A new survey-based report from AIIM corroborates previous evidence on the substantial returns that companies can gain from automating their Accounts Payable (AP) and Accounts Receivable (AR) functions. The survey of 328 AIIM members was conducted in January and examined the payback that companies were deriving from financial process automation.
On average,
Similar monetary and process improvement gains were reported on the AR side as well. According to the AIIM survey, companies that were using an AR system cited better record keeping and reduced time spent on chasing payments as two of the biggest benefits of automation. Some of the other reported benefits included better cash-flow prediction capabilities, better containment of consumer disputes and less bad-debt write-off's.
The benefits of accounts payable automation are even more apparent in the case of non-purchase orders or non-production orders. These are transactions that do not originate from the purchase of an item and often cost twice as much as regular invoices to process.
Examples include transactions involving advertising and marketing costs and payments made to independent contractors. Roughly 30 percent of all invoices handled by companies in the AIIM survey involved such non-PO invoices. The ROI of scanning such invoices and recognizing the data via OCR systems is likely to be substantially higher compared to standard PO invoices.
Despite such benefits, many companies are continuing to drag their feet on financial process automation. More than half of the respondents in the AIIM survey said they had not automated their AP function, while nearly the same number said they did not have an AR system in place yet.
Close to a third of all organizations processing more than 25,000 invoices per month still were relying on outmoded paper-based processes. A majority of those who have implemented AP and AR systems have not linked the systems to ERP or Enterprise Content Management systems.
Though many companies expressed a desire to centralize operations, cut costs and improve process efficiencies not all of them appear to be willing to actually make the investment in process automation. The main reasons cited for non-adoption were a lack of management support, lingering ROI concerns and a general unwillingness on the part of IT to prioritize financial process automation tasks.
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Contact me if you have questions about A/P and A/R automation, ROI or would like a copy of this AIIM report.
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Phil Scarfone has over 22 years experience in document management and technology working for top brands including: IBM, Xerox and Canon.
Over the past 26 years, Phil has held senior Sales and Marketing positions for three international companies (Xerox, IBM and Canon) and three entrepreneurial businesses. Phil has extensive expertise in staffing, training, budgeting, P&L management, recruiting, compensation, change management and process improvement.
In earlier posts we've covered invoice processing and accounts payable automation and how it helps you cut costs and improve productivity. These posts take the viewpoint of the buyer and how the accounts payable department can benefit from scanning, data capture, content management and process automation. I won't restate the value of these technologies nor the ROI.
For this post I wanted to look through the eyes of the supplier and get back to the topic of this post which asks the question "who has my invoice?".
If you're like many companies you have many suppliers some of which are strategic to your business. These suppliers provide you with raw materials or components of things that you include in your final product, service or solution. Fujitsu, for example, is one of Yakidoo's strategic suppliers. Yakidoo solutions integrate their scanners along with capture and content management systems from Kofax, EMC, IBM or Microsoft. These are strategic suppliers or partners if you will.
In the case of strategic suppliers your company's revenue can be dependent on the stuff you buy from them. Imagine what would happen if one of these suppliers called up asking about payment and referred to a specific invoice and it couldn't be found? Believe it or not this happens! The invoice could be sitting in a pile of paper on a desk or buried in someone's email in-box. Whether you have the cash to pay the supplier or not they're not going to be impressed and it can put unnecessary stress on your relationship with them... not to mention more stricter terms of payment like COD.
Simply put, the invoice whether it be on paper or in an email in-box should have been processed immediately as part of a disciplined process that, among other things, made it simple for anyone to find a digital copy of the invoice when the supplier asked about payment. Losing an invoice is no longer acceptable and the data on the invoice needs to be actioned asap to ensure prompt payment to preserve a strong relationship with your strategic supplier and to take advantage of early discounts. Early discounts tend to be missed because the invoice has not be entered into accounting systems fast enough. In the case of a strategic supplier who's products you resell or integrate into your offerings, an early discount increases your gross margins.
