is the waiting involved in gathering all of the necessary approvals and associated paperwork. This workflow typically runs across multiple departments and requires the attention of busy decision-makers. By automating the AP workflow, most of the waiting periods are shortened as the system simplifies, automates, and secures approvals and decisions. But saving money and by saving time is just the start of the benefits of AP automation.
“The average cost of processing an invoice in an environment with no automation or low levels of automation can be up to 20 times greater than the cost of processing in a fully automated environment.”
Is your Accounts Payable (AP) department buried in invoice processing that is mired with manual tasks and exceptions? Paper-based vendor invoice processing is time consuming and expensive and creates chaos in business. Manual processing is error-prone with little or no controls or visibility and leads to invoice approval delays, late payment fees, and missed discount capture; in addition to creating delays in month-end, and year-end closing. When you factor in the countless clerical hours that AP personnel consume to manually reconcile, research and resolve invoice issues and exceptions rather than focus on strategic AP tasks, it’s no surprise why more companies are striving to increase automation and reap the rewards of straight-through invoice processing to save both time and money. PayStream Advisors research reveals the average cost of manually processing an invoice can be as high as $20, versus $3 or less for automated invoice processing. The average cost of processing an invoice in an environment with no automation or low levels of automation can be up to 20 times greater than the cost of processing in a fully automated environment. Research shows the three biggest advantages to AP automation include: 1. Increased Efficiencies – Significant time is saved when employees do not have to manually process, match, and data enter paper-based invoices by hand. Automation dramatically increases invoice cycle time. 2. Ability to Capture Discounts – Invoice automation speeds the invoice processing cycle and allows companies to take advantage of early payment discounts and avoid late payment penalties. 3. Improved Visibility – Automation solutions available on the market today provide real-time access to invoice and payment status, providing quicker handling of reconciliation questions and fewer calls to the AP department. According to PayStream Advisors 2014 Benchmarking report titled Capturing Competitive Advantage, more companies plan to implement invoice automation over the next year, see Figure 1, to reap a multitude of benefits that AP automation delivers, see Figure 2.
Figure 1 – “Companies Plan to Implement AP Invoice Automation”.
PayStream Advisors 2014 eInvoicing Benchmark report reveals the top benefits of automating AP with fewer lost or missing invoices ranking first, see Figure 2.Figure 2 “What benefits do you see from AP Automation?”
Source: PayStream Advisors 2014 eInvoicing Benchmark Report
Partnering with a leading cloud-based AP invoice automation solution provider like Vision360 Enterprise can reduce processing costs by up to 90 percent by maximizing straight-through invoice processing for both PO-based and non-PO or expense invoices. By streamlining invoice data capture and validation and applying powerful, flexible matching, automatic coding and approval best practice workflows, organizations of all sizes benefit from a truly automated AP solution delivering productivity and efficiency coupled with visibility and control. While many invoices lack a PO, the Vision360 Enterprise solution has the ability to quickly process all non-PO invoices straight-through to the appropriate approver and eliminating long processing times. Vision360 Enterprise puts spend controls in place to provide pre-approval that reduces maverick spend, transforming expense invoices into order-based invoices that can be automatically matched; resulting in fewer expense invoices and fewer manual approvals. To further streamline the invoice processing cycle, any recurring expense invoices can be automatically matched against an invoice schedule as part of a procurement contract, further reducing manual intervention and maximizing straight-through processing including automatic invoice coding and approval against configurable business thresholds. This minimizes the risk for manual errors, while providing increased control and focus on handling invoice exceptions. The Vision360 Enterprise solution provides market-leading matching capabilities that allow companies to benefit from dynamically applying automated two, three, and four-way matching. Vision360 Enterprise delivers scalable invoice processing that achieves optimal AP efficiency for companies large and small, including SMB’s that process a few thousand invoices per year to global corporations that process millions. The solution provides powerful coding tools that can automatically code and distributes invoices based on predefined business rules for quick and easy invoice approval. All approvals are tracked in the audit trail to guarantee compliance with both internal and external rules and regulations. The solution also includes a digital invoice archive that enables users to quickly access processed invoices. Both the invoice and all relevant data are retained for future reference. Built-in robust reporting and dashboard functionality empowers users to track AP performance by invoice cycle times, invoices processed, discounts captured, invoice error rates, and other variables. Vision360 Enterprise provides a complete invoice processing solution that was designed with packaged best practices for invoice management and workflow, see Figure 3. The solutions key features include one capture channel for all invoices (Paper, PDF, XML etc.), dynamic business rule based validation, granular automated coding and distribution for efficient invoice management, easy state-of-the-art reporting functionality for full invoice process and transparency. Figure 3 “Vision360 Enterprise – A True AP Invoice Automation Solution”
The Vision360 Enterprise solution can be easily integrated into most ERP and accounting solutions to provide a future-proof investment, providing a consistent, scalable and intuitive operating environment anytime, from anywhere, making it the perfect solution for all users across an enterprise. Speed to value is assured through a cloud-based solution leveraging unrivaled matching functionality and packaged best practice AP automation workflows coupled with immediate user adoption due to Vision360’s intuitive user friendly interface.
