How do you compare?
The chart below shows the 2017 AP Automation Benchmark Metrics courtesy of the Ardent Partners
Cost to process a single invoice
Time to process a single invoice
Invoice exception rate
Percentage of suppliers that accept electronic payment
Percentage of suppliers that submit invoices electronically
Considering the Cost:
Let’s start with transforming your invoice entry process. A 2017 Ardent Partners study proves that 58 percent of suppliers currently receive their invoices manually. Scan, save, then shred your invoices. E-Invoicing takes care of the rest by storing all information based on the rules you create. Categorize and organize your payables the way you would your filing cabinets – if not better.
There’s also the cost of time. Factor in the speed of processing one invoice. According to the study, 51.1 percent of Best-in-Class suppliers submit e-invoices, only costing $2.74 per invoice.The time to fully process one e-invoice is only 3.5 days. Their costs are 82 percent lower and 71 percent faster than others surveyed. That’s pretty cheap in comparison to other suppliers that cost $15.02 and take twelve days!
According to a recent survey with AP department leaders, 63 percent believe that the top priority for 2017 is to reduce invoice-processing costs. It’s safe to say that it’s time to toss the files and folders, and focus on evolving electronically and efficiently.
Think about all of the bills that suppliers must pay monthly. The electric bill, staffing, cleaning, office supplies – the list goes on. The accounting department is responsible for all of these tasks outside of their daily duties. All of these payments – dating back to who knows when – are stored in filing cabinets and closets. Not to mention keeping track of notes about approval, receipts from payment, and any additional forms that the supplier must keep track of.
Automation can take care of your invoices and payments based on data and peripherals that you set. Simply scan the invoice, and the automation service will manage approvals, payment, and the status of each step from start to finish.
Even when considering the order process, there are services to make the P2P process a breeze. An example, is the Purchase Order Application. Create the request, and watch the magic happen. The application sends the request to your supplier, emails you an invoice, and aligns the request with the invoice. The rest is history. With just a few clicks, streamline processes, boost visibility and measure spend.
Do you still have check books and pens with a stack of printed invoices beside them? Do you still flip through folders to staple the updated copy of the check to the company’s papers? Let’s not forget putting it in the mail and waiting for verification that it was received!
Only 46 percent of companies have adopted e-Payments solutions.
Many companies are afraid of change and automation costly. A stack of checks costs less financially, but how does it impact the AP process?
The 2017 benchmarks show that only 51.5 percent of suppliers accept electronic payment. Although it’s becoming more popular, many suppliers don’t see it as a priority quite yet. The study explained why.
“Although much of the contemporary focus for AP departments remains on the front end of the process, more and more organizations are realizing that ePayment solutions are vital to completing the full cycle of P2P.”
In order for suppliers to effectively track data and the success of internal processes, suppliers should process as much of the payments online as possible to provide financial visibility and track spend in one place.
Entering invoices is only one step of the AP process. There’s still approvals, distributing the check, and other parts of the workflow. This process is halted with wait time between the entering the invoice and account system appearing. That doesn’t account for chasing down managers for approval or finding the right files in the cabinets. The average exception rate is 18.4 percent. Employees must account for these invoices that require additional time – only increasing inefficient time and spend. This rate typically determines inefficiency and failed processes.
Accounting department sizes vary depending on the company. Employees may wear many hats in the department depending on the needs. The number of employees does not matter as much as their time does. What are your AP full-time employees (FTE) spending their time doing?
An example is the exception rate. Consider how much time is being spent correcting data errors or getting approval? A 2017 study from PwC found that 40 percent of the accounts payable process can be automated — including billing and reporting. Reducing manual tasks allows time to focus on analyzing financial findings for leadership. Top performers spend 20 percent more time focusing on studying data instead of gathering it. The more time employees spend on workflows increases cost per invoice and decreases efficiency
Approaching Automation QuestionsYour results may spark some discussion around adopting AP automation. We’ve created a few questions to spark the automation conversation. Here are a few factors to consider with your teammates:
- How can you increase efficiency in the AP department to get the most out of your employees?
- What are FTE spending most of their time doing on a regular basis? How could this be better?
- How can you decrease your cost per invoice and exception rate to boost productivity and professional development?
- What can your AP department do to double the dollars without tripling the time?
- How can we benefit from AP automation? Is the reward bigger than the risk?