In earlier posts we've provided some free advice and guidance on how and where to start in process automation, scanning, capture and content management. We suggest focusing on core processes that are manually intensive, can cause human error or delay and that cost the business money. It's possible that lost invoices and payment delays due to manual or unproductive workflow or bad work habits is not only costing you money but may impact future sales too.
We’d also be happy to act on your behalf and get answers to the key questions and concerns you have about accounts payable automation. If you have questions leave a comment below, contact us through this web form, send us a Tweet or contact me personally on Linkedin. Help us shape the editorial agenda for this blog so you can get the most value out of what we produce.
To stay up to date on new blog posts and Yakidoo’s solution offerings just subscribe via email or RSS feed.
Victor Bensusan is CEO of Yakidoo. He has 20 years experience in Finance and Information Technology primarily in the area of process automation, information management and business performance improvement.
This is likely a question CFOs and finance leaders ask themselves as they look for ways to improve overall business performance. Seeking answers to this question can be a challenge however! For instance what does productivity mean? What are key productivity related work activities and outcomes should you measure?
Fortunately, the PRGX Productivity Index (recently updated for 2012) is a great resource to help you answer these questions. This report is issued bi-annually in partnership with the Institute of Financial Operations and APQC.
APQC is the leading source anywhere for best practices and performance benchmarks. With one of the world’s largest databases—based on more than 8,500 benchmarking and best-practice studies and growing—our members have access to data they can’t get anywhere else. We've spent years perfecting a rigorous research process and represent a track record of innovation in developing models, tools, and frameworks to help members improve.
Productivity is about two things: being effective and efficient. Efficient is how fast your staff can do something and effective is how good they are at doing it. It's about how AP functional tasks get done fast, at the lowest cost while producing the desired result (report, payment, resolution etc.).
The PRGX Productivity Index is a benchmarking report that uses the following key performance indicators (KPIs) for Accounts Payable productivity. Companies are surveyed regularly in order to find out how productive they are and what they are doing in order to be more productive. Below is the chart from the report that shows you what KPIs are measured and how they are weighted.
Yakidoo is helping organizations capture and digitize paper invoices as well as invoices received in other formats including those received via email or as PDFs, faxes and images. Automating this function alone can help companies eliminate costly inefficiencies that exist with manual keying and data entry.
Lean Finance and The New Normal
Cutting Invoice Process Costs Through Automation
Accounts Payable Automation and the C-Suite
Invoice Management and Manual AP Processes Continue to Plague CFOs
ECM in Action: Accounts Payable Electronic Processing
Alfredo De Vanna is CTO of Yakidoo. He has over 10 years of international experience deploying over 80 critical information technology and enterprise content management systems. He is fluent in English and Spanish.
Yakidoo is a member of SAP BusinessObjects Intellectual Exchange Network (IXN).
This program gives us access to fresh new research and content prior to it being publicly released through SAPs CFO and Finance Leadership Center.
We will be offering our readers access to this content along with our perspective and thoughts on what it means to our customer and prospective customers.
Not a day goes by when we hear on the radio that we are bound for another global recession. We hear about the ups and downs of the stock market, Greece defaulting on it’s debt repayment and the mounting debt people and other countries are facing.
Today, we heard that U.S. jobless claims were less than what economists forecasted. Does this mean the recession lion wolf is still at the door huffing and puffing or not?
What is certain is uncertainty and because of this reality companies must be prepared to “live in the now”. This is referred to as “the new normal”.
How can companies adjust to this reality? According to this report, companies need to be leaner, more efficient and be on top of their financials. This means a finance department needs to take a look at how their company is capturing data and using Information Technology.
According to Ventana, here’s what companies need to do:
"In past business cycles it was normal to pare expenses as the economy turned down and then, as business rebounded, lessen the scrutiny on costs. The new normal, however, is to keep an organization running as leanly as possible through the business cycle.
Maintaining spending discipline has become essential as companies seek to stay competitive in the short run and still generate return margins that will give them a long-term strategic advantage.
Ventana Research finds that doing so requires that management deploy the right information technology - the software and data - needed to operate in a cost-effective rather than just efficient fashion”
As I point out in “Cutting Invoice Process Costs Through Automation” many companies are still manually processing paper invoices. This costs money, takes time and prohibits companies from acting on data and early payment discounts.
