Based on research from the Aberdeen Group, the top 3 pressures driving interest in accounts payable (AP) improvement are:
- Lack of visibility into invoices and AP documents (45%)
- Corporate directives to lower costs (44%)
- Difficulty finding or managing paper-based documents (39%)
Read on to learn how you can increase visibility, decrease cycle times and cut costs.
Increasing Visibility & Reducing Cycle Times
Invoice processing automation begins with the scanning of your paper invoices, ideally as soon as they hit the mailroom so your employees never have to touch (and lose) paper again. Some outsource this labor-intensive effort to avoid adding headcount to their department. Some prefer to deploy in-house systems consisting of scanning technology and advanced capture software.
Once scanned, full-text optical character recognition (OCR) software automatically extracts invoice data from anywhere on the document, including invoice number, amount, PO number, and line item detail. As such, OCR minimizes error-prone data entry ensuring quick and accurate retrieval.
With integration, extracted financial data is passed to your accounting/ERP system. An image of each invoice, correspondence and supporting documentation is then passed to your document management system and can be easily found later thanks to full text OCR.
Workflow further streamlines invoice processing. Database lookups allow A/P clerks to quickly enter general ledger (GL) codes for each line item without looking them up in a book. Email alerts ensure that approvals, rejections and requests for additional information are handled efficiently. Workflow also allows management the ability to view any invoice at any point in the process, as well as identify and eliminate bottlenecks.
The result: organization can cut invoice processing cycle times from an average of 16.3 to 4.1 days (75%)*.
The Cost Impact
All of the above can cut processing costs by $13 per invoice (80%)*:
- Average cost to manually process an invoice: $16.67 per invoice
- Average cost with automation: $3.34 per invoice
Further cost savings are possible from fine-free audits where all documents are immediately accessible, taking advantage of early payment discounts, and never having to waste time searching through file cabinets, basements and offsite storage.
* Figures are taken from Aberdeen Research’s AP whitepaper: AP Invoice Management in a Networked EconomyContact us to learn more