AP Automation: Quick returns and hard savings
Accounts Payable (AP) processes have typically grown organically in line with the growth of the organization; the need to pay suppliers has been seen as a transactional function and of little additional value to the organization.
With the growing desire to align processes with company strategy, Accounts Payable
processes are now getting the attention they deserve as organizations look to implement processes that are efficient and effective in the delivery of objectives to the organization.
Use case: Focusing on quick returns and hard savings
An organization is processing in the region of 10,000 invoices every month with a small degree of automation. The Accounts Payable Manager has decided that it would be beneficial to introduce automation earlier into the process but does not have the time to fully assess the operation and collect detailed information. Based upon the understanding of the process, the focus becomes key areas that will drive real cashable benefits from the new system - the amount of resources involved in the process, early payment discounts, duplicate payments and reduced costs in document storage.
The labor-intensive aspects of the process:
Various industry standards outline that a "high performing" Accounts Payable function
can process between 24,000 and 27,000 invoices per FTE per annum. The Accounts Payable Manager is aware that, at the moment, he/she has 7 people involved in the processing of invoices, with the current performance level being 17,143 invoices per FTE per annum. If the department could reach "high-performing" levels, the invoices could be processed with 5 people, this would allow the remaining two people to become involved in "value-added" activities such as supplier statement reconciliations or supplier relations.
Equally, the Accounts Payable Manager may focus on a specific segment of the process that he/she is certain will benefit from invoice automation. It may be identified that the keying and exceptions management process is particularly inefficient.
Having looked at "intelligent" invoice data capture solutions that result in over 90,000 invoices being input per person per annum, the Accounts Payable Manager looks at the current manual process and finds that 30,000 invoices are currently being entered per person per annum. This is a significant saving that particularly addresses an area of great inefficiency within the cycle.