It’s a strange time to be in Accounts Payable (AP). Over the last few years, we’ve seen a wave of disruptive cloud-based technologies that promise better visibility into spend, greater cost control, and significantly improved operational efficiency. And yet, the majority of companies haven’t caught up with the times. More than two-thirds of annual invoices have to be handled manually, according to a 2015 survey of thousands of AP professionals by the Institute of Finance and Management (IFOM). These include both paper documents and faxed/emailed documents that require manual handling.
That’s expensive: 62 percent of total AP costs coming from labor, according to a 2015 APQC Benchmarking Survey on Accounts Payable Productivity. Manual AP processes are painful and paper-heavy, requiring a human being to open envelopes and print out emails, match invoices with purchase orders (POs) and receipts, and decide whether or not the invoice needs exception handling. Then the whole shooting match has to be sent downstream for approvals. Travel makes it more complex: if your employees are required to submit paper receipts, then you have to wait for them to come in off the road to do so—often times, asking managers who are out of the loop to approve the expenses.
As a result, tracking spend is difficult. If you’re not able to get real-time data, it’s hard to track payments. It’s a challenge to be on top of compliance issues if you have to wait three weeks to see paid invoices. And it’s asking a lot of managers who are usually more focused on the business of your business, which often isn’t AP.
It’s also time-consuming. A 2016 Aberdeen Group study (“Reap the Benefits of Invoice Excellence with AP Automation”) shows that it takes, on average, 17 days to approve an invoice manually—a process that costs $31 per invoice. Only after those 17 days is it added to the ERP system, giving you the visibility you need to create a report. And then, of course, you have to archive the invoice and any other paper that goes along with it.
That’s a lot of work in the days of cloud computing. Manual processes can lead to duplicate invoices, lost invoices, and insufficient controls. Reimbursement takes longer than your employees would like, and vendors are often left to wonder when their invoices will be paid. And then there are late payment fees and, in the worst cases, the possibility of losing a vendor or a partner to too many late or failed payments.
Of course, moving to a digital system isn’t without risk. It’s expensive and time-consuming; it can even be intimidating. But it’s less dire than sticking with the old system.
When you move your AP processes to a cloud-based system, you can offset your costs with the savings in time and labor. Aberdeen indicates that processing invoices digitally drives the cost down to less than $6 per invoice, and takes a mere 5 days to complete. The emotional costs of moving your employees to a new system are also offset by the reduction in rote tasks and the ease of use of modern digital AP systems.
Digitizing your AP processes gives you a way to gain visibility into your spend much more quickly, take advantage of discounts from paying quickly, and integrate payment tracking, compliance, and management. And with cloud technology, you can spin up a pilot project easily and inexpensively to see whether or not it’s right for you.
By using cloud-based AP processes, you can:
- Log invoices automatically, using optical character recognition (OCR) to extract text from invoices
- Automatically match invoices with their POs and forward it for approval (or for exception handling)
- Set up a portal to give your suppliers visibility into the process, enabling self-service (and reducing your costs)
- Set flags on certain types of spends and behaviors to notify you immediately when problems occur
- Give your employees the ability to use mobile technology to create and submit expense reports on the road—reducing error rates by filing expenses while they’re still fresh in the employee’s mind
- Automatically submit invoices to your ERP, significantly reducing the need for manual input
- Develop reports more quickly and get a better handle on your company’s cash flow, immediately seeing what your liabilities are
- Archive invoices, receipts, and other proofs electronically, for as long as it’s required, without taking up physical space
Digital AP gives you the ability to control spend, which reduces risk, increases compliance, makes tax management easier, and cut off bad spend before it happens.
Interested in learning more about our Invoicing solution? Watch the demo, find out how Concur simplifies and accelerates AP processing, and join us on Thursdays at 11am PT for a live webinar where you can ask questions in real time and get more information.