What is AP automation?

AP automation is a term used to describe the ongoing effort of many companies to streamline the business process of their accounts payable departments. The accounts payable department's main responsibility is to process and review transactions between the company and its suppliers.

Automating the invoice payment process.

·       Invoice Capture: Receives paper or electronic invoices, captures important data, and inputs into a workflow or payment system

·       Workflow/Approval: Routes invoice for approval

·       Payment and Reconciliation: Processes vendor payments via a number of payment methods (AP Card, ACH, check, wire, Supply Chain Finance)

Why the need? Do the math!

Companies are looking to increase process efficiencies and reduce costs.  Let’s look at the average invoice processing costs:

·       The average manual AP invoice costs $30.00 and the average AR invoice $4.00 per invoice.

·       On average the cost of a fully automated AP invoice is $3.50 and the AR invoice $2.25 per invoice.

·       The cost savings for the AP invoice is $26.50 per invoice and $1.75 for each AR invoice. 

·       That‘s a 90% cost savings for the AP invoice and 44% for the AR invoice.

Then consider the average invoice storage cost:

·       A paper invoice storage cost is $3.90 per invoice and the AR invoice is $1.90.

·       Whereas the electronic invoice storage cost $1.30 per invoice and the AR invoice is $1.30.

·       The cost savings for the AP invoice is $2.60 per invoice and $.60 for each AR invoice. 

·       That‘s a 67% cost savings for the AP invoice and 32% for the AR invoice.

The cost savings are significant, but even better; there is a 37% error reduction with automated invoicing.

What does AP Automation mean to me?

·       Automated entry of invoice information

·       Exception Invoices routed to proper workbasket for processing

·       Electronically route invoices for review/approval

·       Focus on exception and vendor analysis

·       No manual filing or retrieval

·       Complete audit trail

What to look for in a solution.

The AP automation provider is one of the determinants deciding the success or failure of your AP project. You should consider a vendor that can equip your company with all of the features your AP department needs. iCapture is a typical example that provides a layered approach to the invoice problem, helping you improve efficiency and many other benefits. Check that the software can be easily integrated with your other systems. Learn about the software’s security and compliance options.  Most importantly, insure that the solution can be tailored to your organizations size and scope and fits your specific needs and will integrate with your ERP system.

Want to fully understand the AP automation and discuss your needs? Contact inFORM Decisions today! www.informdecisions.com

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9 key steps to successful Accounts Payable (AP) automation (Part 2)

In part 1, I mentioned 4 initial steps leading to successful AP automation. The remaining 5 indispensable steps that you should consider are revealed in this continuation post:

5.  Choose an automation provider

Once you have developed a detailed AP automation strategy (based, on the information from the 4 first steps shown in part 1 of this post), you should now be prepared to select an automation provider. The provider selected must be able to satisfy your business issues as well as meeting your requirements, such as the technology required, the payment terms and discounts, etc. Insure that you ask tough questions before purchasing that clarify the providers’ capacities as well as their commercial terms.

6.  Ask for a trial and negotiate a contract

Requesting a trial period is the best way to get real experience with the solution you intend to buy, check its functionality and its compatibility to your business processes.

Before signing a contract, be aware of all providers’ commercial terms including the implementation or license fees, annual subscription or per-transaction fees and termination penalties.

7.  Keep an open communication line with your supplier

Normally, an organization that provides AP automation solutions has a wide range of companion products including other automation tools such as document capture and scanning products or workflow and BPM products. Perhaps your company may consider other automation strategies and utilize other products they provide, so you should keep in regular contact with your supplier to build a solid, strong and long-lasting relationship. Also, in order to obtain full benefit, they should be aware of your automation strategy and your expectations such as integrating their ERP or uploading electronic invoices.

8.  Evaluate system performance and benefits.

After implementing the AP automation solution, you should make an evaluation to compare the result of automation strategy and your initial performance, learn from experience and improve it if necessary. Your evaluation should include:

·      Percentage of invoices ready to be paid on time.

