Faster AP Invoice Approval Boosts the Bottom Line

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Accounts payable insightDocument automation is nothing new; many important business functions have been automated with document management tools. Claims processing, loan origination, and Human Resources onboarding are just a few important activities that are often automated in order to streamline the process, save money, and ensure higher efficiency and accuracy.

Accounts Payable Stymied by Paper

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One key function that is often overlooked, however, is the Accounts Payable process. Despite the increasing digitization of business today, the truth is that AP in most organizations continues to be mired in stacks of paper and manual workflow. As a result, the time spent shuffling paperwork, making copies, and manually comparing data and figures costs organizations in wasted time, effort and supplier goodwill.

Automating AP Invoice Approval

How can your Finance department begin to benefit from better A/P automation?  One place to start is with AP invoice approval. Manual paper processing requires a lot of data entry, handling and routing, and searching for lost documents. Indeed, according to a Prism International study, nearly 10% of documents are misfiled, resulting in handling costs of $120 per document.

And according to a recent study from AIIM, businesses lose about 3% of their invoiced income due to short-payments, late-payments and missed early-pay discounts. Advanced data capture and workflow automation technology can make AP invoice approval significantly quicker, easier, and more cost-effective. Business gain by reducing administration, speeding the pace of the process and capturing previously lost revenue.

Bottom Line Benefit

Still working with paper? Things like making photocopies, finding lost and misfiled documentation, and manually processing paper all take a toll on the process. According to Business Finance magazine, the average cost of manually processing an invoice is around $20 versus $4 for automated processing. The opportunity for savings and improvement is even greater for small and mid-sized organizations that until now needed an enterprise-sized budget and specialized technical support to make AP automation a reality.

AP Automation Advantages

Besides saving money, transforming your AP department from a manual, paper-based invoice process to an automated workflow has a number of additional benefits. Here are just a few to consider:

  1. Reduce cycle times: Automation helps ensure faster AP Invoice approval from managers since less time is spent shuffling paper, making copies and hunting down managers for a signature. And in the event a key stakeholder is not available, systems automatically re-route invoices for approval to the next link in the chain, reducing delays and boosting your ability to leverage early-pay discounts from your suppliers.
  2. Eliminate missing documents: Any time a process relies on paper, you can bet that documents will become missing, misfiled and misplaced. The result is often a ‘wrench in the works’ as AP staff search for the missing invoices and supporting documentation, struggle to recreate the needed paperwork, and work with disgruntled suppliers and managers. The next generation of document capture and automation systems eliminates the costly delays and frustration associated with lost invoices and other missing documentation.
  3. Eliminate shadow copies: Documentation for a typical vendor invoice can grow to include several pages; all subject to redundant copies kept by clerks, suppliers and managers all in the attempt to overcome the inherent inefficiencies and risks of a manual and paper-based process. Indeed, despite advancements in digital office technology, the fact is that most people involved in the AP invoice approval process make their own “shadow” copies to get the job done. Even documents that originate in a digital form, like email or spreadsheets, are typically printed, copied and tucked away in a file drawer just in case. All of this leads to a paper glut that can be eliminated with automation. In fact, according to the AIIM study, the average proportion of office space taken up by paper is now over 15%, but it would drop to in half with an all-electronic filing policy and provide businesses with a savings of nearly 8% in overall office costs.

Moving Forward

There are many important benefits to be found by automating AP invoice approval. Automation removes the need for hard copies, allows AP staff to more quickly identify which invoices are waiting for approval, and reduces the number of missing and misfiled invoices. You increase the opportunity to capture early-pay discounts while enabling your staff to concentrate on more high-value activities.

Ready to move forward?  Look for solutions and partners that provide the right mix of experience, vision, and advanced capabilities that will allow you to generate faster AP invoice approval and improve the AP process overall.