Haley: Hello, everyone and welcome to our webinar on how to turn your AP department into a profit center. Really quickly, before we jump into today’s, you know, meat of the webinar, I’m just gonna go over a few housekeeping items. Most importantly, just make sure that if you have a question you use the chat panel and type that in, and we’ll be covering that during the Q&A session at the end. That’s pretty much all the housekeeping items.
And now I’m going to introduce you to today’s speaker, Rhonda Greene, who is an AP automation expert. And she’s going to give you some background on her experience and then take you through today’s webinar. So Rhonda?
Rhonda: Thank you, Haley. So my name is Rhonda Greene and today we’re going to talk about making AP a profit center. The introduction is now. So I’m actually one of the solutions consultants here at Avid, working with our sales team. But prior to that, I actually led our payment services team. And prior to coming over to Avid five years ago, I actually spent years working in accounting, managing very large AP departments for two different multi-billion-dollar companies. AP is very near and dear to my heart. I love, you know, talking to folks about their current processes and all these offerings, best practice solutions. So as we go along, you know, feel free, like Haley said, to put any questions in the box that you may have.
But today we’re going to understand the best practices of leading real estate companies. We’re going to discuss ways AP can become a profit center. Also, we’re going to identify how to improve your company’s AP process. We’ll take an audience poll and then we’ll have a QA. So please jump right in there, too, and talk about best practices of leading real estate companies. Avid has a very large real estate background. We work with hundreds and hundreds of real estate companies, helping them automate their processes and helping them be more efficient. So real estate is very important to us.
We’re gonna talk about some trends that we see happening. The first one is putting the cloud to work. So cloud applications have really come into the forefront in the past decade. A report by Cisco found that more than 83% of all data center traffic will be based in the cloud within the next three years. File-based solutions for AP and other business applications are becoming the preferred alternative over investments in IT staff and hardware. There will also be a greater emphasis on integrating cloud-based AP solutions with existing financial systems.
So if we think about that just for a little bit, I know just from working with so many folks in the industry, when we talk to them about their interest in automating their AP processes, I know that it’s definitely a concern that I hear. And that is, “Well, we don’t have the IT resources devoted to spend to a new software, new integration process. We just don’t have the time.” And that’s the beauty of working in the cloud. Avid is SaaS-based, so we are in the cloud. And just as long as you have access to the internet, you can use all of our products.
So there really is limited IT spending, limited IT resources that’s needed for our product. And our product, as you can see here by the graphic, is 20.66% average improvement and time to market. Also 19.63% average increase in company growth and about 19% average increase in process efficiency. So the cloud has really made a lot of changes to the traditional ways of doing things.
Now, number two, a survey by the consulting firm Kaufman Hall said that 70% of finance executives polled said their number one goal for 2017 is greater visibility into financial data for decision-making. So advantages of improved visibility include ability to impact management of working capital. They can gain real-time insights for cash forecasting and budgeting. They can identify growth trends. They could also manage customer and vendor relationships more strategically.
So if we think about having real-time analytics, it definitely does impact all of these areas. Especially if we’re talking about managing your vendor relationships more strategically, you’re going to be able to see what kinds of decisions that your vendors are making as far as how they want to be paid going forward. We’re not just in a check processing world anymore. While checks still are the number one payment method, we’ve seen that slipping down each year while more and more vendors become familiar with electronic payments and all the benefits that they offer.
Trend number three is a big one, I think. It’s mobile access. So mobile technology has been surprisingly underutilized in workflow solution for AP and that’s according to research done by the Aberdeen Group. Emerging trends for this year, for 2017, indicate an increased use of mobile devices in AP automation software. So this seems that invoices and approvals delivered by the automated workflows will be easily accessible through smartphones, tablets and other devices. So your folks that you depended on to be in the office, maybe your check signers that needed to sign every check or needed to approve every invoice, they’re no longer going to be tied to their desk. They can now be on vacation, be sitting on the beach, and have access to approve these critical pieces of the company’s cash flow. So they can approve the invoices, they can approve the payment, and they no longer have to worry about being a bottleneck in processing time.
As we see right here in this graphic, mobile solutions support greater access to financial data and therefore greater AP management. So as we look at the first graphic, AP systems fully integrated with ERP or financial solutions. So that’s about mobile 80%, no mobile only about 56%. Electronic approval workflow, 83% versus no mobile at 43%. Electronic invoice network, 67% versus 38%. And real-time visibility into cash positions, we definitely see some improvement there with 33% versus 28%. So more and more companies are looking for the ability to be mobile.
