Accounts Payable Automation Benefits
Facts and best practices by leading analysts

Purchase to Pay by ReadSoft. Automated accounts payable processing Author:Paul Steele, Wille Dahl, November 2010; Updated: August 2011 Copyright 2011 ReadSoft - www.readsoft.com

invoice matching and approval workflow. according to the Aberdeen Group. inefficient processes and manual routing of invoices for review and approval. namely: Aberdeen Group Gartner Inc The Hackett Group PayStream Advisors Inc It breaks down the AP automation issues faced by organizations and highlights the numbers behind the proof that there are major benefits to be gained in implementing an AP automation system.namely invoice receipt. Best-in-class Accounts Payable performance. These consulting companies conclude that there is tremendous potential for improvement by automating the AP process .White Paper © 2011 . ReadSoft . gives you: 92% lower invoice processing costs 81% faster invoice processing cycle times Source: The Aberdeen Group: Imaging and Workflow April 2011. In a recent survey1. This White Paper examines the recent research findings carried out by several independent business analysis companies. Other issues were lost or missing invoices. a high number of discrepancies and exceptions. approximately half the organizations interviewed stated that they had problems with manual data entry. It also shows the criteria for selecting a solution provider and how organizations need to make sure they choose an experienced provider such as ReadSoft to guide them through a proven process. an inability to see outstanding liabilities and no way to capture all discounts offered by suppliers.Accounts Payable Automation Benefits Page 2 (11) Evidence for Accounts Payable Automation Benefits Research-based evidence shows that automation is yet again the way forward for cost savings and improved efficiency Enterprises are increasingly aware that paper and people-based processes lead to high AP transaction costs and missed business opportunities. The sources of the facts and figures that support this evidence are provided in the conclusion of this document.

92% below their peers.have already automated the payments process.especially medium and large ones . Automated approval workflow for invoices was another popular option with 21% of organizations stating that they would focus their attention on this technology within the next 12 months. most AP departments still suffer with high AP transaction costs and cycle times.White Paper © 2011 .Accounts Payable Automation Benefits Page 3 (11) Key Factors Driving Change Time and Money Time and money are the key drivers for AP automation1 along with high paper usage. Improved performance in areas such as complying with contracts and optimizing working capital. Research has shown that best-in-class enterprises report15 : Invoice processing costs that are. Unless there is a mechanism to process invoices after they are received. Top Automation Priorities Based on survey results4. Sarbanes-Oxley (SOX) drives organizations to adopt technology with the necessary controls as part of the application. they are looking to eliminate paper altogether. and more affordable. data and system standardization simplify implementing the technology. on average. the following emerged as top automation priorities: Implementing or increasing electronic invoicing was the most popular option with a majority (40%) of organizations stating that this was the top priority on their automation plan. Process. A large number of organizations . Other Drivers Other reasons why organizations3 focus on electronic enablement of AP transactions are: Buyers and sellers gain savings opportunities by partnering and improving the process between each other. The top two pressures driving organizations to reassess their AP function are lowering invoice processing costs and improving and/or standardizing the AP process. Automated workflow tools go hand-inhand with electronic invoicing. Technology has become flexible to integrate with existing business systems. Automating payment processing was also an important goal for 16% of organizations. e-invoicing delivers minimal benefits. ReadSoft . 81% faster than their peers. on average. Invoice processing time cycle times that are. Enterprises are no longer interested in merely finding a better way to handle paper.

capture negotiated discounts and early payment ReadSoft . contracted payment terms. non-PO-based. For a typical AP department. treasury and suppliers creates an environment where key information flows easily between these stakeholders 5. Improved forecasting and management of near-term cash management requirements. Decreased financial risk. including: Low transaction costs. They help reduce late payment fees. bringing significant savings in payment/settlement costs. The rest suffer from higher transaction costs and longer cycle times. finance. 3. and suppliers and internal up different approval and routing rules based on different types of invoices or supplier arrangements. Not seeing material liabilities that are not yet entered impact the timing and accuracy when closing accounting periods. preapproved and supplier maintenance. Research shows1 that Best-in-class organizations are 56% more likely to have established a platform for collaboration between enterprise groups and functions that are impacted by AP operations. Control Good audit controls help organizations enforce corporate policies and achieve contract compliance. Collaboration. It is used to give an overall view of operations and establish standards on which to base strategies for performance improvement. enterprise visibility remains out of reach. Audit controls ensure that AP transactions are processed in a way that complies with policies. Without this. such as PO-based. procedures and regulations. A high degree of visibility brings substantial advantages2. and Automation: Visibility Visibility into liabilities and operating expenses is the basic requirement for most major functions within an enterprise. Also 1. procurement.Accounts Payable Automation Benefits Page 4 (11) AP Automation Elements for Success In the current AP world there are four elements necessary for AP success: Visibility. early payment discounts. Shorter processing cycle times. organizations that have developed a collaborative framework provided by an automated integrated AP system process more than twice the number of payments electronically than all others. Shorter response times . Research has shown1 that best-in-class organizations are 43% more likely to have enterprise-level visibility for AP transactions.improved productivity by reducing time wasted in low-value activities. recognize unclaimed negotiated discounts.White Paper © 2011 . Collaboration Cross-functional coordination among key stakeholders such as accounts payable. Control. and late penalty fees. Greater ability to monitor billing discrepancies and overpayments. negotiation opportunities with key suppliers.

