4 Reasons Organizations Are Taking an End-to-End Approach to Accounts Payable Automation

Transcription

1 4 Reasons Organizations Are Taking an End-to-End Approach to Accounts Payable Automation An IOFM whitepaper Sponsored by

2 4 Reasons Organizations Are Taking an End-to-End Approach to Accounts Payable Automation For too long, accounts payable (AP) has suffered from high paper volumes, manual keying and routing, fragmented systems and processes, and cost-prohibitive approaches to automation. Some 56.6 percent of respondents to IOFM s 2015 AP Technology Survey say their organization processes less than 6 percent of its invoices straight-through. Not surprisingly, organizations are planning to deploy technology to digitize paper invoices and extract and validate data from all invoices. Front-end imaging, back-end imaging and automated data capture are the top automation priorities of organizations surveyed by IOFM in Organizations also are migrating to electronic submission of invoices via a self-service portal. Sixty-two percent of respondents to IOFM s 2015 AP technology survey said their organization has deployed electronic invoicing, or plans to within three years. Additionally, 51 percent of survey respondents said their organization has deployed a supplier portal or plans to within three years. And 51 percent of respondents to IOFM s 2015 AP technology survey indicated that their organization has either integrated their AP and ERP systems, or plans to within the next three years. AP automation enables payers to reduce costs and errors, improve return on system investments, better control spend, strengthen supplier relationships, and enhance working capital management. The Challenges However, organizations face a double-whammy when it comes to AP automation: 1. It is extremely expensive to process and manage multiple invoice delivery channels. 2. Critical invoice and supplier information is scattered across enterprise applications and system databases and trapped in a paper or electronic format that is not readily accessible. Piecemeal approaches to accounts payable automation don t solve these problems: Data capture is labor-intensive and/or prone to errors The wide range of document formats make scanning difficult Most solutions have insufficient search and tracking Collaboration and information sharing are difficult with multiple back-office systems Manual and piecemeal solutions are slow and costly to adapt processes to business changes For instance, organizations that deploy front-end document scanning without automated data capture or approval workflows will still be burdened with the time, cost and errors associated with manual keying and paper handling. Similarly, back-end document scanning provides little value beyond automating the archival and retrieval processes, especially as it pertains to financial visibility. 2

3 To achieve true efficiency, gain real-time access to data, ensure traceability of information, and minimize human error, organizations not only must automate their document processes, they also must connect their document-based accounts payable processes to enterprise applications. How is your staff organized, and how large is your AP team in number of employees? 60% 50% 40% 1 to to to to % 20% 10% 0% Separate AP Department Part of procure-to-pay team Part of financial shared services team Centralized Partially centralized Decentralized Shared services center global Shared services center regional Other Source: IOFM This whitepaper details the four biggest challenges with processing invoices manually or with a piecemeal solution, and how end-to-end accounts payable solutions address those challenges. The Problems There are four primary issues with processing invoices manually or with a piecemeal solution: 1. Cost and inefficiency: Procure-to-pay processes involve multiple documents such as invoices, purchase orders, proof of delivery documents, and contracts. Each document includes data points (e.g. invoice number, amount) that are critical to the procure-to-pay process. Without automation, payables staff must manually enter the data from invoices and other documents, match invoices to purchase orders and proof of delivery documents, and verify contractual terms. Unfortunately, IOFM reports that most accounts payable departments only have a low or moderate level of automation, resulting in high operational costs, inefficiencies, and long processing delays as staff manually enters data. In fact, the average time to process and approve an invoice stands at 6.1 days, with the cost to process an invoice (from receipt through approval) averaging $6.29, according to Aberdeen Group. And the majority of organizations surveyed for IOFM s 2015 AP Technology Survey process less than six percent of their invoices straight-through with no manual intervention. The root of the problem is the high volume of paper handled by accounts payable departments. As much as 77 percent of the invoices that organizations receive arrive as paper, according to Photizo Group, and the average accounting department scans 24,000 pages per month, IDC reports. Moreover, most organizations are challenged with high costs and inefficiencies as a result of exceptions. Mis-keyed data, mismatches, and other errors found in the three-way match process require organizations to manually review items. Additionally, it is very costly and time-consuming to store and retrieve paper documents. 3

