Finding success through AP Automation

Transcription

1 Finding success through AP Automation

2 Finding Success through AP Automation TABLE OF CONTENTS myths about ap automation 5 problems solved by ap automation 7 steps to successful ap automation AP Automation best practices ABOUT US - JOSEPH EVE TECHNOLOGY GROUP The speed and reliability of business processes and financial information are more critical than ever before. An effective Accounts Payable (AP) function is critical to making sure the accounting department is operating as accurately and efficiently as possible. Source: Kefron Digital Historically, AP has been one of the most erroneous, time-consuming and manual functions in accounting departments. Accounts Payable automation is helping AP departments do more with less in tough economic times, and when done correctly, automation can transform them from cost centers into profit centers. Discover more information on AP Automation by reading about: 5 Myths about AP Automation 5 Problems Solved by AP Automation 7 Steps to Successful AP Automation AP Automation Best Practices 1 FINDING SUCCESS THROUGH AP AUTOMATION

3 5 Myths about AP Automation Debunking the myths Myth 1: Automation is not really more efficient Consider the inefficiencies that stem from remaining By contrast, the efficiencies you gain by automating tethered to a non-automated, paper-based process: the Accounts Payable process produce results that are - A 2010 Aberdeen Group study found that the industry dramatic by any measure. These include: average for 50% of companies (many of which use a nonautomated AP system) is 14.2 days to process a single - 25% improvement in productivity % reduction in paperwork invoice from start to finish. Automated AP systems take - The ability to process 6,000-8,000 invoices a month 2.3 to 3.5 days to process the same invoice. per full-time employee (FTE) by using automated - The cost of processing can range from $5 to $25 for a and rules-based matching as opposed to 1,000 single invoice invoices a month per FTE using manual processing. - Costs associated with manual processing include: shuffling invoices between individuals and departments, exceptions processing, accrual delays, failed audits, duplicate invoices, and late payments Myth 4: we're too small Myth 2: We'd lose control over our processes Automation actually gives you greater control over and increased visibility into the process. Business rules automate the routing, matching, and circulation of invoices and are configured to your organization s specific needs. Not having to look at each transaction individually means that you will have the time to focus instead on the much smaller but crucial set of exceptions that require attention. For example, certain solutions offer rule-based, autoapproved features to accelerate the processing of straightforward invoices. This type of automation saves full-time employees time by requiring them to review and handle only those invoices that do not pass the pre-established system rules. Automating the process also captures the document and metadata at the point of receipt of the invoice so you have full visibility into the process. Myth 3: Automation is too expensive Solutions that offer end-to-end Accounts Payable automation using Software-as-a-Service (SaaS) and the cloud require no upfront software or infrastructure purchases or recurring license maintenance. Choosing an Accounts Payable solution that is offered as a service allows all the users that are part of the business process to participate without having to pay expensive user-based license fees. With a true multi-tenant SaaS solution, you should expect functionality upgrades periodically based on best practices and input from your peers sharing the same core application platforms, helping reach your ROI faster. 2 FINDING SUCCESS THROUGH AP AUTOMATION for automation Cloud-based solutions coupled with a multi-tenant approach equates to a very low marginal cost to serve. With economies of scale and best practices, everyone benefits from automation. Automation enables your Accounts Payable staff to focus on more strategic activities, such as sourcing initiatives, spend management, and supplier management. Myth 5: We're too big for automation Cloud-based Accounts Payable solutions that are delivered as a service scale easily and can handle large volumes of transactions. E-invoicing supplier networks enable direct data integration to skip paper altogether. Supplier portals allow vendors with smaller invoice volumes a convenient avenue to create and submit electronic invoices. These channels aggregate inbound invoices, enable 2- and 3-way matching with business rules against purchase orders (POs) and receipts, and facilitate straight through processing with no human intervention. Source: Iron Mountain

