Posts from July, 2011

This is the second in a series of three blog posts devoted to five changes that are coming to AP:

1. More Importance Will be Given to the Quality of Supplier Information
2. Supplier Networks Become a Reality
3. Technology Provides New Ways to Automate AP Systems & Processes
4. Buyers & Suppliers Collaborate
5. More Cooperation between Finance & Procurement

To review the first two, please click here. Here, I am focusing on the question of how technology will impact AP systems and processes.

3. Technology Provides New Ways to Automate AP Systems & Processes

Over the last few years, this is the single-most talked about AP topic, and was the subject of intense debate and interest at the Fusion session. It is largely understood that automation is inevitability there were concerned opinions about the potential impact automation on, as they described, the “invoice chasers” and “data entry professionals”. I was impressed at the level of passionate discourse about how automation will impact the AP department, as well as how automation is often lumped in with outsourcing and off-shoring as a threat to jobs. The processes of moving past manual to automation will, no doubt, impact the staff in any AP organization. But, as one session attendee aptly noted, the focus should be redirected from potential job losses to the positive impact automation can make to allowing employees to take on more strategic roles.

Here are just a few areas where automation can be used to streamline AP processes and free-up staff time to work on tasks that are not as well-suited to a technology solution:

• eInvoicing: According to a recent Aberdeen report, 77% of incoming invoices are paper-based. The report goes on to state that paper invoices and manual processing continue to hamper accounts payable operations, keeping suppliers in the dark and failing to give finance the visibility it needs to actively manage the organizations’ cash positions. This report looked at the performance of a range of company’s handling of invoicing, and showed that Best-in-Class performers which used technology took 3.8 days to process a single invoice, at a cost of $3.09/invoice.  These companies represented the top 20% of those surveyed. Contrast that to the bottom 30%, or the Laggards that did not employ technology, which took 20.8 days to process a single invoice at an average cost of $38.77! Moving your company from a Laggard to Best-in-Class would go a long ways towards meeting the top pressures driving AP improvements:  corporate directives to lower costs, and lack of visibility into invoices and AP documents. 

• Automating Recovery Processes: A recent report conducted by Paystream Advisors focused on applying automation to the statement audit process, contrasting it to the highly manual and labor-intensive traditional methodology.  Automation, the report noted, really begins with the ability to streamline the process of connecting to the majority of a company’s suppliers — a daunting task without an appropriate technology solution. Traditional recovery audit firms, it states, review only the top 5-20% of a company’s suppliers, which “…leaves 61% of the statement credits in the remaining 80% of a company’s supplier population untouched.” This means a considerable number of credits are never found, and thus the company is missing out on a potential continuous revenue stream.  Automation serves two purposes in this example — it drives money to the bottom line, and it streamlines staff resources.  The report identifies the highest priority in selecting a statement audit firm as being “technology enabled” to manage extreme volumes of supplier data, enable 2-way communication, and capture and manage incoming supplier statements.  To read the entire report, please click here.

If you have other examples of how you see automation changing the AP environment, please add your comments here.  The final installment of this series will review the final two points: Buyers & Suppliers Collaborate and More Cooperation between Finance & Procurement.

Lavante & Basware will present a webinar on July 13 at 11am PDT on this topic, covering these top five changes. Click here to find out more and register.