Vision360 Enterprise solution is ease-of-use, provides unlimited scalability and increased control of the entire invoice process among top differentiating points that distinguish the Vision360 Enterprise solution from other invoice automation solutions on the market. To learn more about Vision360 Enterprise and the benefits it can deliver to your company, please visit our website at www.Vision360Enterprise.com
Here Are 5 AP Processing Facts to Consider.
AP automation brings increased internal visibility and control which organizations can take advantage of. They are able to uncover opportunities to generate savings and optimize cash management. With the visibility that automation brings into invoice and payment data, finance departments can analyze and understand expenditure, perform budget variance analysis, and spot possible fraudulent behavior. Here are five facts to consider if you’re organization is still relying on manual invoice processes. 1. The average number of invoices with errors is approximately 3.6% (per IOMA). Now, that number may not seem like a ton, but consider if you organization has $100MM in payables pumping through it over the course of the year. If $3.6 MM was paid to the wrong vendor, or for the wrong invoice, or in the wrong amount...you get the picture. The sum of these errors equals a total nightmare for reconciliation in the accounts payable process and unnecessary extra work to unscramble the eggs. 2. The industries with the highest average cost to process an invoice are Non-Profit / Education at $16.78/invoice and Government at $15.86/invoice. While this doesn’t really come as a surprise, it underscores the need for accounts payable process improvement across all manner of organizations. With many corporate leaders having no actual clue to how much their inefficient invoice processing is costing them, it’s high time that they wise up to these ap process leaches and identify ways to make AP strategic and profitable (and no, that is not an oxymoron, it’s entirely possible). 3. Nearly 62% of invoice processing costs are made up of staff labor (per APQC). The real issue here is how much time is needed to advance an invoice in process. This includes data entry, data validation (matching the data from the invoice against disparate information like vendor master, PO table, and receiving data), GL coding, and approving. The bottom line is that the accounts payable process is very fat from a time consumption standpoint and needs to be leaned out if you have any hopes of dropping your processing costs and improving your ap process cycles. 4. For the average company, over 50% of eligible early payment discounts go uncaptured because of inability to process invoices and execute payment in a timely manner (per Aberdeen Research). This means that significant opportunities to pad the bottom line are squandered, again because of a grotesque ap process. Ironically, it’s our belief that, given the option, most CFO’s and Treasurer’s would likely want to capture discounts as they tend to be free monies to the payer, when done properly. This again is a compelling reason to pursue automation. 5. On average, only 32% of companies harness Accounts Payable process dashboards to monitor and optimize performance within their AP departments (per Aberdeen Research). This only serves to underscore just how in the dark most AP and finance leaders are. When you consider that most sales and marketing executives have rich insights into their customer and prospect pipelines you can understand that there is a definite gulf between investment in top line revenue generation systems and bottom line, back office systems. This kind of thinking must be challenged, because AP automation need not be a financial boondoggle, but instead could be a transformative organizational profit center, that catalyzes further finance and operations improvements.
Too Many Other Priorities: The accounts payable department is often times low on the totem pole when it comes to priorities. So many times there are too many other initiatives that bump accounts payable automation from the priority list due to availability of resources and funding.
