CloudX Blog

Strategies for dealing with Accounts Payable Process improvement haters

Posted by Chris Cosgrove

Dec 22, 2015 9:58:40 AM

Don't let haters deter your Accounts Payable Process transformation efforts!



Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition.

Steve Jobs


Opinions are like belly buttons...everyone’s got one.


One thing is for certain, he wasn’t cowed by too many folks in the pursuit of his dreams, and we’d argue that he was steadfast even in the face of numerous opinions of people who just didn’t get what he was trying to do.  Such is the fate of anyone taking on a worthy initiative.  Why should this be any different for those who are trying to champion Accounts Payable automation.  The thing is, that unfortunately, many corporate leaders are legacy and due to political power structures, or departmental silos, turf wars and skirmishes emerge over who is going to champion a process improvement project.  And so dies many an initiative before it ever had a shot of getting off the ground.


So, from our heart to yours, we want to equip the person who has a vision and a dream to transform the nature of their Accounts Payable process with the tools they’ll need to eviscerate, obviate, or otherwise derail any would-be hater that comes their way.


Numbers don’t lie.  

If you’ve done an exhaustive assessment of your current accounts payable process, you’ll know how you stack up to other companies from a benchmarking standpoint.  In our experience it’s the majority of CFO’s that don’t actually have a firm handle on what their unique business metrics are from a processing perspective.  For example, items deemed non-critical often get little attention.  With regards to invoice processing, the cost to process an invoice can vary wildly from around $3 per invoice in a highly automated environment to over $15 in a paper-centric, manual environment.  Consider the delta of $12 per transaction times the number of transactions.  At a mere, 1,000 transactions a month, the difference would be a swing of $12,000 to the good (or bad depending on your.  Invest the time to analyze where you can slash wasted cost and bring your analysis to the forefront in the conversation.  Oh yeah, by the way, we offer that up as a freebie if you want some help with that...just click here!


Drive strategic value.

Sometimes cost-cutting isn’t enough.  As an example, cost cuts can mire down between hard and soft expenditures, and some organizations won’t affect active headcount reduction to achieve certain hard savings.  Others may push costs (labor) onto another task area, if someone is strategically redeployed, but strategic gains are another matter.


Consider the equation we laid out earlier on the delta of automated and non-automated invoice processing costs.  The same principle goes for check cutting.  The difference here is strategic thinking can cut certain check processing costs down to zero and be leveraged to drive operational profit.  Specifically, I’m talking about making payments strategic in the form of virtual payments.  The average cost to process a check per TAPN is $5.14.  However, on a $1200 invoice earning the payer 125 basis points, which is standard on many virtual Mastercard payment programs, the rebate earned would be $15 with a $0 processing cost.  In effect, you have a $20 swing per transaction, so assuming 1,000 checks per month, that’s a complete gain of $20,000, not just in theoretical dollars but actual rebates.  When you start talking about true cash impact, it becomes harder to hate away.

Accounts Payable automation gets juicy with virtual payments!

*Average processing costs for traditional forms of payment compared to virtual payments. - per ComData

We also are cognizant of the fact that there are certain scenarios where internal politics hamper progress, as people defend their fiefdoms or look out for their own interests.  Hopefully you can leverage some of the thinking we’re proferring to make headway even in adverse waters.  If you can’t ultimately win hearts and minds though with executive leadership, you’re likely not to affect much change operationally and if that’s the case it might be time to consider finding more forward thinking pastures.


Free eBook on Unlocking Profit From Transactional Document Processes!

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Topics: Accounts Payable Process, Accounts Payable Automation, Invoice Processing, Virtual Payments, virtual mastercard

Why Virtual Payments & Virtual MasterCard Usage Are Skyrocketing!

Posted by Chris Cosgrove

Nov 20, 2015 2:16:48 PM

Virtual Payments & Virtual MasterCard usage is blasting off!

Too much of a good thing is never enough or so they say.


That is certainly a tried and true theory that will be put to the test by millions of Americans in the coming week.  Consider the innumerable La-z-boy recliners, couches, and loveseats that will soon be acquainted with the derrieres of the American masses in their tryptophan induced comas next Thursday.  While it’s ok to binge eat on Thanksgiving, we don’t advocate that all the time, for health reasons.  However, going back to the trough for seconds and thirds (dare we say fourths) is a fantastic idea in terms of virtual payments.


Why is this?


Aren’t virtual credit card payments just another alternative means of paying your vendors...I mean haven’t corporate cards been around for a what’s the big deal?


That’s a great question, and we’re glad you asked.


According to recent survey research released by Paystream Advisors, the trend of virtual payments is skyrocketing and for good reason.  With nearly a 24% annual growth rate and over 29% of large companies having already adopted virtual payments, it’s a force that can not be ignored and will likely not slow down, because it makes too much sense to embrace.


As we wrote previously, virtual MasterCard payments are a thing you just gotta know about.


