Are you tired of lost invoices, payment errors, insufficient traceability and disputes with suppliers, and looking for a way to optimise your accounting processes? This article explains how AP automation solutions offer a concrete and pragmatic solution for reducing costs, improving efficiency and responsiveness while also processing faster.
What is AP Automation?
Automation consists of replacing all or part of a given process originally based on exchanging paper documents, by automated processing that uses digital documents. The foundation of electronic processes, these digital documents may arrive from a variety of different sources. In some cases, the data to be processed already exists in electronic format, either in a structured file format such as EDI, XML, or CSV, or as unstructured files such as PDF documents.
In other cases, the documents must first be transformed into digital format by scanning the contents of paper documents using scanners in conjunction with automatic document reading (ADR) and optical character recognition (OCR) technologies.
Automation with a SaaS (Software as a Service) solution enables users to process, store and classify their documents from any computer or terminal connected to the Internet.
Why should you make the change?
Several studies have highlighted the challenges faced by accounting departments that have not implemented digitalised invoice processing. This includes high processing costs, lack of visibility, lost documents, payment errors, insufficient traceability, absence of a reliable audit trail, and more.
The cost of manually processing a paper invoice was shown to range from £9.40 to £20.8, with a per-document storage cost estimated at £3.25! The figures for lost or incorrectly classified documents are equally astounding: it costs £110 to search for a document and £200 to recreate it.
Beyond the direct costs associated with manual processing, you must also consider indirect costs, which may be harder to quantify but are just as important and equally detrimental to operations.
• Managing supplier calls and late payments: respectively, these two cases represent 41% and 31% of an accountant’s time.
• Lost invoices: 7.5% of the documents handled by any given company are lost.
• Some employees may not be overly motivated to focus on purely administrative tasks that could be automated easily.
What are the benefits?
As time goes on, the benefits of ap automation solutions are becoming increasingly well known, demonstrated and communicated, especially for SaaS models that minimise risks and maximise return on investment.
In a report by Paystream Advisors, a research and advisory firm, two performance indicators for accounting departments are used to show the level of maturity in terms of accounting process automation within companies, which are in turn divided into two categories: novices (companies implementing a low level of automation) and innovators (companies that have optimised and automated their invoice processes through ap automation).
The average time it takes to process an invoice from the moment it is received through payment approval ranges from 45 days for novices to 5 days for innovators.
Also, with the same comparison criteria, the processing cost for an invoice in any format – paper or electronic – drops from 14.12 € for novices to 2.22 € for innovators.
A report by CapGemini Consulting estimates that automating supplier invoices (Purchase-to-Pay) generates a total cost savings of 71%!
In addition to these noteworthy benefits, automating invoice processing increases productivity, agility and efficiency, providing users with instant anytime access to invoices, easier document revision, increased accounting data security, elimination of physical invoice archives, high volume data collection and much more.
Who is AP Automation for?
AP Automation has truly expanded over the past several years. Many factors have contributed to this generalisation, including solution availability as Internet services, Cloud offerings, SaaS mode and use-based pricing models, which help bring digitalisation to within reach of all types of organisations, regardless of their size or the volume of documents to handle.
Where should you start?
Beyond critical basic criteria, such as solution performance, infrastructure security, resulting automation level, scalability, and others, choosing a digitalisation solution starts with optimal understanding of the organisation’s current situation as well as the problems to be solved. The steps are as follows:
• Understanding functional needs: at the very outset, it is essential to involve all project participants, including the CFO, accountants, buyers, approvers, and other stakeholders to highlight pain points and regularly encountered challenges, while also quantifying costs as much as possible. Performing an audit of your current process also represents an important starting point: you must be familiar with the types of documents to process and their volume, as well as invoice workflows and the various people involved.
• Defining your qualitative and quantitative objectives: measuring quantitative objectives is relatively easy once you have set up relevant indicators, such as invoice processing cost and time; average processing time of an invoice from reception to archive; the number of invoices handled by each accountant; and the number of supplier disputes and related processing time. Qualitative objectives generally depend on the identified pain points, for example:
- Pain point: absence of regulatory compliance.
- Objective: implement a reliable audit trail.
• Planning your project: it is critical to start by defining an optimal schedule that takes various issues into account, such as: When is the best period for the accounting team to undertake an organisational change? Does the project need to be coordinated with another change or new accounting package?
Project implementation times vary with the chosen type of solution, its complexity and the required level of customisation.
Communicated by Yooz
Publié le 12 octobre 2020