Accounts payable automation has been a proven method of reducing operational costs, improving cash flow and eliminating non-essential manual tasks. There are many resources available to support a business case in favor of accounts payable automation including studies from Paystream Advisors, The Aberdeen Group and many more! Also, many systems today are deployed as SaaS, Web Hosted or Cloud which require very little IT resources and have less up-front costs than traditional software or OCR based systems. It's Too Confusing: There are so many systems, acronyms, solutions and choices that it is too confusing to know which is best for us. When selecting an accounts payable automation solution provider it is always important to look at experience, scalability and cost of ownership. In-house vs Out-Sources and Cloud vs Software. Many providers offer a multitude of solutions that can fit a wide variety of needs. Be sure to speak with references as they will be willing to share their experience with accounts payable automation. Fear of Change: Accounts payable automation has been around for many years now and is not a new concept by any means. One of the fears of AP Automation is, loss of jobs. If you're an AP manager you might be thinking, "Will have to let people go?" If you're an accounts payable clerk you might be thinking, "Will they no longer need me?" The reality is that the accounts payable team will be much more productive and be able to focus on financial tasks, spend control and analysis that will further save the company money rather than chasing invoices for processing. The best way to plan for change is to listen to those that have done this before you. Chances are you may know someone in a peer group, someone in a similar role at another company that can share their experiences that will help you in the planning process. There is an endless amount of available resources to help you sort through the myriad of available solutions including Aberdeen Group, Paystream Advisors, Linked Groups, White Papers and AP Webinars. Do you your homework, build your case and don't let fear of change stop you from achieving you goal of Accounts Payable Automation!
Accounts Payable departments have a huge potential to drive change in financial operations. By introducing automation, they can remove repetitive tasks from the AP process, and substantially contribute to better overall financial performance. In a recent study Paystream Advisors concludes that 'the quest to go digital [in accounts payable] has never been more appealing”.
AP automation brings increased internal visibility and control which corporate controllers can take advantage of. They are able to uncover opportunities to generate savings and optimize cash management. With the visibility that automation brings into invoice and payment data, controllers can analyze and understand expenditure, perform budget variance analysis, and spot possible fraudulent behavior. As Controller’s wonder, “What’s in it for me? Here are five ways controllers benefit from accounts payable automation which aligns with the five main needs that Controllers have for accounts payable efficiencies: 1. Internal controls & transparency: It is critical that the accounts payable system support internal control. The needed controls should be built in to the workflow of the AP system. This way, the system acts as an “automated” internal control. 2. Flexible & multi-dimensional coding: Ideally, the accounts payable automation software should perform automatic coding based on purchase order or contract matching. However, the coding needs to be flexible and multidimensional. In situations where coding is not automated, details need to be available with historical information about past coding for a given supplier. 3. Access to different levels of invoice data: As accounts payable becomes automated, people who deal with a particular cost center, category or supplier need to have many views available to them. They should be able to drill down all the way to the individual invoice level. Within different views of the invoice data, controllers need to be able to easily categorize, group, and perform aggregate calculations. Also, they need to access conversations and attachments related to individual invoices in order to improve supplier relationships. 4. Tools for in-depth analytics and reporting: Access is key. Controllers need to be able to sort invoices by vendor, by account or by cost center, and search all invoice fields. They should be able to perform budget variance analysis and detailed expense analysis at row-level by vendor on an ongoing basis. If necessary, this analysis should drill down to the invoice image. Analysis is done to study e.g. average purchase per vendor, or number of overdue invoices. 5. Accruals: When you do not have visibility into individual invoices, accruals can be “a black hole”. The accounts payable automation system should monitor and extract information about the invoices that are still in circulation, and allow controllers to work with accountants to include reported invoices into the accruals. Once the accruals are done, controllers should get the lists for reviewing and checking.
It's Time to Connect the Last Mile Between Accounts Payable Processing & ERP Systems!