Here’s some things to take into consideration if you’re wondering what makes them the cat's pajamas:


  • virtual credit cards are accepted by many organizations as they already have the ability and accept traditional credit cards
  • virtual payments can often be executed faster to the supplier than can a check which must be printed, mailed, and then deposited, resulting in a shorter AR cycle
  • virtual payments offer impressive rebates to the purchaser as an incentive that can net significant amounts of ancillary working capital back into the organization
  • virtual payments can be created down to an individual invoice or encompass multiple invoices and each will have a unique, single use account number
  • fraud prevention is heightened due to being able to generate unique virtual payment account numbers instead of leveraging one card for multiple payments or multiple vendors



From our perspective, the other compelling reason to consider virtual MasterCard over other platforms really has to do with breadth of acceptance.  As in all virtual credit card scenarios, ultimately the accepting merchant agrees to accept the card’s inherent merchant fee.  In the case of American Express, the merchant fee tends to be higher by a decent factor in comparison to MasterCard.  Thus, some vendors may not accept or prefer to accept virtual MasterCard payments because it less of a hit to their receivables.  However, in either case, the time value of money and the elimination of check processing and reconciliation are big factors for consideration in that they recoup the time of busy Accounts receivable staff.  We're not sure whether this makes virtual payments the icing on the cake or the cake itself in terms of AP process automation, but we like it and we're sticking to it!


The bottomline is that if you haven’t considered ways to transform your transactional back office processes like AP invoice processing, AP payment automation, or AR check and remittance processing, you’re behind the times.  

Check out the eBook below to look at ways you can mine out the profitability within your process and drop that to your bottom line while making every stakeholder in your process thrilled with less paper burdens.

Free eBook on Unlocking Profit From Transactional Document Processes!

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Topics: AP Process, Virtual Payments, virtual mastercard

Virtual MasterCard vs P-Cards: What’s the difference?

Posted by Chris Cosgrove

Jan 22, 2015 1:56:51 PM


Compare and contrast... 


It’s one of the common themes we learn at a young age in school.  It helps us form our arguments and preferences in a cogent and organized manner. Consider all the things people debate in this chaotic and clutter filled world:  Coke vs Pepsi, Yankees vs. Red Sox (this is a major point of division at CloudX unfortunately), Democrat vs Republican, and on and on we go….you get the point.  In today’s segment, we want to look at the real similarities and differences between virtual MasterCards and Purchase Cards because it has broader implications than you would think at the outset of examining the issue.

So let’s begin!



Sure, both of these payment methods are electronic and reliant upon underlying credit card technologies.  They both seek to alleviate the burden associated with check printing and postage that most Accounts Payable departments find themselves mired in. Additionally, both virtual MasterCards and purchase cards typically offer some kind of a fiscal incentive for the spend pumped through them.  Certainly there are some departures here in how those get meted out as some provide cash rebates and others provide points towards airline miles or other items, but in either case the point is you actually get something for your spend.  An addidtional similarity is that both require some kind of merchant fee from the suppliers who are accepting them as a form of payment, and this varies based upon the issuer wit some being higher than others.




Now we get to the good stuff. While P-Cards are certainly a more prolific type of payment solution in today’s corporate landscape, that may not always be the case.  They certainly provide a viable option to relying upon traditional check printing, but not at the expense of simplified processes.  In fact, P-cards require re-training from a process persepective for anyone who is going to be holding one within the organization. This is not a massive deal if you are a small to mid-sized company, but it increases the complexity of deploying such a solution for the larger organizations as the adoption period lags as increased training is required.  Anytime change is involved rest assured you’ll run into delays.  Essentially then P-cards require more change than do virtual MasterCards.


A final consideration is also the on-boarding process that is required to bring vendors into the fold.  For many organizations that are deploying P-cards, the onus of this is placed squarely on the shoulders of the AP and Procurement organizations, tasks that are neither central nor desirable to the day to day functions of good employees in these areas.  In fact, it’s one of the most common drawbacks that we’ve heard from a corporate card roll out standpoint with customers who have gone down this road before! Adoption can be tricky and at times some of these AP folks have felt on their own so to speak once they had the technology at their disposal to be used for payment. 


But Why?


Well, thank you for asking, that was kind of you! Virtual MasterCards empower AP departments to pay digitally while leaving their procurement process as it stands prior to deployment. The primary difference is that the only thing that is getting changed is literally the payment mode, meaning that deployment and adoption to this approach is much more rapid than a broad-scale, organization wide P-card roll out.   This means that the only real change is a back end component that doesn’t act like a boat anchor to your people or process.  Certainly any time a new system is rolled out there will be a learning curve and adjustments that need to be made, but overall the heavy lifting of retraining and reworking internal processes is not a factor because it does not exist. 


Another key point of differentiation comes back to the isolation and security of individual payments when using virtual Mastercards.  At a payment level, each payment has a unique 15 or 16 digit account number that is generated for single use.  This means that audit drill downs into vendor payments is much more localized and precise than running everything through an individual purchase card or fleet of cards.



So to be sure, both of these approaches represent steps in the right direction of getting out from under the pain that is cutting checks, but we believe that electronic accounts payable (as it is coming to be called in recent whitepapers), though it is only adopted presently by about 18% of companies in North America, represents a better option than P-cards for the above reasons.  Less change and broader impact is what companies are after, as it becomes almost an arbitrage play.


Of course, once you’ve got the virtual payments piece of your AP organization, there’s always good old Accounts Payable automation and invoice processing to get busy chasing down, but the endgame of the paperless AP office is more rapidly becoming a reality for intelligent folks willing to put the effort in!

Free Whitepaper on Why CFO's Are Ditching Checks!

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Topics: Accounts Payable Automation, Virtual Payments, virtual mastercard, electronic accounts payable

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