The key to transforming a company to exist in “the new normal” is the rapid processing of unstructured data (like paper invoices) by using scanning and capture technologies and automating this process.
Please enjoy this research compliments of the SAP BusinessObjects Office of the Finance team and Yakidoo. You can access the report here. (registration required)
To stay up to date on new blog posts and Yakidoo’s solution offerings just subscribe via email or RSS feed.
Success Story: Data Capture, Automation and ROI
Invoice Management and Manual AP Processes Continue to Plague CFOs
ECM in Action: Accounts Payable Processing [included demo video]
Cutting Costs through A/P Automation and Scanning
ECM (Electronic Content Management) 101
Cloud Computing 101
Alfredo De Vanna is CTO of Yakidoo. He has over 10 years of international experience deploying over 80 critical information technology and enterprise content management systems. He is fluent in English and Spanish.
In theory at least, it should be a fairly simple endeavor to cost-justify an Accounts Payable automation initiative, yet often it is not.
Numerous studies, including a recent one by the International Accounts Payable Professionals group, (IAPP) have highlighted the gross inefficiencies that exist within A/P departments because of a lack of automation.
Companies are spending far more money, effort and time than they need to on A/P functions because of their continued dependence on manual processes.
The Accounts Payable departments themselves are often under tremendous pressure to reduce costs. Yet, efforts to build broad, enterprise-wide support for A/P automation efforts have often failed for a variety of reasons.
One common problem is that C-suite executives often have little idea about the need for automation within their A/P departments.
The recent IAPP study showed that with the exception of the CFO and the controller, few other senior executives including the CEO, COO, CIO and the CTO are aware about A/P automation needs or benefits. To learn more read my earlier blog post: Accounts Payable Automation and the C-Suite.
Accounts Payable departments themselves are also not very adept at documenting how they will benefit from automation or how they will measure return on technology investments.
According to document management vendor Kofax, any cost-justification initiative needs to begin with a thorough evaluation by A/P managers of where their departments are, where they want to be, and what it will take to get to that destination.
Though many A/P executives figure they already know what needs to be done, it is still important for them to accurately identify all the sources of their costs and the opportunities to reduce them.
It is an undertaking that requires a thorough evaluation of the strengths and weaknesses of the A/P function using metrics such as the timeliness and the accuracy with which invoices are processed and the number of steps involved from procurement of an invoice to payment.
Yakidoo offers workshops that are geared to help companies define the issues they face and create a path to A/P automation.
In order to properly cost-justify an A/P automation initiative, A/P executives also need to review all of their invoice handling and exceptions handling processes. The goal should be to get an accurate estimate of the fully-loaded costs to process a single invoice.
That means looking at items such as data entry costs and clerical costs such as those associated with copying, filing and faxing invoices. Building an accurate estimate also means calculating the costs involved in handling errors and exceptions and looking at ancillary costs such as those involved in mailing and storing paper documents.
The next step is to identity the specific functions or processes that can benefit the most from automation. Experts often recommend that companies with heavily manual processes take a phased approach to implementing new technology.
A phased approach is not only more manageable, it is often easier to cost-justify as well. For instance, cost-justifying a document scanning technology is likely to be a whole lot easier than justifying end-to-end automation of the A/P function.
Also key, is the need for A/P managers to understand their company’s project approval process and to identify the key executives that are likely to be involved in it. When preparing their case, AP managers should try and involve the executives who will be the ones that are signing off on it.
Often, finding a sponsor from within the executive suite can make a critical difference when cost-justifying an A/P automation initiative.
A Yakidoo Business Process Optimization/Automation Workshop provides a thorough documented analysis of a company's business processes and capture requirements in order to set the foundation for a phased and successful A/P automation project. If you're interested in learning more about a workshop let us know.
We’d also be happy to act on your behalf and get answers to the key questions and concerns you have about accounts payable automation. If you have questions leave a comment below, contact us through this web form, send us a Tweet or contact me personally on Linkedin. Help us shape the editorial agenda for this blog so you can get the most value out of what we produce.