“Productivity” and “Visibility” are the rallying cries of today’s financial executives - and they’re also the promise of ERP systems. But ERP nirvana can’t be attained until it extends to all of an organization’s core financial processes, particularly the function that pays the bills - accounts payable! The benefits - increased productivity, reduced costs, strengthened vendor relationships and better compliance - are too good to stop short. By connecting accounts payable processing with your ERP system AP Departments can now take full advantage of productivity and efficiency gains that an accounts payable automation system provides. The benefits of integrating accounts payable processing with the ERP system. - Seamless integration reduces the need for technical resources - Accounts payable dashboard provides 100% visibility to supplier invoices - Eliminates 100% of paper invoices - Captures email invoices electronically - Eliminates the need for manual invoice entry - Powerful GL coding engines - Powerful 2, 3 & 4-way matching engines - Powerful tax rules engines - Powerful freight rules engines - Data validation engines ensures accuracy - Centralized processing and financial controls - Complete audit trail of approval activity - Generate instant efficiency reports - Instantly access invoices from electronic archive - Enforces your security, processing rules and compliance - Always know EXACTLY how efficient your AP department is functioning We do not take a one size fits all approach to any engagement. Our strength is in our ability to objectively evaluate the business problems and challenges that affect every day. By leveraging our business process solutions experience, coupled with our technical expertise we are able to effectively analyze and recommend a variety of viable solutions to fit the needs of any business problem and challenge we are faced with. Connect the last mile between accounts payable processing and ERP systems.
Invoice processes costs vary greatly and are closely linked to the level of accounts payable automation and productivity gains.
The levels of automation shown here are: 1. No automation. 2. Partial automation, such as scanning invoices. 3. Full automation, comprised of scanning and information capture coupled with a business rules engine to enable touchless processing of the majority of invoices as well as integration between the automated process and a company's ERP system. Invoice processing cost comparisons clearly demonstrate how valuable accounts payable automation is to the bottom line of any organization, no matter the size or scale. When a routine job is automated, the resulting efficiencies and cost savings open up learning and development opportunities for staff. The shift caused by automation is one that moves staff from “routine work” to “knowledge work” and this contributes significantly to continuous business improvement and staff job satisfaction. Perceived barriers to automation: With automation shown to be the best route to increased productivity, one might wonder why more organisations have not employed this tool in their accounts payable departments. There are many reasons for this: 1. Within some organizations, internal IT departments can be perceived as a roadblock. Understandably, IT departments handle many requests for various competing projects with limited resources. So it is important to build a compelling business case to ensure your project gains the appropriate support. 2. There is no “one size fits all” software or solution on the market. This can add complexity to the decision-making process but also delivers the benefit of a tailored solution to meet an organization’s existing and future needs. 3. There is a perception that accounts payable automation requires an “all or nothing” approach, which again adds to perceived complexity and effort. In fact automation can take place step by step. 4. Another factor is the fear that suppliers will walk away if you ask them to do something new or different – but in reality this is highly unlikely. 5. Finally, in many organizations, there is a fear of automation – and that it might place jobs at risk. “While automation undoubtedly has a short term effect on particular workers who have grown accustomed to their present habits, it does not show any trend of decreasing the overall size of the economy, or of decreasing the number of jobs available.” When a routine job is automated, the resulting efficiencies and cost savings open up learning and development opportunities for staff. The shift caused by automation is one that moves staff from “routine work” to “knowledge work” and this contributes significantly to continuous business improvement and staff job satisfaction. Courtesy of Accounts Payable Benchmarking Report 2014 So for whatever reason you’re not ready for an invoice automation system just yet. Maybe your company is “old fashioned”, or likes “paper” or just not ready for a “change”. Whatever the reason is here are 6 tips that should help make your paper based accounts payable process go a little bit smoother.
Not sure what AP automation is all about? Come for the ROI, but stay for the efficiency, security, and compliance benefits.
