Automating an enterprise’s accounts payable (AP) process is not new, but today’s ePayable solutions provide vast improvements in both functionality and cost.
In other words, once an enterprise chooses and deploys the right tools, they can overcome their AP challenges such as manual processes, redundancies, low efficiencies, and high risks for error. Finally, for those of us in AP, we are no longer seen as merely a cost center. Rather, we can contribute to business strategy by looking at the payables process through a new lense and turning every invoice into a revenue generator.
In fact, according to Ardent Partners’ report, ePayables 2014: The Quest to AP Innovation, the average cost of processing an invoice is $14.21! You are probably wondering how one invoice can cost so much to process, and the simple yet expensive answer is that we need to factor in costs related to:
- AP staff time
- Managerial overhead
- Facilities, equipment and material
- IT support
But when AP is automated, enterprises can cut costs by 60-80%.
Today’s Top AP Challenges
1. Invoice/payment approvals take too long. Nearly half of enterprises reported that one of their top AP challenges is obtaining approvals in a timely manner. With manual processes, this is not surprising, as there will be delays when invoices are emailed or printed, and AP personnel chase down approvals. By using an automated AP system and providing suppliers with a self-service portal, delays are eliminated as visibility in the AP approval process is accessed and relevant business rules are put into place.
2. High percentage of exception rates. For many of us who are already using an automated system, this challenge can be easily remedied by adding in additional standardization to our automation processes and further refining our business rules.
3. Lack of visibility into invoice and payment data. How much time could you save per day if all your invoice and payment data was in one place for your suppliers to see? Personally, I’ve saved at least 3 hours/day (that’s 15 hours a week!) with a supplier self-services portal. My suppliers no longer call me asking me on the status of their invoice--they just log into the portal and the answer is right in front of them. Some call this an Accounts Payable superpower, but I call it strengthening supplier relationships. Either way, providing visibility is a win-win for both parties!
4. Getting the budget to invest in automation. We’ve all heard this before: “This is great, but we just can’t afford it,” or “We don’t have room in our budget for a project like this.” Well, in many cases, I’ve found you can’t afford not to have an automation solution--remember the average cost of processing one invoice? (It’s $14.21 if you already forgot!) Plus, what if you could fund your automation project?
5. Invoice processing takes too long. A delay in matching an invoice (another top AP challenge) to its relevant documents translates into a longer invoice-processing time, which then translates to our #1 challenge. See how one challenge multiplies into more inefficiencies? In an automated environment, invoices can be matched automatically to line items within POs and goods receipt notes, which then positively impact the invoice processing and approval times.
6. Late supplier payments. All of the above challenges sum up into quite possibly the most appalling challenge on this list: paying your suppliers late. Accounts Payable superheroes know that paying suppliers early is the key to strengthening supplier relationships and adding millions to your bottom line. As AP professionals, our core responsibility is to ensure our suppliers are paid, and why not offer to pay them early in exchange for a discount? To overcome this, you can turn your AP department into a profit center.
Despite all the challenges, implementing an automated AP system is now easier than ever, but it takes time to find what works for your organization.
So, how does one start the journey? AP leaders needs to:
- Understand the current process
- Define requirements
- Develop a strong business case
- Select the right technology
- Deploy it well
Solutions are changing how we do business in AP. As we focus on supplier relationships, quality assurance, reporting, and analysis, we are not only becoming more visible within our organizations, but also, we are adding to the bottom line.
The ePayables whitepaper is available for free. Download your copy here.