To stay up to date on new blog posts and Yakidoo’s solution offerings just subscribe via email or RSS feed.
ECM and Automation for Accounts Payable
Invoice Management and Manual AP Processes Continue to Plague CFOs
ECM in Action: Accounts Payable Processing [included demo video]
Cutting Costs through A/P Automation and Scanning
ECM (Electronic Content Management) 101 Series
Victor Bensusan is CEO of Yakidoo. He has 20 years experience in Finance and Information Technology primarily in the area of process automation, information management and business performance improvement.
Despite all the talk about automating the Accounts Payable function, invoice processing tasks continue to remain stubbornly reliant on paper-based processes at a vast majority of companies.
More than three-quarters of the respondents in a recent survey by the IAPP said that a majority of invoices processed by their companies are paper-based. Of that number, close to 40 percent said that more than nine out of ten of their invoices are still on paper.
Given those kinds of numbers, it’s not surprising that invoice processing costs have not budged for years at most companies and neither have error rates for invoice entry and payments. Even today, despite the easy availability of automation tools, many companies do not even know how much they are spending on handling each invoice.
More than 50 percent of the companies that are aware of their costs say they spend between $2 and $15 per invoice. A handful of organization in the IAPP survey said they were spending an astounding $20 to $25 to process each invoice.
In many cases, an organization’s ability to pay invoices on time and manage the cash flow related to AP functions continues to be seriously hampered because of delayed invoice processing.
Clearly, companies that are hoping to get a handle on their invoice processing costs simply cannot afford the inefficiencies that exist with manual processes. Numerous solutions are available today that can help organizations capture and process invoices electronically right from the moment they are received to the point when it and are posted and captured in an ERP system.
These solutions include processes and tools that electronically capture, read identify and verify invoices, convert them to text-searchable format, match them with purchase orders, automate the dispute management and resolution workflow and export to ERP.
Implementing all of these technologies at once can be a big challenge especially for companies that have little automation in place right now. That’s one of the reasons why analyst firms such as Forrester recommend that companies implement invoice processing automation one step at a time beginning with document capture at the front end. To learn more about Frontend vs. Backend capture read my earlier post on the topic.
Yakidoo is helping organizations capture and digitize paper invoices as well as invoices received in other formats including those received via email or as PDFs, faxes and images. Automating this function alone can help companies eliminate costly inefficiencies that exist with manual keying and data entry.
For example, a Yakidoo Managed Solution can scan and capture paper invoices and send the data and the scanned document to a clients ERP system and content management system. This effectively removes the onus from staff to scan, index and store invoices so they can focus on more strategic tasks such as supplier relations and payment prioritization based on early payment incentives.
Similarly, automating the invoice matching process using tools help companies squeeze out some of the errors and inefficiencies that can crop up when trying to manually match each invoice with an associated purchase order.
Automated invoice matching can help companies make payments faster and take advantage of early payment discount opportunities. Enterprise Content Management systems provide another opportunity for companies to implement invoice process automation in manageable chunks. The key is to implement a solution that ties invoice processing functions with ERP systems for final payment.
Even companies that are unable or unwilling to automate their invoice processing functions have an opportunity to cut costs via outsourcing. Cloud and Managed solutions from Yakidoo and other companies allow companies to automate many manual invoice processing functions.
The benefits of such automation are manifested in multiple ways:
We’d also be happy to act on your behalf and get answers to the key questions and concerns you have about accounts payable automation. If you have questions leave a comment below, contact us through this web form, send us a Tweet or contact me personally on Linkedin. Help us shape the editorial agenda for this blog so you can get the most value out of what we produce.
To stay up to date on new blog posts and Yakidoo’s solution offerings just subscribe via email or RSS feed.
Accounts Payable Automation and the C-Suite
Invoice Management and Manual AP Processes Continue to Plague CFOs
ECM in Action: Accounts Payable Electronic Processing
Cutting Costs through A/P Automation and Scanning
Alfredo De Vanna is CTO of Yakidoo. He has over 10 years of international experience deploying over 80 critical information technology and enterprise content management systems. He is fluent in English and Spanish.