In the world that we live in today, we’re always on the go, so we need to be able to make sure that our workflows and our tasks that we used to depend on an individual sitting at their desk that they can now go out and you know, go to conferences or on vacation and they’re not having to wait just to approve.
Trend number four, straight through processing. This is another big trend for 2017. According to Ardent Partners, 58% of survey respondents viewed a truly touchless invoice environment as the highest potential to change AP operations. Also, a single solution significantly reduces human touches, while eliminating the potential for error and assures the integrity of the data. So if you can just imagine having your invoice come straight through from receipt through entry into your system all the way through payment, how much more efficient that would be to have a straight through process.
Next is accounts payable can become a process center. So your question may be, “Well, how is that even possible?” So we’re going to talk about reducing processing cost by 60% or more, improving efficiency, better cash management and more payment discount opportunities, increased visibility to spend, ability to earn rebates on qualified e-payments.
So how do we improve your process? So what we’re looking at now is your typical paper-based AP process. What you’re seeing here with these icons is your typical AP flow. The invoice comes in, someone opens the mail, may or may not be matched to a PO. They then route the mail, code the mail, have to approve those invoices, may or may not be matched to a budget. They then need to be entered into your accounting system. Then they’re posted to the GL and then the payment process takes place from cutting the paper check and then filing the invoice. And then in your research that comes up as a result.
One of the beauties of our AvidXchange software and services are all of the things that our technology and our people do. They replace a lot of these manual processes. So everywhere that you see an X, that means that either our technology or our service teams are going to be doing this for you. And that’s the invoice, you know, opening of the mail, the routing the mail around, entering the invoices into the accounting system, and then even all the way through processing those invoices for payment.
Now, you’ll notice there are a few icons that do not have the X associated with them and it’s important to know that those are three areas that are still entirely up to the client. These are business decisions that the client needs to make as in how to code and invoice, approving invoices and then of course posting those invoices to the GL. But our goal is to get a fully coded, fully automated invoice back into your accounting system so that the payment process will be ready to go when those invoices become due.
There are five ways that we can get invoices into our Avid invoice. We can receive the traditional paper invoice. We’ll actually work with you and we’ll open up a PO Box in your name so that instead of the paper invoices being sent to your office for someone to open and then scan into the system, we’re going to do that for you. You can also scan them in. You’ll actually be given an email address with your company name at avidbill.com, so that if paper invoices, some of them still come into your office, you can always scan those in and send them over via email, and your vendor can do the same. They can send them directly to us via email. And we do have an EDI, an electronic option to receive them.
Also we have a vendor portal. But around 65% of the invoices that we process for our clients, they’ll come in by email. And once they come into us, the information is then extracted and we analyze to make sure the information that we have extracted from those invoices are correct. So we check seven different data points, things like the invoice number, invoice date, amount, vendor of course. And then those invoices are then delivered into the workflow that you have worked with one of our project managers to initiate and set up.
So now let’s talk about reducing operating cost. So I think this graphic here probably really surprises folks more than some others. And that’s what the cost, the average cost per invoice and the average cost per payment is to process these invoices and these payments. I think when we ask folks, a lot of them really don’t have any idea. They’d never really sat down and analyzed the cost of their labor, time, the number of invoices that come in. Same way with the payments. You know, you’ve got to consider the postage, plus the manual processes of printing the checks and stuffing the envelopes.
So on average, we have found, and these are industry statistics from PayStream Advisors and Aberdeen Research that it cost $9 on average per invoice. Can you imagine that, that an automated invoice that goes through an automated system is about $1.50 per invoice? So that’s obviously a huge difference. Same way on the payment side, you’ve got $7.15 being your average cost for your paper check versus 68 cents for an automated solution.
So what drives up the cost? Manual labor. I think I’ve already touched on that a couple times. You’ve got to manage approvals, the invoices have to be entered. You’ve got to handle vendor inquiries. Then you have to make the payment. Labor costs typically consume 62% of total AP cost. And this is definitely something that I can attest to from former experience. One of my goals at a company that I worked for a lot before coming to Avid, was to reduce these labor costs, to become as efficient as we possibly could be. And that was definitely through automation.
Looking at how do we take the data entry portion, for instance of invoice entry and of actually cutting checks and stuffing the check, how do we take that away and automate that? And then we can have our folks that were typically entering those invoices or processing those paper checks, we can assign them to other tasks.
Speaking of that, how much time does an AP staff member spend on manual tasks each day? Research shows that that’s about four hours. So think about that. Four hours per person doing things like opening the mail, entering in the invoices, and possibly making copies of checks to staple to the invoices once they’re paid. So if you can imagine taking away four hours a day for manual tasks, what you can actually accomplish using those folks on other tasks. And what would you do with that extra time? You could improve vendor relationship, help companies to improve process, plan for the future.
