CloudX Blog

Is AP Automation Worth It?

Posted by Chris Cosgrove

Nov 8, 2017 2:59:36 PM

Is AP Automation worth it? Depends what your building...

Count the cost!


It’s always a good idea to determine whether something you’re thinking about doing is worthy of the effort.  I mean, who goes blindly into a venture without first counting the cost...that’s just dumb!  Could you actually imagine some engineers, architects, developers, and construction workers looking at each other at a skyscraper site and just shaking their heads saying I can’t believe we can’t finish...the beancounters say there’s no funds left.  It’s ludicrous, because that would never happen (except maybe for that hotel in Pyongyang, but hey).

Though most Accounts Payable professionals don’t have extensive building construction expertise it is not entirely dissimilar in that the question needs to be asked before beginning the lift in terms of process automation.  Though AP automation is definitely a known entity, it’s more involved than in bygone years, especially with the advent of numerous B2B payment rails.  The thrust of what we want to bring into view today though is really the measurement by which one could assess the prospects of AP automation and determine whether it would be worthwhile.

Three perspectives that need to be considered:

  1. Financial costs - Certainly any project has a financial cost consideration to take from inception to completion, like our building example above.  In many cases, the end result is something that may have an intangible value, though that won’t cut it in terms of assessing the viability of bringing AP automation to bear.  In fact, most organizations that have brought transformation to their Accounts Payable function have done so for precisely two reasons: a. They had a desire to do things more efficiently and they knew that was possible and b. They had the foresight to realize that an improved process would have the directly proportional effect of driving their costs down, and thus they would eventually achieve a break even and ultimately return on their investment.  This whole model is well and good, though new ePayments mechanisms like virtual card are tipping the apple cart though as they afford businesses the opportunity to monetize their payment stream and literally flip AP into a profit center virtually overnight.

  2. Opportunity costs - What does not automating this onerous process mean to your business? How is a poor or suboptimal process impeding your doing business with vendors and ultimately your supply chain? Is it creating error in your process that is then getting found out through internal and external audits?  What are the impacts on your people, and not just your back office AP staff, but how are your approvers engaging with this and how much is the effort requiring of them and what is their time worth.  What comes of doing nothing in terms of improving and maintaining the status quo?  All of these questions need to be posited and then you must taken an honest inventory of the responses before determining what matters most.

  3. Resource / political costs - Some hills are worth fighting for and others worth dying for, though not all are worthy of a fight.  If you know you don’t have the personnel to pull a project off, in some cases an honest assessment before getting started is what’s absolutely required.  In other cases political infighting can doom a project before it finds its feet.  For some companies, areas and projects are more siloed and competitive and as such, getting an initiative can be challenging to say the least.  Either way you need to count the costs in this respect and determine how much support you have and how much ack ack you have coming at you and what the best path forward is.

From our perspective, staying mired in inefficiency, waste, and limited visibility is an absolute non-option.  So, granted that we’re biased in this area, but we’re also unapologetic advocates for improvement where possible, and via cloud based AP automation virtually any business can benefit from an improved process and one that monetizes each transaction coming through and going out the doors so to speak!

Free eBook on AP Automation vs E-Invoicing:  What's Right For My Business?

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Topics: Accounts Payable Process, ap automation

Harnessing AI Via AP Automation

Posted by Chris Cosgrove

Nov 1, 2017 11:00:17 AM

Best AP Automation is AI powered!

Rise of the machines

There’s increasing buzz over the impact of AI (artificial intelligence) in the workplace.  With all the B2C impacts we’re seeing of late it’s with good reason.  Just consider how Alexa and all the Amazon devices, or Siri on iPhones, or the Google suite of products are changing how we do life at home and you’ll quickly grasp the pace and scope of the landmark changes in our world.  This is all well and good in our personal lives, and somewhat easier to comprehend, but the business implications of artificial intelligence in the back office can not be understated.  Sadly, many companies still don’t grasp how this technology can be leveraged in the here and now to create better business outcomes, reduce costs, improve cashflow, and drive profit, all in back office areas.

The primary way that AI is influencing AP automation would be three fold:

  1. OCR - It’s by no means a new technology, but one that has been changing and improving for a while.  OCR is now a highly reliable, trainable, adaptive technology that utilizes a machine learning engine to continuously improve in terms of accuracy and data throughput.  At a minimum, if you are in the data entry game in areas like Accounts Payable, this is a technology that can deliver a massive amount of value and should be on your roadmap to explore.  Granted, it’s not for everyone and typically only fairly large companies have successfully deployed it, but rest assured there are cloud and BPO models that can take your documents and data and run through an OCR engine with validation services to deliver high quality data back to you (and without breaking the bank).
  2. Workflow - Business Intelligence can be applied to drive documents or processes forward and this is a welcome change.  For anyone who has been trying to push approval processes forward and understands the challenge of doing this across a large or geographically dispersed organization, this is a definite win.  By applying your unique business rules to an electronic workflow, you can obtain the approvals needed to advance a transaction all while establishing a digital audit trail that can be tapped into later as a means of process visibility.  Various triggers can be used in conjunction with OCR so an AP automation system intelligently knows who and where to route invoices or transactions for human interaction.  Things like Address, Vendor Name, or Dollar Amounts can all be triggers for delegation or escalation and will help most businesses navigate even the most cumbersome of processes.
  3. Payments - Payment broker technology is a relatively newer development in the B2B landscape, but is a technology that can intelligently apply payment to your vendors based upon their preference.  This is massive for Payors as it enables them to push ePayment adoption and thereby advance their interests in terms of divesting themselves of traditional, onerous payment methods like Check.  Also, due the increasingly diverse set of B2B payment rails, it’s a welcome support to the AP staff that are otherwise responsible for executing payment transactions.  In today’s business climate, companies can pay via Check, Wire, ACH / EFT, credit cards, or virtual payments.  As such, having this technology that can intuitively offer payment according to the vendor’s preferred payment method, or one that can be designed to offer payment by the Payor’s preference as an initial offering and then default to a secondary method.