A recent study by the International Accounts Payable Professionals (IAPP) shows that few senior executives are actively engaged with what’s going on within the Accounts Payable (A/P) departments at their organizations.
In a majority of companies, for example, only the Chief Financial Officer (CFO) and the Controller are truly aware of A/P automation efforts and the potential benefits. Other key executives such as the Chief Executive Officer (CEO), the Chief Operating Officer (COO), Chief Information Officer (CIO) and Chief Technology Officer (CTO) are not, according to the IAPP.
This lack of awareness may be one reason why many companies continue to struggle with inefficient paper-based processes even though other business processes have long since been automated.
One way to accelerate efforts to automate the A/P department is to garner the support of more C-level executives. Executive support has been critical to the success of almost all major automation efforts at enterprises over the last few decades and there’s little reason why it should be any different for the A/P function.
A look at the list of the most commonly cited obstacles to A/P automation shows clearly how important the support of the C-suite can be. Many A/P executives for instance, cite a lack of internal IT resources as being their biggest impediment to implementing A/P automation.
One of the reasons could simply be that CIOs and CTOs are not aware of finances efforts to automate A/P functions. The IAPP study showed that less than one in three CIOs are actively aware of automation projects within their A/P departments
Similarly, many of the respondents in the IAPP survey said their A/P automation projects were being stalled because of “too many other projects” at their companies. It's no mere coincidence that less than 20 percent of chief operating officers are aware of what their A/P organizations are doing to automate key processes, or why they might be doing it. As a result, A/P automation projects are often given a lesser priority than other, more visible, projects.
Interestingly, when a C-level executive is sufficiently informed about the issue, s/he tends to remove many of the obstacles to automation. For instance, CFOs and Controllers are the only senior executives who really are informed about A/P automation efforts within their organizations. They are also the executives in charge of the corporate purse strings.
Perhaps that’s the reason why A/P automation projects seldom get stalled because of a lack of money. So it’s quite conceivable that if a CIO or a CTO were made similarly aware of A/P automation efforts, IT skills availability wouldn’t be such a big issue. Similarly, if a CEO or COO knew how important A/P automation was, it’s quite possible that such projects would be given a higher priority.
The CFO needs to lead the way when it comes to A/P automation but almost all c-suite executives these days have a stake in modernizing the A/P function within their organizations whether they realize it or not.
A/P automation projects that are done without the active participation of the internal IT organization for instance, could end up resulting in the introduction of non-standard platforms and technologies.
So, CIOs and CTOs have a stake in ensuring that A/P automation technologies are introduced, tested and implemented in a manner that is consistent with the rest of the organization. Similarly, chief security officers and chief risk officers have a stake in ensuring that new A/P projects and technologies are rolled out in a secure manner.
Security executives and risk officers are under more pressure than ever to ensure data security and compliance with state, federal and industry-specific mandates relating to data collection, use, retention and destruction.
CEOs and COOs have an obvious stake in ensuring the modernization of their A/P departments. Numerous studies have documented issues related to costs, errors and inefficiencies that exist within most A/P departments because of their continuing dependence on paper-based processes.
The key to raising the visibility of A/P automation efforts among such executives may well lie in making them aware of just how much of a stake they have in it as well.
We’d also be happy to act on your behalf and get answers to the key questions and concerns you have about accounts payable automation. If you have questions leave a comment below, contact us through this web form, send us a Tweet or contact me personally on Linkedin. Help us shape the editorial agenda for this blog so you can get the most value out of what we produce.
To stay up to date on new blog posts and Yakidoo’s solution offerings just subscribe via email or RSS feed.
ECM and Automation for Accounts Payable
Invoice Management and Manual AP Processes Continue to Plague CFOs
ECM in Action: Accounts Payable Processing [included demo video]
Cutting Costs through A/P Automation and Scanning
ECM (Electronic Content Management) 101 Series
Victor Bensusan is CEO of Yakidoo. He has 20 years experience in Finance and Information Technology primarily in the area of process automation, information management and business performance improvement.