·      Amount of time taken to receive, approve invoices and deal with invoice disputes.

·      Amount of time required from AP and IT to manage the system.

·      Number of invoices received electronically.

·   Most importantly, utilize the ROI calculator shown in step 1to identify savings.

9.  Monitor your solution.

Only when you can demonstrate its benefits should you implement an AP automation solution. Monitoring the new process and the solution you are utilizing periodically will ensure that you have a worthwhile investment. Determine if your provider offers an Advanced Capture + Workflow (Highest Level Automation) solution. This type of solution includes not only document capture automation of all invoice processes, but also adds workflow software to aid in the routing of documents, kickback of invoices to vendors and solving any issues.  The addition of digital workflow adds the ability to monitor, track and report extensively on the AP process.

Adherence to these steps will assure a successful initiative. What is your current position on the way to successful Accounts Payable automation? Contact us now for additional advice from our experts!

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9 key steps to successful Accounts Payable (AP) automation (Part 1)

In tough economic times, AP automation is considered as a lifesaver for AP departments. When implemented properly, AP automation can transform them from cost centers into profit centers. But how do you insure that the accounting department operates as accurately and efficiently as possible, and what is the nearest road leading to successful Accounts Payable automation? Below are the first key steps:

1.  Identify and build your business case

This is the first and most important step. You have to identify your business situation and build a strong business case so that your company can both achieve a good return on investment and solve many of business issues together with manual processes.

Before choosing any solution or implementing any strategy, it’s crucial that you calculate ROI. This is seen as the significant preparation in building your business case. Then compare the ROI between different solutions. This is a simple equation helping you calculate and compare ROI:

(Current cost-per-invoice – Projected cost-per-invoice) X Invoice Volume = Savings

2.  Know your needs and goals

After identifying and building your business case, you need to carry out a thorough examination of your current processes. Then determine your company’s specific needs and objectives, both from management and end-user perspectives. The most important point is communicating with end-users (accounting staffs in this case) to understand the pain points of the AP process because they are the ones who directly handle and solve AP issues.

Do not rush and try to deal with all problems they encounter, focus on the main points and prioritize requirements and goals to maximize your ROI.

3.  Get senior management support as soon as possible.

Your company may have thousands of projects vying for the same budget dollars and IT resources. Gaining budget approval from your senior manager would increase your chances of success.  Build a steering committee of senior members from all departments within your organization, from the accounts payable department through your supply chain.

4.  Develop an AP automation strategy

When all steps above are successfully conducted, it’s time to develop a thorough AP automation strategy for your specific business. You have to make sure that your strategy can meet all of your business’s needs and goals, and address the areas you wish to automate, from invoice capture and process, workflow and approval to payments.

Above are the first 4 of 9 steps to successful AP automation. Subscribe my blog to avoid missing the latest news about part 2 of this post as well as receive useful info about AP automation.

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Exposing 5 misconceptions about AP invoice automation

In the context of the economic downturn, tight credit, and declining margins, AP automation is considered as a powerful tool in reducing costs and bolstering bottom lines. As prevalent as it is, there are lots of misconceptions regarding the benefits of automation. But not to worry! I’m here to dispel the 5 common misconceptions about AP automation.

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5 ways to maximize ROI with AP automation

2016 has proved to be a revolutionary year for many accounts payable teams. At the forefront, AP automation is considered as the critical solution to increase efficiencies and make an impact at the highest level of business operations. This post will help you discover 5 ways to maximize the return on investment with AP automation:

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Top 4 processes to be automated first.

Deciding on which processes to start with is always the toughest task when first implementing workflow management. You may be overwhelmed by the number of processes that need to be automated while your company copes with problems arising from resource limitations such as lack of money, time or personnel.

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What ordeals do accounts payable departments have to cope with?

Deal with ordeals and help the accounts payable departments to process invoices

As we all know, the accounts payable department takes charge of processing and checking transactions between the company and its suppliers. This means the accounts payable department has to make sure that all invoices from suppliers are approved, handled and paid.

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