CloudX Blog

Accounts Payable Process - 9 Ways To Slash Costs Quickly

Posted by Chris Cosgrove

Feb 5, 2013 7:42:00 AM

Slashing Accounts Payable Process Costs Rocks!

According to recent economic data, the road to recovery for the US economy is still fraught with uncertainty and less than optimal results. 

 

The tepid recovery that has been underway for sometime appears to have stagnated, with actual GDP contraction in the fourth quarter of 2012.  Some economic experts anticipate more of the same in the first quarter of 2013 with results essentially being neutral and according to others, even indicative of recession level benchmarks.  With that said, many organizations are also bracing for rising tax burdens, healthcare costs, and pension liabilities.  So, as a means to foster improved organizations fiscal health, we wanted to contribute 9 ways to reduce cost in your AP process.

 

Here’s a recession busting list of 10 Account Payable best practices to make AP more profitable and better the financial health of the company simultaneously!

 
  1. Pursue AP Automation through cloud initiatives.  This will help you cut processing costs by eliminating data entry and manual workflows.  Cloud infrastructure generally represents a potent alternative to traditional Accounts Payable software system deployment and is typically not shackled by high investment costs to deploy.  Also, cloud delivery often reduces the amount of IT resources and time required to support systems, making this appealing for companies from SMB to Fortune 500 level.
  2. Adopt electronic payment alternatives and incentivize your suppliers to accept e-payment methods.  Accounts Payable solutions for payment include P-Card, ACH, e-Invoicing, & many more.  According to The Accounts Payable Network benchmarks, it can cost upwards of $5 to process a physical check.  As a stark contrast in cost, ACH transactions cost under $1.50 to process.  That represents close to a 70% savings in cost, not even factoring the time impacts of electronic payment compared to traditional methods. 
  3. Centralize AP Invoice Receipt – Many organizations with broad geographic footprints have a difficult time getting invoices into AP directly and in a timely fashion.  This is also true for organizations that have multiple business units, with invoices coming into the business unit first and being forwarded to AP from there.  Whenever possible, centralizing the invoice processing function to a standardized and centralized approach will result in consolidation benefits.   This is also being rapidly enabled through flexible capture solutions.  By leveraging investments in multi-function and even mobile devices, you can now onboard AP documents from virtually anywhere.
  4. Ditch using Checks for Employee Reimbursement – Similar to getting vendors set up on electronic payments, printing check for employee reimbursement is costly, paper burdened, and inefficient.  Explore Direct Deposit alternatives to get them their money quicker, easier, and at a reduced transaction cost to yourself
  5. Collaborate With Procurement To Increase Early Payment Discount (EPD) Capture – Companies of all sizes are being disaffected by challenging economic conditions.  This creates an opportunity for those who can turn invoices around quickly and execute early payments.  By working in conjunction with Procurement to negotiate supplier discounts and then executing invoice processing and payment within AP, EPD’s can quickly become the biggest financial contribution AP can make on organizational performance. P.S. AP departments that automate their processes capture 90% of available discounts, compared to those who don’t who get only 18% of what’s available according to Aberdeen data by the way!
  6. Deploy Fraud Detection Technology – By looking for fraud within AP, companies can often cut down on funds leaking out of the organization.  Simple items like stopping duplicate payments can significantly contribute to errant or even malicious cash outflow.
  7. Improve AP Productivity Through Dash(Score)Boards – When benchmarking AP productivity and monitoring KPI’s in a public space, two things occur; 1. You establish a framework for performance, and oftentimes AP staff will strive to improve their productivity.  2. You can create a platform to create organization awareness to how AP is contributing to organizational health and fiscal performance.  It’s kind of like the difference between someone who goes to the gym to socialize and the personal trainer who meticulously records performance levels while helping their mentees shatter performance barriers.
  8. Transform AP Staff From Mundane Work to Strategically Valuable Work – Part of this has a lot to do with removing big rocks (obstacles) from the process…data entry, manual validation, paper processing, etc.  When you do that and start to consider AP as a customer service position internally and externally in conjunction with a department that has significant ability to improve financial performance, hedge risk, and provide dynamic reporting, you realize that AP can make a significant difference as a valued resource to corporate performance.
  9. Consider Using Accounts Payable Audit Services – In many organizations, Credit Memos are processed incorrectly, Duplicate Payments occur, and a host of other issues transpire with respect to incorrect transaction bookings.   Contracted AP recovery audit firms can help recover misappropriated or unclaimed funds usually on a contingency basis.

