Did you know that lagging organizations pay 149% more than their top performing brethren in order to process an invoice? According to recent APQC research of nearly 1,000 organizations’ payables processes, those labeled “bottom performers” are paying $12.77 per invoice processed, compared to a much more manageable $7.75 by median companies and $4.98 per invoice processed by the top performers.
Five Contributors to Invoice Processing Costs, and What Top Performers Do Better
According to the research, there are five parts of the processing costs that top performers are able to control better than laggards:
- Personnel (compensation and benefits)
- Outsourcing (to either a company-owned shared services center or to a third-party)
- Additional Miscellaneous Costs
“Now,” you may ask yourself, “Aren’t these the costs that every organization has?” The answer is yes, but top performing organizations are able to mitigate these costs better than the average company.
How Top Performers Focus on What Matters
The biggest difference between top performers and laggards? Top performers can remove the human element. Labor costs typically consume 62% of total AP costs, according to the APQC research, and most of these labor costs come from manual intervention to fix errors.
These errors and manual processes can be traced back to one common element that bogs down the accounts payable process—paper.
An invoice hits the mailroom, is identified, sorted, and routed to the appropriate location, where it lands on the desk of the individual in charge of paying the supplier. The same goes for an email: The email must be printed and routed, adding to the mess of paper that already exists and possibly getting lost, buried, or sent to the wrong person, creating the worst possible iteration of “chasing paper” that exists in the modern world.
Overuse of paper in the AP process is so bad, in fact, that according to PayStream Advisors, 52% of procurement and finance professionals said an overreliance on people and paper-based processes was “[…] the biggest barrier to success in improving AP Operations.”
Top Performers are able to simplify this process through automation—minimizing the use of paper by implementing advanced solutions that turn paper-based invoices into machine-readable data streams.
By reducing the costs that paper brings to an organization, leaders can minimize the need for additional headcount, in some cases actually reducing the number of employees toiling away on manual processes, while improving the turnaround time on payables.
Eight Ways Cloud-Based, Automated AP Processes Save You Time and Money
The costs, waste, and headcount needed to manage an organization’s AP processes can be driven even lower by moving to the cloud, according to Aberdeen. With lower costs and more simplified processes, automated, cloud-based AP processes can allow your organization to:
- Log invoices automatically, using optical character recognition (OCR) to extract text from invoices.
- Automatically match invoices with their POs and forward it for approval (or for exception handling).
- Set up a portal to give your suppliers visibility into the process, enabling self-service (and reducing your costs).
- Set flags on certain types of spends and behaviors to notify you immediately when problems occur.
- Give your employees the ability to use mobile technology to create and submit expense reports on the road—reducing error rates by filing expenses while they’re still fresh in the employee’s mind.
- Automatically submit invoices to your ERP, significantly reducing the need for manual input.
- Develop reports more quickly and get a better handle on your company’s cash flow, immediately seeing what your liabilities are.
- Archive invoices, receipts, and other proofs electronically, for as long as it’s required, without taking up physical space.
Digital AP gives you the ability to control spend, which reduces risk, increases compliance, makes tax management easier, and cut off bad spend before it happens.
Conclusion: Making the Most of AP
Concur Invoice has helped thousands of organizations to make their AP process better, shortening time spent on the invoice goose chase, reducing the amount of errors that plague organizations, and ultimately giving better visibility into the organization’s spending.
Learn more about Concur Invoice here, and learn about taking your processes further by integrating your invoicing with either Intacct or Microsoft Dynamics with InvoiceConnect here.