4 What percentage of invoices does your organization process straight through without any manual touch? 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 0 to 25 percent 70.8% 26 to 50 percent 7.6% 51 to 75 percent 9.5% 76 to 100 percent 5.7% Don t know 6.4% Source: IOFM Lack of visibility and reporting: Accounts payable staff need the ability to retrieve information in real-time, no matter where it is, to ensure visibility and traceability of the business process. Visibility is critical to cash flow analysis and liquidity management the top functional priorities of controllers and CFOs, according to IOFM and Aberdeen Group. A lack of visibility and reporting also makes auditing timeconsuming and imprecise. Limited access to information also can cause processing delays in obtaining approvals and can hinder compliance. Not surprisingly, controllers identify improved visibility and reporting as their top priority for accounts payable in 2015, according to IOFM. Senior finance executives surveyed by IOFM in a 2014 survey identified improved visibility into invoices and payables documents as the biggest benefit of accounts payable automation. Which of the following are the biggest challenges in your AP department (check all that apply)? Lack of visibility into invoices and payables 45.4% Costs to process invoices 38.7% Difficulty handling, managing and finding invoices 42.0% Inability to effectively maximize vendor discounts 17.6% Mitigating fraud 10.1% Paying invoices in timely way 25.2% Minimizing errors 47.1% 0.0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: IOFM

5 3. Poor integration with enterprise systems: Integrating accounts payable with enterprise applications is the goal of many IT managers, notes Photizo Group. Information pertaining to a supplier, purchase order or invoice can be scattered across applications and databases, and buried in electronic or paper documents. Auditing also requires organizations to consolidate information from all financial systems. As a result, accounts payable solutions must integrate with a wide range of enterprise applications, including enterprise resource planning (ERP), accounting, supply chain management (SCM), travel and entertainment (T&E) expense management, contract management, enterprise content management (ECM), document management, and customer relationship management (CRM) applications. It also is not uncommon for organizations to have multiple ERP systems. Organizations need the ability to share information across accounts payable systems and enterprise applications to achieve real-time access to the latest data. Unfortunately, the exchange of information between systems and applications is limited in a manual or semi-automated accounts payable environment. Complicating matters, many of the enterprise applications that need to be linked use different databases, reside on different operating systems, and use different computer languages, Photizo Group notes. In some cases, legacy applications or systems are not supported by the original vendor who created them. 4. Inflexible business processes: It is difficult to adapt manual or semi-automated business processes in response to business changes such as fluctuating volumes. It also is hard for IT departments to manage manual or semi-automated document-based processes. And manual or semi-automated business processes do not have the scalability or flexibility to support a shared services environment or the costeffective processing of other enterprise functions. The Benefits End-to-end accounts payable solutions combine robust document imaging (capture, processing and document creation and distribution) with enterprise application integration. This approach automates document and image-related processes while integrating back-office applications with document and imaging input and output devices in a single automated business solution. Importantly, end-to-end solutions uniquely address the top accounts payable challenges that organizations face: Reduced costs and improved efficiency: Reducing invoice processing costs was the second-biggest driver of accounts payable automation identified by organizations that responded to IOFM s 2015 AP Technology Survey. Invoice processing costs the least efficient accounts payable departments 10 times as much, and takes more than five times as long, compared to best-in-class organizations with a high level of automation, according to Aberdeen Group. End-to-end accounts payable solutions automatically classify documents, extract key data (such as invoice number, header and line-item detail, and invoice amount), and validate extracted information against data from enterprise applications. Validated information then is automatically matched with information from purchase orders and proof of delivery documents, eliminating manual keying and paper handling and accelerating invoice processing turnaround. Automatically capturing and matching payables information also reduces the potential for data-entry errors and duplicate payments, improves control over access to sensitive financial information, and frees accounts payable staff to focus more of their time on value-added activities. End-to-end payables solutions also increase efficiency through the fast distribution of reports and other documents via , fax, print or FTP. And streamlined approval and exceptions resolution workflows increase processing efficiency and eliminate processing delays and the potential for lost documents. All of these benefits combine to reduce processing time by up to 400 percent. Moreover, an end-to-end accounts 5