To identify other ways to reduce cost in your AP process, it’s a good idea to know the costs that abound within the invoice approval process.  Check out our eBook on Uncovering the 7 Costs below!

Read More

Topics: Accounts Payable Process, AP Process, accounts payable software, Invoice Processing, accounts payable best practices, ap automation, Accounts Payable Solutions, accounts payable audit

Accounts Payable Software Benefits - Why Automating AP is Super!

Posted by Chris Cosgrove

Jan 8, 2013 12:25:00 PM

 

 

Accounts Payable Process Automation Super

Automating AP Is Super!

 

This is a fairly introductory post, though it is important to review this subject  matter from time to time for would be users to learn about what the biggest impacts generated by Accounts Payable automation software are upon AP invoice processing.

To better understand it, approaching the issue from a few different lenses offers the most comprehensive overview to the benefits of Accounts Payable Software. 

 

Impacts are made in the following core areas:

Operational

Strategic

Financial

 

 

Operational

 

Operational benefits to your Accounts Payable process are bountiful with well executed AP improvement initiatives. 

Key areas affected by this include:

- Improved invoice entry.  For many organizations that  are still encumbered by paper based or paper image format invoices, invoice entry is error prone and arduous.  With such a time consuming approach to getting invoice data loaded into the ERP system, processing of invoices at its best is constrained to how quickly the data can be typed into the system.  With that said, Accounts Payable Automation software typically improves invoice processing by up to 70% through the utilization of OCR to offset dependence upon data entry.  The implied benefit of this is to also massively boost individual Full-Time Employee productivity benchmarks.  According to IOMA data from 2010, in well automated environments, a single FTE should be capable of processing 3,400 invoices per month as a benchmark.  Interestingly, for many customers that we speak with, their productivity benchmarks are far lower.

 

- Automation of GL Coding & Approval Routing for invoices that require an Approval process. 

 

- Automated distribution of invoice documents through workflow, including diminished reliance upon interoffice mail, email, and courier services to deliver these document types. 

 

- Eliminating multiple validation points through the use of automation is also of fundamental importance to many organizations who are looking to eliminate manual time wastes throughout their process.  Once an invoice is converted to data and integrated with the ERP system, you can enact validation steps to reference Vendor Master File, PO Table, and Receiving Data to audit for exceptions.  In this way, you can further enhance staff productivity by facilitating faster exception handling and passing the invoices that are ‘straight-through’ processing eligible dynamically.

 

Strategic

 

Strategic benefits derived from process automation with Accounts Payable Software are multi-faceted as well.

 Key strategic impacts to improving your Accounts Payable system in this space include:

- Getting visibility to an otherwise murky area from a reporting perspective. 

- Promoting internal collaboration among departments throughout the supply chain.  This can enable better customer service, vendor dispute resolutions, easier financial forecasting and troubleshooting, and a myriad of other issues.

- Promotion of compliance standards within AP. Indexing critical information by Vendor, Dollar Amount, Requisition Process, and providing audit trail information for approver

 

Financial

 

Many AP projects are justified by the measure of the financial impact on the organization as a proverbial ‘cherry on top’.  Surely the Operational and Strategic values have merit, but the financial piece makes this type of improvement irresistible for many organizations.

 

- Cost Reduction around Invoice Processing costs – This is no small amount to be sure, as the average organization spends between $6-15 to move a single invoice from receipt to approval.  Multiply those numbers by your invoice volume and then realize that best in class organizations are doing the same work at $2-3 per invoice, and you can determine how much of an opportunity cost there is for you.

 

- Improved Discount Capture Through Faster Processing and Dynamic Visibility to Eligible Discounted Invoices

   

- Cost Reduction around Audit cycles, document retrieval, and document distribution   If you feel your organization is inefficient and slow in this respect, 2013 could be a break out year for you if you take the time to determine what challenges in your Accounts Payable process currently hold you back from better performance.  Click here to learn how to benchmark your process!

CloudX provides AP services and solutions to improve Accounts Payable processing speed, visibility, and performance.