organizations will successfully drive transformation of their accounts payable departments to overcome the challenges of manual and paper-based processes. payment services and spend analytics for all invoices. Benefits An automated AP solution5 streamlines and drastically improves performance by utilizing e-invoicing. and electronic payment methods reduce the inefficiency of manual and paper-based processes. and settlements.1. Technology solutions to manage invoices and workflow.Accounts Payable Automation Benefits Page 5 (11) discounts. scanning and workflow. the majority of AP departments utilize a patchwork of solutions to automate certain processes. supplier networks. 6: While 44% of Best-in-Class enterprises utilize a single e-payables solution to fully automate their entire AP process. Automation Automation is a critical foundation to lowering costs and streamlining each of the four AP sub-processes: invoice receipt. Electronic payments have the highest penetration among all AP automation solutions (80% -in60% for all other enterprises). online tracking and reporting capabilities. Research2 has found the exception rates in top performing firms are 85% lower than other enterprises. and prevent fraudulent payments. Benchmarking research on AP strategies across nearly 400 organizations6 revealed the benefits that Best-in-class organizations achieve by developing efficient processes and mapping them to automated AP solutions: Performance Area Invoice processing costs Processing cycle time Late payments Staff time responding to inquiries Best-in-Class Advantage 91% lower 46% shorter 12% fewer 30% less ReadSoft .White Paper © 2011 . validation and reconciliation. approval and inquiry. Using an automated AP solution. electronic invoice dashboards and supplier portals. eliminate duplicate invoice payments. 60% payments made annually via paper-based checks have an opportunity to greatly improve.

This saves a substantial amount of valuable time at the end of every month. An increased interest in early payment discounts is driving smaller organizations to investigate tools and technologies that enable them to shorten their invoice receipt-to-approval cycles. Shared service centers: A centralized or shared services approach will help ensure that AP tasks are streamlined and standardized. ReadSoft . The convergence of electronic invoicing and front-end invoice imaging gives organizations a single. with efficient workflow to streamline verification and exception handling.White Paper © 2011 . via mailbox. Increase visibility: Improve your cash flow and invoice management. Any format. quarter and year. And not just for large o AP automation technologies have been limited to larger companies until recently. Value added-services delivered by solution providers for supplier recruitment tasks mean that buyer organizations can engage suppliers more quickly. Streamlining the AP process has become extremely important in a tough economy where cash flow and greater control over payables is critical. Improved day-to-day information on financial status (regarding current projects. any source: Physical documents. automatic purchase order matching. enhanced security. fax and file transfer. shorter total processing time. On-demand and Software-as-a-Service (SaaS) delivery models have lowered the initial cost of implementing AP solutions and make them easier to maintain. Now there is evidence that small and medium sized businesses are adopting the technologies for the following reasons4 : A competitive business environment means even small and medium-sized businesses need to focus on reducing processing costs and increasing efficiencies for invoices and employee expenses. less manual work. Improve what you have: Integrate with the major ERP/financial system of your choice. electronic documents. for example) and basis for business decisions. comprehensive solution that can manage both paper and electronic invoices through a common process. and document images. and AP technology budgets are consolidated. email. Better control of received and invoiced goods. best practices are documented and shared.Accounts Payable Automation Benefits Page 6 (11) What are the must-haves? Key areas required by organizations to ensure that a solution covers current and future needs as the process matures2. 7 include: Automate your process: From arrival to post and archive. optional automatic posting of invoices. decreased total cost for supplier handling and early notification of errors.

benefits. They offer relief in disbursements for payroll. regulatory and tax issues. as well as intra-company transfers. consist mainly of Enterprise Resource Planning (ERP) providers. ReadSoft . They introduce greater levels of control and visibility for management of low-cost. 2009 So which types of solutions make the most sense? Extensive research6 has found that: Electronic invoicing solutions automate the invoice reconciliation and payment process and address most invoice types. which manage the budget and general ledger of an enterprise. They typically offer functions such as a general ledger. and sometimes more advanced capabilities like supply chain auto-reconciliation and AP workflow. validation and verification. Payment automation platforms specialize in accounts payable and accounts receivable processing. from invoice arrival. Top performers are four times as productive as Non-top performers Number of invoices a full time employee can process per year Source: The Hackett Group. This requires end-to-end solutions for automating AP processes in any major Enterprise Resource Planning (ERP) or financial system. high-volume categories. though information extraction.Accounts Payable Automation Benefits Page 7 (11) An End-to-end Solution Organizations obtain maximum value by selecting the broadest possible solution set that can change user roles from exception and problem handling to oversight and process management. Purchasing cards (p-cards) are designed to streamline the front (purchasing) and back (payment and reconciliation) ends of the procure-to-pay process.White Paper © 2011 . These solutions range from automated clearing house (ACH) and general payment processing to company-wide AP solutions. They are often part of a cross-functional enterprise solution. to approval workflow . Enterprise financial solutions.all with Sarbanes-Oxley (SOX) compliance support. Workflow and imaging solutions manage all aspects of in-house invoice scanning and documentation and provide an effective electronic archival system.

