Despite the movement to electronic and digital transaction systems, the invoice is still the primary source for payments. The shift towards electronic invoices through the form of PDFs has grown significantly, but despite this change, companies are still missing the true benefits of invoice capture through OCR, workflow and automation, that this shift has presented. We did some research through white papers, case studies, testimonials, and real-life examples – speaking with our own clients. The conclusion was unanimous: There’s ROI in AP automation – and it comes a lot sooner than you might think.
According to a January 2014 survey conducted by AIIM, the results reported that:
- 50% of organizations have yet to adopt any automated AP system
- 55% of organizations with AP systems, are not using any OCR or scanning solutions (12% only scan for archival purposes)
- The median cost to process an invoice is $8
Those are some pretty astonishing numbers, considering the technology that is out there to help improve in these areas.
The report went on to comment on those who had implemented an automation or capture system for their AP functions:
- 50% of AP system users reported a payback period of 9 months or less – 22% achieved thispayback in as little as 6 months
- Those streaming invoices through AP capture systems were achieving 40% “hands-free” throughput (25% of users had 65% or more on straight through processing)
- 29% reported savings of 50% or more from adopting AP solutions
- Of these savings, the biggest benefits reported (each indirectly impacting savings on staff) were:
- Faster turnaround time on payment
- Better monitoring and transparency of invoice status
- Better records keeping
With more suppliers providing the option to have invoices sent as PDF’s electronically, the key fields that need to be captured for AP purposes are likely to be the same. As such, implementing a process that will capture and automate the AP process will be easier. It will also lead to a significant amount of benefits, be it costs, process cycle time, visibility in the process, and improved cash management.
What’s myDigitalOffice.ca’s take on building AP automation into your organization? Here’s our top 5:
The process to receive an invoice to the point of payment can take seconds – improving your ROI from the moment this is implemented
- Linking workflow to digital approval methods (e.g. digital signatures) allows a company to follow a consistent set of steps for each approval (controls and auditability of processes)
- Faster time to process = early payment discounts. Gone are the days where you have to wait for an invoice to get from one location to head office. A document management system with an effective AP process will reduce that processing time by greater than 60%
- Indirect benefits from an automated AP process will boost your ROI further – eliminates the need to file/retrieve paper documents, no longer requires couriering of invoices for processing, etc.
- Accuracy and accessibility of information is enhanced when you eliminate or reduce the need for hand-key entries. By building a proper set of quality control rules, you will ensure that the standards are being met, but simultaneously build efficiency through the reliance on technology.
- A desire to centralize operations is a key driver for AP automation in many organizations – it equates to savings IF it is implemented right. Platforms are now available allowing AP staff to process these invoices outside of the office, or offshore, where labour may be cheaper.
It’s time to start thinking about building better accounts payable processes into your organization. If you are not sure where to start, consider the following questions:
- How much does it cost to input an invoice?
- How much time am I spending on filing/retrieval of these invoices?
- What are my biggest bottlenecks in the AP process?
- What are my reasons for not considering automating the AP process at my company?
We would love to hear the answers to these questions to see if there’s an opportunity to build efficiencies. It’s not a shameless plug – but we deal with invoices too…and inputting them into our accounting system was one of our most inefficient areas until we implemented it ourselves.
Give us a call today to find out more about our Accounts Payable process improvement initiatives and to talk more about the opportunities for your organization.
For more information on the AIIM Whitepaper entitled “Automating AP/AR Financial Processes”, please visit the website at (www.aiim.org).