All of these are solid examples of the use of machine computing and intelligence to bring about positive wholesale operational benefits that come with a major financial upside.  If you haven’t explored these yet for your business it’s time to get serious and look into these for yourself to see where you might be missing out and learn what you can do about it!

Download The Four Keys To Maximizing The Strategic Value of Accounts Payable

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Topics: ap automation, artificial intelligence, ai

How much does AP Automation cost? - Updated 2017

Posted by Chris Cosgrove

Oct 12, 2017 10:55:54 AM

AP automation price tag

How much is it?


If you’re anything like me then these are four words that can make or break the moment when you are talking about whatever the item is in question…..a car you’re thinking about buying, a planned vacation, a piece of clothing...whatever. However, the same question needs to be asked of AP automation because while it’s a great concept and certainly a needful one for most businesses, answering this question will by and large determine whether a business can make the decision for or against automation. The good news is that depending on your version or approach to AP automation, the costs vary greatly.


The models:

Scan & Archive: While this is admittedly a bit of a tame approach to automation, some businesses cut their teeth on process improvement through this approach. While it does help with archival and retrieval, it does little to improve the process and some could argue that it actually encumbers the process more by requiring an additional post-process step of scanning and indexing. Now, this can be achieved on the most basic of levels through some kind of a shared drive / folder-based storage approach, but this is typically not the best solution for finding things unless you’re a very small business. The moment your transactional levels jump into the hundreds or thousands per month, you’ll find this to be a less than adequate solution. Still, it can be done for mere hundreds of dollars on the micro scale. If you’re looking at layering in an electronic document management system, you’ll be looking at anywhere between $10,000-$100,000 depending on how robust it is plus annual license fees and any technical support required to maintain it.

Front End Invoice Processing, Auto Matching, Approval Workflow, and Archival: This has been a tried and true approach for many businesses but in a deployed setting the costs can run amok quickly as the systems necessary to power this approach (OCR, bi-directional integration, business intelligence, workflow, audit trail, and storage) are all complex and costly. These types of deployments are typically taken on by businesses running upwards of 10,000 invoice transactions a month and the associated spend can easily range from $100,000-$500,000 for deployment plus annual software license fees and related personnel support costs. For this reason many businesses shy away from the model because the costs outstrip the benefits and the return on investment is beyond a 12 month period and thus becomes seemingly unfavorable.

Cloud-Based AP Automation: Essentially this approach is similar to the above, but because the infrastructure investments are in the cloud and generally deployed across multiple tenants, the cost is shared. Further, hardware requirements are obviated, especially if data center elements are hosted and therefore the point of entry costs for businesses are vastly reduced. In many cases, the providers of this approach charge transactionally instead of software license model. Implementation fees are typically proportional to the number of invoices processed per month, but piggybacking off the scenario above at 10,000 invoice transactions per month, it’s not uncommon to see an implementation fee of $20,000-$35,000 and transactional costs ranging from $.65-$.95 depending on the scope of services / automation provided.

AP automation & ePayments: This is where things get interesting. In all the above cases the typical play for a CFO, Controller, or Treasurer is to look at AP automation as a means to cost cutting and process improvement, which it certainly is. However, when we start to consider the vital role of physical payment execution and the byproduct of automation (ie. time saved and visibility generated through data lifting and automation) there are a world of possibilities. For starters, ePayments (ACH, EFT, wire, and virtual cards) are growing quickly and displacing the heavy reliance on checks in the B2B space, but more importantly they provide a more secure conduit and one that can actually monetize the process (virtual card payments). Through this one payment type alone, many companies can generate a 1-1.5% tap on eligible spend.

The math looks like this:

Spend / mth = $20,000,000Invoices / mth = 5,000VCards @ 25% / mth= $5,000,000Rebates @ 125 bps / mth= $62,500Annual impact= $750,000

This does not even factor additional cash saved through the elimination of checks, but The Accounts Payable Network estimates the average cost to cut a check at $5.14, so a simple formula multiplying that value with the forecasted number of checks saved by using a virtual card in their place will yield the result.

Beyond that the other strategic gain is early payment discounts, which can be massive and will be something we look at more deeply in future posts.

All that said, remaining in the state of a painful, dysfunctional process is not really an option in today’s networked economy. If you’re unsure of what approach is right for you, may we suggest checking out our eBook on AP automation vs E-Invoicing?

Free eBook on AP Automation vs E-Invoicing:  What's Right For My Business?

Read More

Topics: Invoice Processing, ap automation, epayments

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