Is your company’s Accounts Payable (AP) function performing as well as it could?
According to a recent study, over 60 percent of companies still process their invoices and payments offline1. While many companies use their websites as a digital storefront, or even rely on social media for customer service capabilities and engagement, many more are not taking advantage of digital programs to process Accounts Payable. And for most companies, the number of invoices being processed each year is only increasing, which means the pain of paper-based AP will increase, too.
If your business falls into this 60 percent, you might be looking for a solution to make your AP function more efficient, cost-effective and up-to-snuff with other competitors in your industry. Identifying a need for change is a great starting point!
However, the biggest hurdle you’ll likely face in getting an automated AP project off the ground is how to make this case to executives, IT, and key team members. Without their buy-in, your plan to automate your AP functions will not go far.
Great! How should I start?
The first major component is developing a strategic business case for AP automation. By doing this, you’ll be able to show decision makers how automating your AP function will result in:
- – Cost savings
- – Time savings
- – Efficiency of job tasks and functions
- – Streamlined financial processes
- – Workflow flexibility
- – Enhanced visibility and control
- – Revenue growth
- – Enhanced customer and vendor relationship management
Here are some steps to follow when developing a winning business case for adopting a new AP solution within your company.
Step 1: Define your needs
Make sure to identify the need for automating your AP functions by developing a clear plan. This can be done by:
- – Determining the steps and processes of AP that you’d like to automate
- – Determining the biggest challenges your company encounters with your AP processes
- – Identifying the benefits you’re hoping to receive from incorporating new AP solutions
- – Involving your team in identifying key AP process issues
|Did you know?
According to a recent survey, one third of finance executives use manual methods (like Excel spreadsheets) for data collection, calculations and reporting2
Step 2: Set the stage with research
Next, conduct research to understand your current state of AP processes. It’s important to identify the pain points and needs, and then back it all up with measurable data.
This will only enhance your business case because stakeholders will want to base their decisions on tangible numbers and figures.
The main questions to address about each AP process in your research phase include:
|Workflow||How many staff are dedicated to AP functions?|
|How much of their time is dedicated to the AP process?|
|How many invoices, on average, are processed (day, week, month, year)?|
|How many steps are in your current AP workflow (from beginning to end)?|
|Data Entry||How many full time employees input and manage invoices?|
|What percentage of their day is spent on data entry?|
|How much time is spent on data entry weekly, monthly, and annually?|
|Approval Process Management||How many full time employees manage the approval process?|
|What percentage of their day is spent managing approvals?|
|How much time is spent managing approvals weekly, monthly, and annually?|
|Payments||How many full time employees are involved in payments?|
|What percentage of their day is spent on payments?|
|How much time do they spend on payments weekly, monthly, and annually?|
Step 3: Zero in on the ROI
Now that you’ve completed your research, it’s important for you to focus in on the potential Return On Investment (ROI) of your solution. Fortunately for you, the return on AP automation is easy to quantify!
First, calculate the total costs of the project (licensing, subscription costs, maintenance, support, etc.).
Next, calculate the savings. This component of your calculation will be largely based on the data you uncovered in your research phase, and includes ‘hard’ savings (reducing staffing hours spent on invoicing and data entry, eliminating the cost of manual errors, early payment discounts, time saved on approval processes and payments, etc.) and ‘soft’ ones, like time saved for approvers and better vendor relationships.
Step 3: Collaborate with stakeholders
By leaving key stakeholders out of the equation, your business case has little chance of becoming a reality. Each level of stakeholder, from executives, IT, to the team members carrying out the AP functions, will have different objectives and requirements out of a new AP solution.
Make sure all of your team members understand the benefits of a new AP solution, and are fully involved in the entire consultation, research and decision making process.
Step 4: Put it all together
The final step in incorporating a new AP solution is to break it down in quantifiable and tangible data for all stakeholders to review.
Using the figures and metrics you uncovered in your research phase, it’s time to organize the math of your calculations in a clear and concise way, while highlighting the major benefits of the solution(s) you’re proposing. Here is an example of how you could lay out key benefits using Beanworks AP Automation.
- On data entry – An AP program like Beanworks can save your company hours each week on manual data entry and invoicing by fully automating the process.
- On payments – Beanworks gives you the ability to pay vendors electronically, so you can securely pay your invoices directly and on time through a virtual credit card, EFT/ACH, wire or automated cheque, all with one click.
- On coding – Beanworks uses a combination of SmartCoding and human auditors to intelligently code invoices, along with automatic PO-to-invoice matching for a fast AP process.
- On approval processes – Beanworks allows you to approve invoices from anywhere, anytime. That means a significantly reduced timeframe for approvals – from days to minutes.
- From early merchant payments and discounts – By using a fully automated program like Beanworks, your customers can take advantage of early payment discounts with full control over their payment timing.
- On staffing resources and future projects – By automating the data entry process, you can allocate your staff to more strategic accounting tasks, which ultimately adds more value to the future success of your organization.
- On cheque processing and mailing time – Cheques can take time and money to issue, especially when you add in the cost of printing and postage. Using a solution like Beanworks can save your business tens of thousands of dollars every year.
Added Revenue Opportunities
- Virtual card rebates – Some AP solutions, like Beanworks, offer cash back rebates. Beanworks’ virtual credit rebate program will actually generate revenue as you pay your vendors.
So, are you ready to automate?
Beanworks can help you fully automate your AP workflows, manage invoice approvals in real-time from anywhere, and process payments in one central solution.
Try out our ROI calculator to find out how much time you can save each week with AP automation in Beanworks.
- Ryan, Vincent. (2017). AP Benchmarks Reveal Opportunities for Fraud. Retrieved from http://www.cfo.com/cash-management/2017/08/ap-benchmarks-reveal-opportunities-fraud/
- Institute of Finance & Management. (2017). How to Use Key Metrics to Chart Your AP Improvement Journey. Retrieved from https://divcomplatform.s3.amazonaws.com/www.iofm.com/images/6652f2ddaf4d970e28e842ee2552cdaa.pdf