Since the birth of the Industrial Revolution in the mid-1700s, automation efforts have proven to be one of the key catalysts of successful business growth and innovation. One of the most celebrated models of automation and business success was Henry Ford’s car company. His implementation of the assembly line is seen as the automation success model of his century. Of course, the advent and proliferation of advanced IT systems have automated nearly every aspect of a business. Surprisingly, however, despite the tangible and rapid ROI of automated accounts payable (AP) processes, a majority of companies have not taken advantage of the technology. In a recent AP Department Benchmarks & Analysis survey conducted by the Institute of Finance & Management, only one-third of companies surveyed have implemented document capture and only 25 percent use some form of e-invoicing. This indicates that many companies are still tied up in manual paper processing. The same study notes that those companies that have implemented automation systems are twice as productive. Part of the reason a surprisingly large number of companies are still manually processing their AP transactions is they are often not aware of the factors that are sucking time from staff and costing the company money. One of the more costly elements of getting an invoice paid is the waiting involved in gathering all of the necessary approvals and associated paperwork. This workflow typically runs across multiple departments and requires the attention of busy decision-makers. By automating the AP workflow, most of the waiting periods are shortened as the system simplifies, automates, and secures approvals and decisions. But saving money by saving time is just the start of the benefits of AP automation. Other significant benefits include improved efficiency, improved protection from fraud, reduced errors, reduced need for storage space, strengthened internal controls, as well as better analysis, planning, and forecasting capabilities. To set the context for the benefits that AP automation processes can bring to companies, consider this example of a typical manual payment process: The McDuck Widget Company gets an average of 100 invoices each day from its various vendors that supply its production plants. The mail room receives these invoices, stamps the received date on each, and then stacks them together for delivery to the AP department. An AP clerk then starts the work of matching each invoice to a purchase order or some other pre-approval form to document which department manager made the purchase request. Once that’s done, the appropriate transactions are entered in the ERP/Accounting software. If no matching approval form is found, the invoice is copied and filed, and then a copy is sent to the department manager for justification of the expense via the completion and return of the required purchase approval forms. The AP department then reattempts processing the invoice. After the invoice has been recorded, it is sent to a senior accounting manager or executive for check-run approval. Typically, each invoice is reviewed and checked against the budgets and then approved or disapproved for the check run. Once each day, the check run is executed, and checks are printed, bundled, and sent to the mail room to be folded, stuffed into envelopes, sealed , stamped, and sorted for delivery to the post office. As you look into this scenario, you can see that although the process of manually managing the payment of vendor invoices is well-organized and can be completed within a few days, real life happens and things don’t always work as planned. Mailroom clerks typically have multiple responsibilities and when the work load gets to be too much, invoice routing can get delayed or otherwise fouled up. AP clerks are often spread thin, adding to delays and errors. Department managers are always covering multiple bases, making it difficult for them to sit down and work through their stack of invoices. Senior executives have many heavy responsibilities and, when traveling, find it a challenge to consistently review and sign the stack of waiting documents. In short, the above scenario is not unusual, and given the imperative of many companies to do more with less, manual processes put an increasing burden on all participants. In the case of AP processes, there are inevitable delays and errors, and worst of all, and the compromised accuracy and speed of the process means critical decisions get made on compromised information. And yet this is still not the whole problem. The costs that could result from the opportunities for security, privacy, and financial fraud in manual AP processes stand to well eclipse the costs resulting from AP delays and errors. Core Compenents of AP AutomationWith the introduction of AP automation covered, let’s now look at the basic components of AP automation solutions in the context of how these are used to streamline AP processes. Document Scanning and Data Extraction When the invoices from suppliers arrive, they are scanned into an electronic accounts payable workflow system and the image is automatically date stamped. The scanned invoice is passed through an automated optical character recognition (OCR) process that extracts the invoice number, vendor name and address, and associated PO number. The paper invoice is stacked by batch date and stored for 30 days before being shredded. In an ideal world, a vendor has electronic document processing systems of its own, so it simply sends electronic versions of invoices to customers, which can automatically be received and processed by the customer’s AP automation system. Archive/Retrieval in Content Management Systems In fact, some document scanning systems can index any information that’s on the invoice for electronic archive and retrieval capabilities. Because the invoice is scanned, images are indexed and archived by date, invoice number, PO number, vendor name, or just about any information on the invoice for quick future retrieval by any