Companies need to harness new technology to simplify outdated processes and take advantage of increased agility.
The best part of every Halloween movie is always the same. You can see the moves the victim should make – “Open the door!” “Move to the next room!” “Get out of there!” and while you scream at the TV – no one can hear you. The helpless victim just can’t find the best way out of a bad situation.
What’s seen as fearsome entertainment in the movies during Halloween season brings to mind the plight of businesses that can’t seem to navigate their way out of a frightful mess of paper invoices – inefficiencies, manual processes, lost paperwork – the list goes on – because they just don’t know where to begin.
Or worse, they are convinced the same entrenched processes they’ve used for decades will somehow magically produce better results. It might work in the movies but this is real life. This is business.
In Part I of our series on AP, we discussed how more and more small to medium businesses are discovering the benefits of significantly shortening the AP cycle – from procurement to processing to payment – by automating the AP Process. And the results are promising.
According to PayStream Advisors 2013 Invoice & Workflow Automation Benchmark Report results, paper invoices continue to decline from 59 percent in 2012 to 52 percent in 2013, as electronic invoicing gains more traction.
“SMB’s are now embracing AP automation as they strive to migrate from a manual paper-based invoice system to an efficient and cost saving automated system,” stated Henry Ijams, managing director of PayStream Advisors. “Solution providers have made AP automation more attractive to the SMB market with affordable, easy-to-use and easy-to-implement technology solutions.”
We are making progress, but there is still room for improvement. No doubt innovation is changing the way companies do business – and these days it all boils down to technology.
According to a recent study by The Economist, technology development is expected to be rapid enough that “nearly four in ten of surveyed executives are worried that their organizations will not be able to keep up and will therefore lose their competitive edge.” In order to ensure their longevity, the report concludes that “business leaders and their teams must deploy their crystal balls and think ahead about the types of changes that may be wrought by technology-led innovation.”
Start in the back office
With AP Processing as a starting point for automating workflows, and a manageable one at that, business can see tangible results in a relatively short period of time, including improved cash management, lower costs per invoice and more rapid turnaround times.
By automating invoice routing and approvals, payments, and streamlining communication, businesses can shorten cycle times and take advantage of early pay incentive and discounts. Taking it a step further and integrating with an ERP system, companies can gain greater efficiency and insight into their business by reducing manual data entry and gaining swift access to relevant, precise and actionable financial information.
With centralized storage and reporting – retrieval of data is easier than ever. Flexible delivery platforms, like cloud technologies and the pervasiveness of mobile applications make collaboration between globally diverse locations and vendor/supplier interactions a matter of minutes instead of days.
“This abundance represents a profound change,” says Gavin Michael, the chief technology innovation officer at Accenture. “It allows you to undertake problems that you could not before because they were too computationally or storage intense.”
That includes invoices and paperwork from your legacy process that can now be moved into an automated system without having to maintain large file cabinets or pricey in-house servers. It also means supporting your AP process with communication and technologies to manage documentation more efficiently –like vendor invoices, purchase orders, expense reports and others – by converting them into digital files that can be stored, searched, coded, and easily retrieved.
Automated AP also leads to “enhanced visibility into the process itself, as well as the availability of cash resources.” In a May 2014 report by The Aberdeen Group showed that “with full visibility, employees can react to exceptions more quickly, take advantage of favorable payment terms, or gain insight into just how efficient and easy to work with the organization is.
For example, this gives organizations the ability to reconcile invoices and purchase orders.” This information can be shared easily across the business so that C-level executives can have a handle on workflow from start to finish.
The cost savings are significant. In Table 2 above, automating AP saved companies an average of 31% in purchase order transactions to 65% in invoice transactions. Cost savings that can be utilized by other areas of the business.
Adding value to an organization is the main goal of innovation. By automating your AP Process you can get your business on the right track – no matter what your strategy was in the past. Start by exploring the current workflow for your AP and see where the opportunities lie. Then just open the door to innovation.
Take an informational tour of DocStar’s AP Automation Software today to see how we can help you better manage your AP.
Don’t miss Part 3 of this 3 post series – Shorten the Life Cycle of an Invoice and Improve Cash Flow with AP Automation.