Scalability. The thing with the cloud is that there’s no infrastructure to invest in, no hardware. So automation is built for scalability. You need no IT expert help, no hardware. You’re able to approve invoices and payments from your mobile device. You can connect anywhere any time, highly scalable as you grow, and it’s three times the processing capacity of a manual-based AP process. Three times. So if we look at all of these, these are all things that we can help you with.
And this is what our software looks like. So once we have set up those workflows with you, you let us know. We can set workflows based on dollar amount, department, you know, any way that you need to see those invoices routing for approval. So once they come in, an approver is going to receive an email letting them know that they have invoices to approve. They will then log in to their queue and see all of the invoices that they need to go in and approve.
So if we take this first one, for instance, you’re looking at here, and this is some of the data points we were talking about earlier, invoice number, invoice day, due date, vendor. These are all things that we capture and that’s over 99% accuracy. Also your entity, so if you have things being sent directly to properties, we will certainly capture that as to which property that receives the items on that invoice.
And here you can see, for example, where it says “action” is Mike Johnson will need to approve anything over $200. And we’re also gonna let you know if someone is holding on to invoices longer than they should as well. So no more wondering where’s that invoice, who has that invoice, we need to pay that invoice.
So if we go to the next slide, you’ll see that you’ll actually have an invoice image there for you to make your coding decision. And again, here are the data points that we’ve captured for you. Right beside it is the invoice image. And it doesn’t matter if the invoice is one page or 30 pages. All pages will be there for your review. As you can see, then you can make educated decisions on approving. Did I receive everything that I ordered? Is it at the cost that I ordered it at?
And then, again, it’s a simple matter of just clicking approved once that you are in agreement with the invoice. You can see here, again, because we are cloud-based, that you’ll have 24/7 access from anywhere at any time, from your mobile device, your tablet, of course your PC.
Let’s talk a little bit about scaling for growth. We’ll actually fill over a real life example with a company that has been a client of ours for a long time, The Wilton Companies. So the Wilton Companies grew from processing 10,000 invoices a year to more than 14,500 over the course of five years without adding any additional AP staff. So think about that. That’s four times the growth without additional AP head count. After implementing a complete automation solution, The Wilton Companies was able to pay invoices with just a few clicks of the mouse. Also, they were able to minimize risk of check fraud. Our solution increases security around payment.
Forty-eight percent of payment fraud can be tracked back to paper checks, and I’m sure that more than likely all of you have maybe experienced check fraud in your AP career. I know I personally have. Without giving away my age, too late, I’ve been doing this since I got out of school in the late ’80s when everything was paid with a paper check. And it was so much easier back then for fraudsters to steal checks out of mailboxes and to wash the ink off the checks and to change the dollar amount that’s being paid. And the company would have no idea until either the vendor called them to let them know they never received payment, or until they got their bank statement and noticed that there was a different payee or a different dollar amount.
So why? Data is not secure in a paper-based environment. Manual processes rely on post-payment review to detect deviation from business rules. By the time you’ve identified an issue or discovered an error, just like I went through, the fraud has already occurred.
So how does automation prevent fraud? Automation enforces strict adherence to business rules reducing opportunities to commit B2B fraud. Every invoice is scrutinized for legitimacy before entered into your accounting system. Every payment has positive pay and approval workflows making sure that no fraud occurs.
So graduate to a paperless process with AvidXchange. Let us be your partner in increasing your processes and making you more efficient in a cloud-based solution.
Paperless AP recap. Ability to receive 100% of your invoices electronically, you can facilitate 100% data capture with 99% accuracy guaranteed, enhanced workflows and approval, you can pass the AP data into your accounting system with no manual data entry on your end, and we can facilitate 100% of your payments regardless of the supplier or their preferred method of payment.
Haley: Thank you, Rhonda.
Rhonda: Thanks, Haley.
Haley: Really quick, while we’re taking Q&A, we’re gonna launch a poll and this will help us know how to follow up with you. So there’s three selections you can make. So if everyone on the line could just take a second and vote. If you want to see a live demo and potentially learn a little bit more about how it would work with your individual accounting system, you can select the first option. If you just want more information, you have some questions about processes or pricing, you can select that or you can select “I’m just learning for now.”
So it looks like just over 60% of you on the line have voted. We’ll give it just a few more seconds and let everybody make their selection. And then we’ll turn it over to Rhonda for the Q&A session.
And Rhonda, we do have our first question. It’s from Eric and he wants to know, in your experience, what was it like implementing a solution like this for a decent-sized company?