department needing access. Matching and Workflow Within seconds of being scanned and OCR-captured, the electronic data from invoices is automatically brought into the accounting systems andmatched against outstanding purchase orders. If there is no PO match, the transaction is put in a separate queue for review by an AP clerk or, if required, department managers who instantly review invoices and approve or deny them online. For the bulk of the invoices with a positive match, AP clerks are notified via email that the batch is ready for processing and the successfully matched invoice information is automatically forwarded to senior management to review prior to the initiation of the check run. Because of these automated electronic systems, even if a manager is out of the office, the information can be easily and quickly accessed online so that delays are minimized. A scheduled daily check run triggers bank-to-bank electronic payments where possible, and for the rest, a file is automatically created that goes to the AP group (or even a designated third party via secure FTP), where the checks are printed and mailed. An electronic image of the check is automatically associated with the invoice and archived in the content management system. Because of these automation steps, invoices are often turned into checks or electronic payments the same day, and very few hours of human intervention are required during the process. Reporting and Analysis Reports are generated and automatically routed to managers, showing the status of all incoming invoices, unmatched POs, outstanding approvals, and other information as needed. Analysis reports on financial performance by department, turnaround times, discounts missed, etc. are also automatically generated and routed to management. Rapid ROI…and MoreIt’s not difficult to see that these components of AP automation significantly impact the efficiency, security, accuracy, and speed of payment processing in an organization. Directly and indirectly, an organization can clearly save a lot of money, which quickly pays for the necessary AP automation technology. The Aberdeen Group recently released a study that calculated the average cost of invoice processing in AP departments at $16.33 per invoice for companies that don’t automate payment processing systems. On the other hand, those that have AP automation processes in place can bring the cost down to around $4.80 each. Based on this, if a company processes 100 invoices a month, they will realize $13,836 in saving each year once AP automation system is in place. In addition, AP errors are costly in dollars, productivity, and reputation. Paper-based processing is known to have higher error rates, which in turn affects quality of service. The wasted time caused by errors ripples down through other processes, multiplying the cost factor. By implementing quality-improvement programs in conjunction with AP automation technologies, these improvements can drive costs down and improve quality measures. Some of the other obvious benefits of AP automation include these: Increase Visibility Visibility entails the ability to see and understand all current and outstanding invoice transactions. Paper trail processes limit visibility as invoices and PO requests sit on various management desks waiting for approval or for forwarding to appropriate channels. This can be addressed by AP automation systems, giving decision-makers instant, secure access to invoice images and status notifications even during times that they may be traveling. Strengthen Internal Controls; Eliminate Fraud Increased visibility means decreased fraud. A PricewaterhouseCoopers crime survey found that 45 percent of companies worldwide deal with the issues of fraud, and many fraud issues are AP-related. By applying AP automation technologies, internal controls are simplified and centralized, and additional layers of security access controls are put in place. All of this decreases the exposure to fraudulent activities. Speed Up Closing of Accounting Periods and Give Managers Better Decision-Making Information Sarbanes-Oxley (SOX) regulations mandate that companies close their books quickly and accurately. In addition, speeding up period closing allows management to make timely tactical decisions. AP automation systems provide the standardization and infrastructure for more rapid closings. Of course, the more quickly accounting periods close, the more accurate the financial information that executives have. This results in faster and better decision-making, which on its own has huge benefits in terms of saving money and being more nimble to seize opportunities. Reduce Storage Space One small health insurance provider implemented technology to scan invoices (claims), turn the scanned invoices into readable data (OCR), and interface with their claims accounting system. This saved them $50,000 a year simply in the costs of storage space for all their paper claims. Centralize and Standardize Large companies can centralize all branches on one system to implement best practices, streamline financial services, and have necessary oversight controls. Such systems force companies to implement standardized vendor records and approval processes throughout the company, which can have a large benefit on its own. Making Henry Ford Proud The challenges of competing in today’s business climate requires the ongoing application of automation technologies in all aspects of an organization. Because of advanced IT systems and the falling costs of implementing technologies, AP automation for many organizations is among the “low-hanging fruit” when it comes to realizing an attractive ROI. Certainly this would make Henry Ford proud, but the benefits to an organization reach well beyond just simply being able to quickly recover the cost of the technology. Note: Originally posted by inFORM Decisions. To learn more about inFORM Decisions and the benefits of going paperless, visit www.informdecisions.com. How often have you heard the phrase "Time is Money"?
