Regardless of what organization you’re in or what business you’re a part of, there’s one thing that rings true throughout – you want to do more while spending less.
So how do you do that? In a lot of cases, technology is the first place leaders look to help them improve their operations. Even then, certain departments tend to get overlooked. One of those is accounts payable (AP). While most AP departments are condemned to a life of paper and back-office bottlenecks, savvy leaders realize that improving AP operations can actually be central to saving money and creating company-wide efficiencies.
In this three-part blog series we discuss how improving AP efficiency, access, and visibility can positively impact your bottom line.
Part One: Improving Efficiency
As the saying goes, “it takes money to make money.” In a way, that’s what we’re talking about with accounts payable. No matter what your business and no matter what sort of merchandise you move, there are people you need to pay, too. Rent, operational expenses, suppliers, partners, and others are running a business too. We’re all in this together, after all.
Accounts Payable is the department that keeps all this stuff in order. That’s a huge role, and sometimes no small undertaking. So if your goal is to increase efficiency, there are three aspects of AP work of which you need to be aware:
1 . Increasing Invoice Volume
According to the Institute of Financial Operations Accounts Payable Efficiency Study, 39 percent of AP professionals say their total invoices increased as much as 10 percent in the past year while 24 percent report an increase of greater than 10 percent.
2 . Paper Complexity
Despite the advent of new technologies and more and more people using “e-” versions of everything, 50 percent of all invoices still arrive as paper. Approximately a third of them come in via email, and 19 percent are sent via electronic data interchange (EDI).
3 . Transaction Times
Regardless of company size, finance teams spend about half their time on transaction processing.
Automate for Efficiency
For a lot of folks, dealing with paper evokes images of Ebenezer Scrooge, skulking over his books and not allowing another coal for the fire. Yeah, it’s antiquated. Which means it’s natural to think about automating invoice processing with enterprise content management (ECM). Doing so eliminates the excessive time and errors that result from paper-driven AP processes. You know what we’re talking about – things like manually entering invoice data and indexing information. But ECM offers a better way. That’s because regardless of how invoices and supporting AP documents arrive — be it via snail mail, fax, email or EDI — ECM automatically accepts and imports the files into the system. Simple. Done.
Don’t get us wrong, though. Enterprise content management is much more than a scan-and-retrieve system. The right ECM solution will also do things like:
- extract critical data from imported invoices (e.g., PO numbers, due dates and even line-item details)
- deliver that data directly to existing business applications like your ERP, and validate that data against existing records
- automatically file imported documents into a single database using a folder structure you create, ensuring protection against loss or misplacement
What’s more, ECM workflow management simplifies invoice processing by routing documents and information to the right business units at each stage of the invoice approval process. No more hunting approvers down or tracking progress on spreadsheets. Key stakeholders are automatically notified via email when there’s some action required.
Do More with Less
How does this support your overall bottom line?
1 . Accelerate Cycle Times
With the right ECM solution, you process invoices quickly and with fewer errors, without adding to headcount. Consider the example of Leggett & Platt, Incorporated. The S&P 500 global manufacturer automated invoice processing with ECM to eliminate manual entry, connect systems and accelerate payments. By so doing, they were able to save $1.6 million in AP labor costs every year.
Another ECM user, Cornwell Quality Tools, said, “[ECM] makes growth possible without adding substantially to our headcount. We can do more with the same number of people.”
2 . Reduce Operating Costs Associated with Paper-Based Processing
Go paperless and you not only eliminate the cost of storing and maintaining paper documents, you can stop worrying about losing or misplacing important paperwork – including invoices. ECM allows for the centralization of all pertinent information, allowing your AP folks to easily track payments and prevent both duplicate payments and late-payment penalties. And maybe the best part? Faster invoice approval can help you negotiate with vendors to take advantage of dynamic discounting or early-payment discounts.
3 . Improve Customer Service
No one likes on-hold music. Well, mostly no one. On the phone, it reminds people that they’re on hold and not actually talking to another human being. That’s why staff not being able to quickly locate the information they need to accurately answer questions can lead to poor vendor relationships. With ECM, staff quickly locate the documentation they need to proactively and quickly resolve customer service requests. Fast. Accurate. Efficient.
Every invoice counts. A single unpaid invoice can result in escalation to the highest levels of the organization, tarnishing the reputation of any AP team. With ECM, AP staff has a clear and auditable trail for every touch of a document. Managers can easily monitor the status of invoices, too. The right technology can keep you connected, speed processes and, above all, boost efficiency. Now that’s a goal to which we all aspire.
Next time, we’ll discuss how improving access can lead to happier teammates and better efficiency. It’s all in Part Two of our three-part series, “How AP Affects your Bottom Line.”