Rhonda: It was actually surprising for me. It was much easier than I anticipated. Because you’re working in the cloud, you’re not dependent on IT and installing anything. So typical implementation for us is 45 days or less. I know that sounds hard to believe, but it’s true. And we’re doing a lot of the heavy lifting, meaning we are loading your chart of accounts, we’re working with you to create your workflows, dealing with all of those things that will make your life easier when it comes to receiving invoices and processing them. Great question.
Haley: The next question is from Chelsea. And she wants to know, in your personal opinion, what was the biggest benefit of, you know, getting rid of all the paper?
Rhonda: Oh my gosh. A couple things. So you know, here we are, about the middle of March and I’m sure all of you have just recently gone through yearend close. And with yearend close comes those pesky auditors who are a very necessary evil, but because you can grant auditors read-only access, number one, you don’t need to have all that paper standing around or sitting around or in filing cabinets because it’s all here on the cloud. And you can give those auditors read-only access and they can actually pull up that information themselves.
So they can see the invoice image, they can see where it was coded, who approved it, and also they can see cleared check images. If they’re doing a disbursement audit, they need to see proof of payment. So getting out of the payment paper makes everything so much easier because you know exactly where those invoices are, you know where they are in the approval workflow. And like I said, if someone needs to see an invoice copy, there’s no more going to the file cabinet. Thank you for your question.
Haley: Thank you so much. We have just a few people that still haven’t voted on the poll, so I’ll leave it up for, you know, 10 more seconds so that we get everyone’s answer and we’ll continue to take questions. And the next question is from Alan and he wants to know, you know, is this something that’s a monthly fee or is it based on the volume of invoices and payments that we’re processing?
Rhonda: Great question. So it is transaction-based. So we will charge you per invoice or per payment, so if you have invoices or payments that you need to keep in-house for some reason or something comes up and you’ve got to cut a check the same day, the beauty of AvidPay is that while you’re spending the vast majority of your payments through the AvidPay network, if you need to cut a rush payment, you can continue to do so like you always have. And again, if you’re not sending that payment that you don’t send through, you won’t get charged for it.
Haley: Thank you. We are still taking questions, so keep sending them in, folks. The next one is from Donna and she wants to know if you could give one piece of advice to, you know, an employee who’s trying to basically be the spearhead of the project… I’m trying to interpret this question, so sorry if I butcher it a little bit. But basically, if somebody is like the champion, the internal champion for automating for their company, what advice can you give them on how to help convince, you know, their boss and board to make a decision like this?
Rhonda: Well, I think knowledge is power. So some of these slides that we covered today talking about what the typical average cost is for processing invoices and payments, if you can take that to a controller or a CFO or, you know, whoever your manager is and let them know, “Hey, this is on average what it costs in a paper-based processing world.” Look at what we can gain through automation, all the efficiencies, lowering the cost but also increasing visibility because I’m not trying to hunt down invoices or check copies. If I’ve sent checks somewhere for the CFO to approve and maybe they’re not gonna come in for a couple days, I don’t have to worry about holding up the payment. So if you can take the knowledge that you’ve learned about automating and all of the efficiencies and how cost-effective it is to your management team, that usually really starts a great conversation.
Haley: Thank you. It looks like we have one more question in the queue and it’s from Lynn. And the question is, “I understand how automating would reduce your processing cost, but have you really seen companies see an ROI from it?”
Rhonda: You know, we actually have. And let me explain how that works. We actually know of several companies and that is because in an electronic payment world, when vendors are electing to be paid with electronic methods over versus the traditional paper checks, you know, they’re getting their payments a lot faster so they don’t have to wait for the traditional mail time, and also more securely. And every time that your vendor accepts an electronic payment, we can give you a rebate. And so that is how, depending on the volume of payments that flow through the network, that is how we can turn your AP department into a profit center. Given if the volume is there, who knows, you know? Sky is the limit.
Haley: Wonderful. It looks like that wraps up our questions for the day. So Rhonda, thank you so much for being a wonderful host. I just wanna say a friendly reminder to everyone who’s on the call that we did record this webinar and it will be sent out tomorrow, so keep your eyes open for that. Rhonda, any closing thoughts?
Rhonda: Well, again, I advise you to take what you’ve learned today, do some research, go out and Google AvidXchange or ask, you know, for more information. We’d be more than happy to talk to you, do a demo for you just to give you the basics of how it works and let us apply it to, you know, your processes. You can tell us what you typically do. So I really advise you to just do your research, reach out, let us talk to you and take it from there.
Haley: Thank you so much. Everyone, that will conclude our webinar today. Have a wonderful afternoon.