4 5 Problems Solved by AP Automation Understanding the advantages Problem 1: Lack of visibility and control over the process Paper invoices sit on individual employees desks until they are routed to Accounts Payable there is no visibility into the liabilities until it is data entered into an Enterprise Resource Planning (ERP) system. Field management requests result in rushed payments because Accounts Payable can t provide adequate controls. Lost, missing, or duplicate invoices are all major risks within a paper-based process. Automation with front-end scan and capture, on the other hand, provides immediate, real-time visibility into the entire process. Automation provides audit proofing and better controls. All actions on documents are automatically logged and tracked, and provide ready reporting on transactions to satisfy compliance obligations. Problem 2: Delays in processing Manual processing of invoices implies data entry and resultant delays. Longer cycle times lead to potential late fees. Paper-based processes with poor visibility lead to longer and inaccurate accruals, which in turn can lead to delays in period end closing of the books. Reconciliations prior to close can become a nightmare. Automation provides real-time, accurate visibility into all transactions with up-front invoice ingestion and digitization. Problem 3: Quality and errors Manual processes have a tendency to produce exceptions are the norm scenarios. When users are forced to touch and process every transaction, it is difficult to filter out and prioritize which need the most attention. Without clear prioritization and focus, user errors creep in keying errors, matching errors, misfiled documents, and the like. Automation flips this on its head, with a focus on the exception and not the normal scenario. With the bulk of the straightforward transactions handled automatically, a user can focus time and effort on managing the true exceptions which improves process performance and quality metrics. Problem 4: Low productivity; no resources to address key priorities Filing, retrieving, and keying data into ERP systems is not the best way to leverage your accounting and finance talent. Manual processes are inefficient and time-consuming. Inter-departmental file requests, additional copies, and obscure reporting can further complicate matters. With automation you can eliminate the non-value added tasks that your staff may have been mired in. Through exception-based management of the Accounts Payable process, you can free up your staff to focus on your higher value strategic priorities. Capturing invoice information in electronic format at the front of the process enables reporting and data visibility to answer key strategic questions around spend management. Problem 5: No support for sourcing/procurement initiatives Spending not captured by a standard PO process is a challenge to manage due to the large number of suppliers and items involved. Manual, paper-based processes provide no support for sourcing initiatives. While procurement can structure central contracts with projected savings, these are not realized until Accounts Payable can enforce the spend control. Accounts Payable is the final gatekeeper to ensuring that what is contracted is what is bought. Paper-based processes provide poor visibility into overall spend on non-po/ indirect items. Automation provides clear visibility into these areas. What gets measured, gets managed, and sourcing-led indirect spend control and savings can be attributed directly to Accounts Payable automation. 3 FINDING SUCCESS THROUGH AP AUTOMATION Source: Iron Mountain

5 7 Steps to Successful ap automation MOVING ON FROM MANUAL Step 1: Address the issues Conventional invoice processing makes the AP department s job an uphill battle. Aside from manual hassles slowing down the procure-to-pay cycle (entering invoices, getting approval signatures, resolving errors, etc.), those in AP also have the time-consuming task of retrieving data for inquiries and audits. All in all, it s a recipe for disaster. Step 2: Consider the big picture Unfortunately, the pain inflicted by manual vendor invoice processing doesn t stop at the AP department. With no electronic audit trail, members of management have zero visibility into the process. That s a big deal without proper oversight and transparency, the ability to accurately plan, forecast and identify areas of process improvement is virtually impossible. Step 3: Assess your situation Many companies choose to stick with the status quo thinking their current AP process is comparable to the standard. The only way to find out? Set benchmarks like key performance indicators (KPIs) to see how your AP process ranks among top industry metrics. If you re not happy with how you stack up against the competition, it may be time to consider the move to automation. Step 4: Choose the right solution There are a variety of solutions that allow you to automate every phase of vendor invoice processing for streamlined AP management. Workflow features such as a real-time audit trail from invoice receipt to payment posting and intelligent data extraction will make you wonder why you hadn t switched from manual AP processing sooner. Step 5: make it your own Choose how you want your solution implemented. Prefer to house it on-premises? Rather have your solution hosted in the cloud? There are many options that will give your company more freedom and opportunities to expand your solution to other departments and processes if necessary. Step 6: Get started quickly The faster an automation solution is up and running, the faster you can reap the benefits. It is important to find an approach to solution delivery that promotes customer involvement early in the process to achieve the highest business value in the shortest amount of time - a surefire way to get the most bang for your buck. Step 7: Reap the benefits Breaking free from outdated practices can make all the difference in how your AP operations perform. Just how big of a difference? According to a study by Esker research, automated vendor invoice processing can be up to 65% faster and cost 40-60% less than manual methods, and result in invoice accuracy rates up to 99% with 100% process visibility. 5 FINDING SUCCESS THROUGH AP AUTOMATION Source: Esker

