According to the Institute of Finance & Management, 61% of top global companies have implemented full Accounts Payable (AP) automation. This occurrence has had its challenges.
Primarily, the universal commonality of budget allocation is the obstacle to overcome. When a company’s CFO is prioritising expenditures, their eye remains on cash flow and compliance/risk mitigation. AP must factor into these objectives to achieve funding for automation (or for anything else; with decisions being made by priority).
For many large and mid-size organisations, AP is a manual world. The three-way match process – insuring accuracy between vendor’s invoices, the company’s purchase orders and receiving documentation – is an environment of disconnected paper and electronic transmissions. AP professionals create business processes to best fit their environment’s workflow, though they’re aware through their repeatedly encountered frustrations that even their best efforts don’t fulfill their objectives.
This provides Finance-Accounting nexus: both share fiscal interest in both cash flow and compliance. The commonality brings the two together on priority, broaching the budgeting subject. Now to back it up with justification.
Today, enterprise content management (ECM) has advanced AP automation to encapsulate document capture in all formats: paper, email with attachments, native electronic files of any type. The data housed in each document is intelligently indexed, and used to populate user-specific designated fields created in the ECM program. With enterprise resource planning (ERP) system integration, the newly introduced information is verified against established data in the ERP. Upon verification, configurable workflow capabilities fitting an organisation’s particular business processes now enable accurate, cost-saving interdepartmental collaboration.
With cash flow, automating AP provides accurate, real-time visibility into status of every project and transaction within the department’s realm, as it’s documented. This ability enables organisations to achieve overlooked vendor discount revenue (over 75% of payment-based supplier discounts go unclaimed by purchasers). Foster awareness and avoidance of any late payment penalties. Effectively be freed from hidden costs associated with overpayment of under-received orders.
A major avenue to diminish expense is with processing AP transactions. Establishing policy of electronic payments to all vendors has positive, direct out-of-pocket savings from the first day of implementation. Industry studies pace ongoing cost savings to average 70% annually versus manual processing.
Another source of cost reduction is with staff resources. With automation quickening the pace of transaction processing, it allows employees to be utilised in increasingly productive endeavours mission-critical to an organisation. Their time and talents are fully engaged, avoiding headcount increases associated with departmental turnover.
Regarding compliance and risk mitigation, it begins at each transaction and project’s start – with all documentation that touches AP captured electronically with key content indexed and utilised for accuracy verification. From this point, all data is archived, avoiding lost-paper/lost information scenarios of uncertainty. It’s accessible to those provided documented permission by their company, trackable with each access. Reporting tasks are reduced to dashboard setting simplicity, a day-to-day benefit also realised with enhanced auditing efficiency and time/cost reduction.
ECM systems are available that, based on scale, provide full return on investment typically within a year.
Is automating accounts payable processes worth the effort? So far, 61% say yes, with many others in discovery mode to see if they also agree – Finance and Accounting working together towards commonly-shared objectives.