BPO Bulletin

Five Challenges to Successful Accounts Payable Automation Implementation, Part 3

by Ken Neal
February 24, 2015

The third key challenge companies confront when automating their accounts payable department is that they don’t think the cost and time associated with implementing accounts payable automation will justify the benefits.

As I outlined in my previous column, the cost and time savings associated with a best-in-class accounts payable department translate to a significant amount of resources and energy that can be deployed elsewhere – allowing companies to realize significant benefits from automation. Perhaps most notably, organizations that have achieved best-in-class status are able to process invoices at a cost of $2.20 per invoice, 88% lower than the average AP department, which averages $19.10 per invoice.

However, the greater issue is often that companies don’t have sufficient budget to completely overhaul their AP operations, so they ignore it as an option. What organizations need to realize is that implementing AP automation doesn’t need to be an incredible reworking of existing processes; there are incremental improvements that can be made.

When it comes to companies for whom a complete overhaul is unrealistic or overwhelming, incremental success can be found by focusing on one aspect of the AP department that will yield the greatest positive impact. In the study I referenced in my previous column (High-Performance Accounts Payable: Three Key Drivers to Success), Canon Business Process Services identified three drivers of high-performance AP departments:

Centralized Invoice Receipt with Automated Data Extraction: A centralized structure with automated OCR (optical character recognition), data extraction and validation processes can yield significant benefits. These include lower invoice processing costs, fewer errors, shorter cycle times and the elimination of handoffs.

Process Automation: While it requires an investment in technologies such as an invoice workflow system, supplier portal, mobile approval capabilities, dynamic discounting and analytics, workflow automation can help companies realize successes. These can range from an average $5 decrease in cost per invoice to a 3.5 day shorter cycle time for invoices and a 117% increase in invoices processed per month.

Outsourced or Managed Services: One of the most popular approaches is outsourcing the front-end invoice imaging and data conversion. Canon has found that just the act of outsourcing an AP activity has a synergistic effect on higher AP performance – including cycle time, cost and labor performance.

By putting time and resources behind one of these three drivers, companies can still realize the benefits of AP automation without feeling like they’re biting off more than they can chew.

In my next column I’ll spotlight the fourth challenge: Companies don’t have the existing resources to implement accounts payable automation. In the meantime, feel free to visit the accounts payable page of our web site for more industry insights, best practices and solutions for streamlining the operational efficiency of your AP department.

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