6 payable solution provides a significantly lower total cost of ownership compared to sourcing, integrating and maintaining multiple technologies. What do you see as top reasons driving AP operations to move to automating the management of purchase orders (POs) and invoices? (Please rank in order of 1= most important) Improved control over cash management and spending 3.1 Improved control to ensure purchases are made with preferred vendor 4.7 Decrease in exceptions that lead to blocked payments 5.5 Simplification of invoice submission process from suppliers 5.1 Reduction in processing costs 4.5 Reduction in processing errors 4.9 Improved cash flow visibility Improved compliance Decreased risk of fraud Faster reconciliation 7.7 Source: IOFM 2015 Enhanced visibility and reporting: Improved visibility is the top benefit of accounts payable automation, according to controllers surveyed by IOFM in End-to-end accounts payable solutions provide rich archiving and search capabilities, including the ability to archive documents within the end-to-end platform or within other content repositories. Archived images can be accessed via link from SharePoint, Salesforce or other applications. And business workflows within an end-to-end solution can easily access information, regardless of where it resides. End-to-end solutions also automatically update information in multiple enterprise applications and back-office solutions with data captured from paper and electronic documents, ensuring that decision-makers have timely access to critical financial variables. Additionally, users can leverage the information stored in enterprise applications and documents to quickly create forms and reports that can be easily distributed or archived in enterprise applications, ECM solutions and database systems. All of this significantly enhances the visibility and reporting required for cash flow analysis, liquidity management, the monitoring of operational performance, and audit and compliance. Seamless integration with enterprise applications: End-to-end accounts payable solutions bring together information scattered across various back-end systems and stored in paper or electronic documents. Cross-application navigation, such as with direct links via , connects accounts payable with other systems and departments. Integration with ERP applications enables users to manage business processes that require the integration of information from paper and digital documents. End-to-end solutions create ERP vouchers, for instance, eliminating the need for manual entry of invoice line items, as well as manual label creation (to attach to incoming invoices). Agile approval workflows for incoming invoices also can extend into the ERP system something that cannot be done in an environment with manual or piecemeal invoice processing. Unlocking the data from hard-copy documents and disparate 6

7 systems also delivers valuable business intelligence for cash flow analysis, liquidity management, spend and contract management, and more. And the 360-degree view of invoices, transactions and suppliers streamlines the audit process. Greater process agility: End-to-end solutions enable organizations to easily create customized business solutions to satisfy the most complex needs and to quickly adjust processes as requirements change, such as additional volume, new suppliers, the integration of corporate subsidiaries, and import or export changes. Additionally, business processes can be easily developed and maintained using management adapters that allow authentication, content management, job management, settings management, and log management to be performed from a web services interface. And end-to-end solutions support integration with cloud applications and mobile devices. The design of some endto-end solutions even allows for the development or improvement of business processes without programming. End-to-end accounts payable solutions also provide a robust foundation that can be readily extended for shared services or to automate functions such as T&E management, accounts receivable or order-to-cash, and human resources. All of this reduces solution development complexity, lowers implementation time and cost, and significantly enhances processing flexibility. Conclusion Accounts payable organizations will never solve their biggest operational and information management challenges with manual processes or by taking a piecemeal approach to automation. End-to-end solutions uniquely address these challenges by automating and integrating enterprise applications and paper-based information flows. Organizations benefit from cost savings, increased efficiencies, and the enhanced business intelligence gained by bringing together vital information previously scattered across various back-end systems and/or stored on paper or electronic documents. End-to-end solutions also make the organization more agile and better positioned to support changing requirements and other enterprise functions. Together, these benefits not only make accounts payable more effective, they make accounts payable more strategically important to the enterprise. About Canon Information and Imaging Solutions This whitepaper was sponsored by Canon Information and Imaging Solutions, Inc. Canon Information and Imaging Solutions, Inc., a wholly owned subsidiary of Canon U.S.A., Inc., was formed to bring together Canon s greatest intangible assets: information management expertise and imaging technologies. Utilizing Canon s vast collection of imaging technology and development tools along with select third-party enterprise applications, Canon Information and Imaging Solutions delivers compelling market-driven services and solutions in the areas of business process automation, sales & marketing automation, print management, and records management. For more information visit: 7