6 AP Automation best practices Get the most out of Ap Automation The Accounts Payable (AP) process is one of the most consistently broken of all financial processes in business today. As a result many organizations are looking to automate their AP processes in order to fix this situation. AP Automation however, is only the enabler of the fix. In many cases the processes surrounding the function of accounts payable need to be addressed to take full advantage of potential savings created by AP automation. By adopting these six best practices as an integral part of their AP automation strategy, businesses can ensure that they are able to maximize the benefits of AP process automation. 1 CENTRALIZED SCAN & PROCESS OF ALL INVOICES INTO WORKFLOW ON THE DAY OF RECEIPT This is the first step in reducing the invoice process turnaround time resulting in substantial time and cost savings. Not only is the labor-intensive photocopying and great paper chase eliminated, but immediate capture of invoices allows visibility of real-time liability enabling more effective cash flow monitoring and the potential to maximize early payment discount options. 2 SEPARATE FUNCTIONAL TEAM RESPONSIBILITIES WITH CLEAR COMPLIANCE CONTROLS Sarbanes-Oxley style compliance rules make sense for any medium to large company, whether or not it is publicly listed. The main thrust of SOX compliance, as applied to AP processing, is to ensure that the Requisitioner Goods Receiver Approver Payer. Companies that enforce the separation of these duties can meet the disclosure and auditing mandates imposed upon them through regulatory bodies. 3 AUTOMATE INVOICE MATCHING FOR SWIFT AND EFFICIENT PROCESSING Matching of the PO with the received invoice or PO with invoice and the goods received docket, makes sense from an accounting point of view but can present problems if a company s systems do not communicate and the information is not available electronically for comparison. Automated matching reduces the manual effort required, and enables straight through processing where a match is achieved. 4 STREAMLINE AND TAILOR YOUR EXCEPTION PROCESSING Straight through processing allows AP staff members to concentrate on exceptions. Non-matching invoices generate an automated response, either through an to Suppliers, or as a capability of workflow to speed discrepancy resolution. In an automated system the exception is presented immediately to the correct person designated to deal with the exception, thus reducing the time taken and streamlining the process. 5 SIMPLIFY THE APPROVAL HIERARCHY OF THE ORGANIZATION Often approval hierarchies become complex and unrealistic as companies add layers and levels to create bullet proof protection at the expense of process time and reasonableness. Approvals should be done by appropriate management (the immediate manager of the originator, and the next level up where a certain dollar level is exceeded). By restricting approvals to a maximum of 2 levels, coupled with realistic dollar limits, a smooth but safe approval flow can be achieved. 6 ADJUST BUSINESS PROCESSES TO GIVE APPROVALS PRIORITY Like , workflow approvals should be a priority step at the start of each day. Electronic approvals are much like s in that they are presented in an inbox and can be easily cleared daily in the same way that a manager deals with his . By scheduling this as a start-of-day process, approvals can be completed early and no longer be the onerous task that drags on from day to day, week to week, in the paper bound world. 4 FINDING SUCCESS THROUGH AP AUTOMATION Source: ReadSoft

7 ABOUT US JOSEPH EVE TECHNOLOGY GROUP JOSEPH EVE TECHNOLOGY GROUP Accounting solutions for savvy casinos 6 FINDING SUCCESS THROUGH AP AUTOMATION