Read More

Topics: AP Process, AP Process, Accounts Payable Automation, accounts payable software, accounts payable audit

9th Day of Christmas - Accounts Payable Invoice Retrieval Made Easy

Posted by Chris Cosgrove

Dec 17, 2012 12:28:00 PM

Accounts Payable Invoice retrieval is like Secret Santa

 

Retrieval around the holidays certainly has a different connotation for most people than it does in the terms of Accounts Payable automation. 

 

The concept of retrieval means to ‘get back’ or ‘recover’, which  is a pretty common theme for most Secret Santa or White Elephant gift bags, which are basically the beginning of internal office rifts at their worst.  For many, those who have later round selections during these grab bag gift games, have an unfair advantage and the power to snatch away the choice pickings much to the dismay of those who had earlier turns.  However, in many variations, the first player has the trump play and can often retrieve what might have been in there hands for a fleeting moment.

However, in the context of the Accounts Payable process, retrieval of invoices is a big deal.  It is the means by which AP Staff (as well as Approvers, GL Coders, Auditors, and Administrators) obtain the invoices for a variety of reasons.  These may include internal or external audits, vendor disputes, or a myriad of other financial reporting inquiries.

 

How do most organizations retrieve invoices presently?

 

According to recent data from The Accounts Payable Network, over 80% of invoices in mid-market business still are received into the organization as paper.  Only 10% of invoices in this space come in as an electronic imaged document (PDF), and the remainder come in through alternative means (EDI, EIPP).  With that said, many companies still find themselves mired under heaps of paper unless they’ve deployed some level of imaging.  The same report from TAPN suggests that over 50% of organizations have deployed some level of imaging to their Accounts Payable process, which definitely adds some value to the retrieval component.  However, when the imaging occurs is a fundamentally important element to making your Accounts Payable process optimal. You can read more about that here!

Though invoices are essentially a ‘dead’ document after they have been processed and paid, most organizations have a multi-year retention requirement in place primarily for compliance and audit purposes.  With many Accounts Payable departments still shuffling through paper, retrieval can be a nightmare, and by not having the invoices and invoice information indexed in an electronic document management system, you can bet that the amount of time to find an invoice manually increases exponentially compared to environments leveraging robust Accounts Payable software.  For many organizations though, the imaging of AP invoices is done at the end of the invoice process, which does not really improve the process tangibly other than to make the invoices easier to recover when need.  This would be our approach to improving the process through front-end imaging!

 

AP Audit Considerations

 

Accounts Payable software retrieval is not just limited to AP staff either.  Accounts Payable audits are an ongoing source of frustration for AP managers and finance leaders the world over.  Often, the bigger the organization (and certainly if you are a public vs. private company) the more frequently you may need to provide invoice information to your audit staff.  This is often a painstaking and time intensive burden that is levied upon AP staff whereby they have to procure invoice files from storage areas and supply them to the Auditor.  Nobody, in our experience, likes being beholden to another in terms of the audit process, so minimizing these interactions is typically a worthwhile pursuit for both parties.

In more progressive AP environments, the AP audit is a much more congenial interaction as invoices images and their corresponding indexed data can be provided in a ‘de-militarized zone’ of a document management system.  Essentially, AP auditors have the invoices and supplemental information they need available in a dedicated environment that makes the Accounts Payable audit easier on staff.  In this way the auditor doesn’t have carte blanche access to all AP documents, but only what they need.  By doing this, we’ve heard from clients that AP audit cycles have been shortened by as much as half, in terms of billable hours to their Accounting firms. 

 

Three key Audit impacts provided by embracing Accounts Payable software:

 

  • Easier Audits for AP Staff & Auditors – Less back and forth time, less time off-task, less stress.
  • Promotion of Green initiatives – elimination of paper copies
  • Promotion of Compliance Standards & Disaster Recovery Preparedness – By having your invoices and invoice data in an electronic document management system (especially cloud-based), re-creating AP data is made simpler and more secure than physical storage and retrieval.
For more insights on Best Practices to managing invoice data and images electronically, check out our Best Practices eBook below!
Read More

Topics: Accounts Payable Process, AP Process, Accounts Payable Automation, Improve Accounts Payable, ap system, accounts payable best practices, ap audit, accounts payable audit, invoice retrieval, invoice imaging

Subscribe to Email Updates

Posts by Topic

see all