8 About IOFM The Institute of Finance and Management (IOFM) is the leading organization providing training, education and certification programs specifically for professionals in Accounts Payable, Procure-to-Pay, Accounts Receivable and Orderto-Cash, as well as key tax and compliance resources for Global and Shared Services professionals, Controllers and their F&A teams. IOFM has certified nearly 20,000 financial operations professionals worldwide through its four certification programs. These programs include Accredited Payables Specialist or Manager (U.S. and Canadian specific versions available), Accredited Receivables Specialist or Manager and Certified Professional Controller. The globally recognized AP & AR certifications are available in English, Simple Chinese and Spanish. IOFM s membership networks, the AP & P2P Network ( and AR & O2C Network ( feature industry research and best practices, metrics and benchmarking data, policies, case studies, tools, templates, and critical compliance and corporate governance resources. The Institute also produces on-demand e-learning resources including video trainings and web-based seminars. IOFM hosts industry-leading conferences designed to facilitate continuing education and peer networking. These events include the Accounts Payable and Procure-to-Pay Conference and Expo (Spring and Fall), and the Accounts Receivable & Order-to-Cash Conference. With a universe of over 100,000 financial operations professionals, growing certification and membership programs, and a keen understanding of the issues and content needs critical to the profession, IOFM is the trusted source of information in the rapidly evolving field of financial operations. About the AP & P2P Network The AP & P2P Network is the leading provider of training, education and certification programs specifically for Accounts Payable, Procure-to-Pay, Global and Shared Services professionals as well as Controllers and their F&A teams. Membership to the AP & P2P Network ( provides comprehensive tools and resources to financial operations professionals who manage or are deeply involved in the Accounts Payable and Procure-to-Pay process. Focus areas include best practices for every AP & P2P function; AP & P2P metrics and benchmarking data; tax and regulatory compliance (e.g. 1099, 1042-S, W-9, W-8, Sales & Use Tax, Escheatment, VAT, Canadian Tax, Internal Controls); solutions to real-world problems challenging your department; AP & P2P automation case studies; member Q&A networking forums, Ask the Experts, calculators, and more than 300 downloadable, customizable AP & P2P policies, flowcharts, templates and internal control checklists. A membership to the AP & P2P Network provides tangible ROI to any organization saving your organization time, money and keeping you compliant. Over 10,000 professionals have been certified as an Accredited Payables Specialist or Manager (available in English, Simple Chinese and Spanish), and Certified Professional Controller through the AP & P2P Network and its parent company, the Institute of Finance & Management. 8

9 AP & P2P Network also hosts the Accounts Payable and Procure-to-Pay Conference and Expo (Spring and Fall), designed to facilitate education and peer networking. The AP & P2P Network is produced by the Institute of Finance and Management (IOFM), which is the leading organization providing training, education and certification programs specifically for professionals in Accounts Payable, Procure-to-Pay, Accounts Receivable and Order-to-Cash, as well as key tax and compliance resources for Global and Shared Services professionals, Controllers and their F&A teams. With a universe of over 100,000 financial operations professionals, IOFM is the trusted source of information in the rapidly evolving field of financial operations. 9