AP Automation

Accounts Payable Automation Pays Big Dividends

May 20, 2014

Automation pays big dividends

When it comes to shrinkage, finance executives typically cringe. The term represents a leak in the financial ship, so to speak. As unpaid goods vanish from store shelves or racks, profits shrink.  But, consider a new definition, one where finance department headcount shrinks while productivity rises and the word no longer rubs company controllers the wrong way. Recession or recovery, finance leaders have shrunk their departments, by roughly 30 percent since 2004, according to The Hackett Group. Some shrink by deploying new business models which consolidate roles, some by outsourcing, and others by increasing the use of workflow automation, especially accounts payable automation.

The case for widening the focus of improvement efforts

Nearly half, some 47 percent of the finance executives Hackett queried, say they increased the use of automation to ratchet up productivity. And, not only does implementing business process automation hold the line on headcount, but the nature of invoice software means as your business grows, your ability to manage accounts payable scales up as well, quickly, easily, and inexpensively. The net effect of moving to a Purchase to Pay (P2P) online service covers many facets, with process efficiency typically being the main focus for quantifying the benefits. Hackett Group has created an effectiveness quantification model that delves into the wider range of P2P value drivers that leading-edge companies have realized.

Hackett’s model makes the case for widening the focus of improvement efforts, which they show can increase the value and savings by 12 times over measuring just process and workflow efficiencies. Factors such as compliance risk, opportunity-cost of management time, early payment discounts and rebates, and supplier non-compliance drive value from automating the purchase to pay process. The P2P process is influenced by dependencies between multiple departments, and by recognizing the areas in your company that yield the highest returns, you can take steps to close performance gaps with industry leading-edge companies.

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