According to the white paper Automating AP/AR Financial Processes published by the Association for Information and Image Management (AIIM), accounts payable continues to be an inefficient cost center for companies where, “leaving money on the table from missed discounts or disputed transactions, and slow collection can put huge pressure on cash flows.” To alleviate these issues, accounts payable automation sounds like a good idea, but where is the evidence?
In this blog post, part 1 of 2 of our AP Automation Series, we will share some examples of how AP automation can reduce costs, increase efficiency and ease your AP pain.
Can You Relate to These AP Processing Pains?
- Finding and accessing relevant purchase contract and delivery documentation is cited as a major factor in the cost of processing non-PO orders, where two-thirds of respondents admit that the original purchase requisitions, supplier correspondence, supporting documentation, and contracts are not easy to find. Can your team find supporting documentation quickly and easily?
- The average estimate of the additional cost factor to process non-purchase order (PO) or non-production orders is 2.2x. What is your additional cost factor?
- The cost to process an invoice ranges from $1 to more than $50 with an average of $12.90. Where does your company fall on this spectrum?
How AP Automation Will Make Your Life Easier
- Cost Reduction: the average reduction of invoice processing costs is almost 30%, stemming primarily from a repurposing of AP clerks to higher value-add roles and increased efficiency
- Decreasing Cycle Time: many organizations report that up to 40% of incoming invoices can be processed “hands-free” (100% automated) and those that scan invoices as soon as they’re received in the mailroom significantly expedite processing time of non-PO invoices
- Improved Visibility: AP automation software allows for better monitoring and transparency of payment status, employee workload and cash-flow
- Better Cash Management: stemming from greater visibility, management will gain a dramatically improved view of what is owed to vendors and can make better decisions regarding who gets paid and when
- Integration: AP automation software allows correspondence and supporting documentation to be directly accessible via the organizations ERP/accounting system so all information is available to process each invoice that requires some degree of manual intervention/exception handling
What’s Your Next Step?
Being able to cut invoice processing costs by 30% on average with a 6-9 month ROI should help justify AP automation to your organization’s C-suite and start making your life a whole lot easier. Let us know how we can help reduce the pain in your accounts payable processes.
In Part 2 of our AP Automation Series, we will explore how you can implement the right AP automation for your organization.