Accounts Payable (AP) processes at many companies continue to be seriously hampered by grossly inefficient invoice processing and management capabilities, according to a Feb 2010 report, Taming Invoice Processing: Still Work To Do, by analyst firm Forrester Research (you can purchase the report here. Yakidoo does not receive any compensation). In June 2010, Forrester produced a follow up podcast summary of the report which you can download and listen to here.
Below is a summary of what is covered in the podcast and a timeline that you can use to follow along.
Many accounts payable departments continue to struggle with overwhelming paper volumes, surging document-handling costs and numerous process inefficiencies because of their failure to automate invoice processing functions.
The Forrester report is based on a survey of companies that were at various stages of automating their accounts payable departments. It showed that invoice processing continues to be a largely chaotic and untamed function that is full of non-value added activity and non-standard processes.
In many cases, a company’s ability to pay invoices on time, or to take advantage of early payment discounts or to effectively manage the people and cash flow related to the accounts payable functions continues to be compromised because of weak invoice processing.
Over the long-term, Electronic Invoice Presentment and Payment (EIPP) technologies will likely become the gold standard for addressing such issues, according to Forrester.
However, many companies are far from being in a situation where they can implement EIPP because many of their business partners and suppliers simply do not support the level of process automation required for the electronic presentment and payment of invoices.
For such companies, Electronic Content Management technologies, document and image capturing tools and document processing services can play a big role in corralling untamed invoice processing.
Companies looking to automate their invoice processing functions have a plethora of vendors and technologies to choose from, according to Forrester. Some products, such as those from Kofax fall under the document capture category and are designed to help companies electronically capture paper invoices at the front end.
Some products such as those from EMC feature full fledged enterprise content management capabilities and adapters that allow businesses to hook their invoice processing environment with broader ERP suites. Meanwhile, vendors such as Xerox let companies completely outsource their document management requirement if they choose to.
So while invoice processing remains a largely untamed process, enterprises have numerous opportunities to identify their pain points and to get it under control via automation, according to Forrester.
Go to Taming Invoice Processing - Still Work to Do to download and listen to this podcast.
(NOTE: There is a 20-second lead-in music segment that precedes the interview)
00:22 Craig Le Clair from Forrester Research identifies himself and says he will be talking about Taming Invoice Processing: Still work to do. Le Clair says that untamed processes are shaking confidence in the accounts payable function and that ECM and EIPP tools can help corral those processes.
01:05 Mr. Le Clair defines what Forrester means by ‘untamed processes’. These are processes that tend not to be large enough in focus to be captured by the core ERP, or CRM or PLM system, he says. They tend to be chaotic and involve lots of non value-add work. Invoice processing is a classic untamed process.
02:10 Mr. Le Clair says that for many companies, the problems caused by inefficient invoice processing are clear and devastating. The problems include massive paper volumes, and surging document handling costs. He provides one example of company handling 200,000 to 300,000 paper invoices annually.
03:15 The ability to effectively manage the people and the cash flow related to account payables is a big concern for many businesses, Le Clair says.
04:50 Mr. Le Clair says that enterprises which fail to automate invoice processes face four key consequences: inconsistent processes, high transaction costs, too much time spent on paper processes, high degree of non-value added activity.
05:50 EIPP is the gold standard where all companies will eventually need to get to eventually, says Le Clair.
06:30 He adds that paper and faxes are still the reality for most companies. So, many companies are implementing ECM to corral their invoice processing.
08:05 Implementing ECM would allow companies to cut paper off at the periphery of the accounts payable process.
09:00 Vendors which can help companies automate their invoice processing fall into three categories: document capture vendors, vendors of enterprise class ECM products and providers of outsourced document management services.
Yakidoo offers data capture and ECM solutions that help companies address these problems. Please feel free to contact us if you'd like to discuss how to improve invoice management.
Alfredo De Vanna is CTO of Yakidoo. He has over 10 years of international experience deploying over 80 critical information technology and enterprise content management systems. He is fluent in English and Spanish.