This expression takes on a special meaning for accounting and finance personnel, especially during the first week or two of each month, as there’s an ever-increasing need to get the latest information about their organization to management as soon as possible. Management is looking for timely and accurate information—both financial and non-financial—to make decisions before opportunities vanish. Because of this “need for speed,” many companies have compressed their monthly financial statement closing process, moving away from the traditional hard month-end close. These companies have implemented new methods to accumulate and distribute financial information more quickly and efficiently without compromising the quality of the information. The month-end close has traditionally been a time-consuming process: first, gathering data from a number of different systems; second, performing detailed analysis; third, making corrections; and finally, reformatting the data into any number of management reports. In some cases, the resulting management reports have been prepared month after month or year after year without a current evaluation of their relevance. A number of medium-to-large companies have redesigned their closing cycles as part of a total finance function re-engineering process. They’ve transitioned first by improving the traditional hard close, moving to a soft close, and then to a “virtual” close. The hard close focuses on total and complete accuracy, resulting in GAAP/SEC financial statements. The focus of a soft close is the material accuracy of information. Organizations who have implemented the “virtual” close have developed systems and processes that allow them to produce vital management reporting on demand. Suppose, however, that you’re a smaller organization looking for ways to speed up your closing process. Instead of embarking on a complete process redesign, consider taking these steps to accelerate your company’s closing process. Eliminate First, identify the true users of the reports generated from the month-end close. Users can be internal or external and include owners, shareholders, government agencies, taxing authorities, financing/funding sources, and grantors and/or managers. Remember that certain reports might be valuable to one user but not to others. Ask internal users about their business unit goals and how those goals can be objectively measured. What information is useful for measurement? How often and when is it needed? Based on the answers to these questions, non-essential reporting can be eliminated. Simplify Analyze existing processes. What’s cumbersome? Are there bottle-necks? Are there outdated policies that can be reevaluated? For example, perhaps you have a policy requiring more than one approval for vendor payments. Consider setting dollar thresholds in order to eliminate an additional approval for smaller payments. If sales cut-off typically causes a delay, consider using a morning deadline on the last day of the month to encourage earlier sales-order entry. Leverage Technology There are a growing number of technology solutions available to businesses of all sizes and industries. Look at the processes that are currently performed manually. What can be automated? For example, consider the bank reconciliation process. There are software programs that download both the bank and the general ledger data into an electronic spreadsheet and then match them automatically, eliminating the time-consuming and error-prone process of manually matching cleared checks to the general ledger detail. Pull Closing Activities Forward The ultimate goal is to speed up the closing process without compromising the quality of information reported to management. Therefore, having the ability to perform some closing activities prior to month end is important. Consider all of the reconciliations that are performed at month end. Which accounts could be monitored during the month in order to reduce last-minute reconciliation efforts? The bank reconciliation provides a good example of a process that can be moved to an earlier date on the closing calendar. The Internet can be used to access bank account information at any time during the month. Consider advancing the closing date for the bank reconciliation; include estimates of bank fees and other automatic charges in recur-ring monthly journal entries. Another option is to reconcile the bank statement on a weekly basis. Combine Related Activities Instead of thinking about closing activities as a list of individual tasks to be executed sequentially, consider whether there are efficiencies that could be gained by logically grouping related tasks together. For example, entry of hours worked during the last period of the month; accrue wages, salaries, and payroll taxes; and close the payroll module. Establish Accountability Another consideration in an accelerated close effort is ensuring that each member of the accounting and finance team is clear on the specifics and timing of their role in the process. The following best practices are recommended:
The End Result A thoughtful and well-executed effort to streamline the reporting process requires balancing the need for speed with accurate reporting of financial data and lowering the cost of the closing process. Time, as they say, is money. In the end, the benefits of streamlining the reporting cycle are well worth the effort. Did You Know That Exception Invoices In Your AP Process Can Cost Almost 10 Times as Much as an Invoice That Matches and Processes Straight Through. Here are a few examples as to why: An AP clerk enters a PO invoice in the ERP system, matches the information on the invoice to the information that the buyer entered on the purchase order. The system applies invoice controls to the invoice. If the information on the invoice does not match the information on the purchase order, an invoice exception occurs. The AP clerk then sends the invoice to the buyer for resolution when the invoicing process is interrupted by an invoice exception. Often times the invoice is sent via interoffice mail as paper of scanned and emailed. Either way these steps occur outside of the controlled accounting environment. Now the AP clerk cannot finish processing the invoice until the buyer has resolved the exception and sent the invoice back to the AP clerk. This process may take some time and the result may be a delay in payment to the vendor. There are two types of invoice exceptions: Invoice Header Exceptions An invoice header exception occurs when the information on the invoice header does not match the information on the PO header. Common header exceptions occur because:
Invoice Line Exceptions Invoice line exceptions occur when the invoice line information does not match the PO line information. Common line exceptions occur because:
One of the most effective ways of handling invoices exceptions is by utilizing an e-invoicing platform that is designed to apply rules based matching that minimizes and in many cases eliminates the manual tasks associated with processing exception invoices. |
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
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