in many premise is that accounts payable processes are basically the same regardless of industry type. Does the supplier have experience with multinational installations and understand regulatory. It aims to standardize wherever possible to ease workflow between departments and organizations. so enterprises can manage payables more easily. its strength in the AP environment. procedural. these solutions can help move to an automated AP platform.Accounts Payable Automation Benefits Page 8 (11) Supply chain finance solutions provide full AP invoice dashboards. Treasury management services offer advanced financial administration by consolidating cash forecasting and handling foreign exchange affairs. its customer base and market share.White Paper © 2011 . These services provide management for deals and trades. With ERP integration and supplier portal capabilities.a global provider of experience covers many different fields of industry. and specific expertise in all aspects of the invoice-to-payment function. and cultural differences between one part of the world and another? The accepted criteria framework recommends that enterprises assess automated AP solutions in 6 primary areas6: Receipt Approval and Inquiry Validation and Reconciliation Settlement Reporting and Analytics Integration and Services A supplier that fits the selection criteria6 is ReadSoft . and they also provide analytics and risk management. ReadSoft . Selecting Suppliers strength and stability. public service organizations and governmental bodies.

Results that Speak for Themselves ReadSoft continues to bring success for Clients across diverse sectors. . The solution enables Sarbanes-Oxley (SOX) compliance support. according to the specific needs of AP departments. ReadSoft Combines Flexibility with Powerful Features The ReadSoft automated AP solution has been deployed for a wide range of organizations. from invoice arrival. drastically reduce invoice cycle times and processing costs. It is also Certified by Oracle. Their invoice processing solutions have recently: Helped to reduce the Danish invoice process time from 30 to 7 days. Their AP Manager said. ReadSoft has an AP automation system that handles paper as well as digital documents. Tailormade solutions can provide a combination of the following powerful monitoring and control features . to approval workflow and final posting. The project manager said. whose functionality can be accessed either through the Oracle E-Business Suite or a simple web browser interface. Results were so successful. Brought RS Components (UK) substantial benefits by automating up to 90% of their SAP system invoicing and reducing their AP employment costs by 36%. ReadSoft . promote half their AP staff to more fruitful tasks within four months and reduce invoicing time from an average of 24 days to just nine. TransMontaigne (US) automated its accounts payable and achieved tremendous savings by capturing more discounts. The ReadSoft solution is Certified by SAP®: All required data can be accessed either through the normal SAP environment or through an easy-to-use web interface. and we want to continue to be seen here as innovators within our global organisation. Enabled LexisNexis® UK to streamline its invoicing and confidently move toward an outsourced business model. and is proven for all major ERP and financial systems. though information extraction.White Paper © 2011 .Accounts Payable Automation Benefits Page 9 (11) automation goes hand in hand with its vision of contributing to businesses' success by providing the ideal software solutions for automating document driven processes4. Exceeded expectations by helping them to achieve its AP 2year goals in six months. validation and verification. Their Head of UK Finance said. The ReadSoft product suite offers data extraction. ound confident they knew what they were doing. 56 to 60 % of the invoices that come in go straight into our Oracle E-Business Suite ngs.flexible reports and graphs allow clear process tracking for document and data processing and provide performance monitoring for a wide range of parameters. Helped the Midas Group (UK) to reduce their AP headcount by 40%. a major contributor to them winning them a prestigious Danish E-business award. integration in any major Enterprise Resource Planning (ERP) or financial system. their Finance Controller is considering extending the system to other areas that are currently processed manually and said.

Accounts Payable Automation Benefits Page 10 (11) Month over month improvement is roughly 1000% in terms of vendor term discounts and is getting better." "Even substantially. and lost invoices were now at a minimum.White Paper © 2011 . ReadSoft ." said the project manager at Starwood Hotels & Resorts Worldwide (US).

Control and Automation Nov 2008. 8. 5. 4. is it enterprise-wide? What is the time for deployment? Engage with other key stakeholders to define requirements (including treasury and finance. 10. procurement. IT. 15: The Aberdeen Group E-Payables Receipt and Workflow May 2009. Visibility into accompanying content of financial transactions will bring business improvements and vastly improve relationships with customers and suppliers. 16. small to very large enterprises can bring AP automation to the optimum level at a pace that matches their structure and resources and just as importantly. effectively implement AP automation and move to seamless AP transformation. 12. 2. where AP transformation to make sure that enterprises can effectively23: 1. Your 20072008 Guide to A/P Transformation. 13: The Aberdeen Group: The 4 Pillars of A/P Success: Visibility. Using ReadSoft solutions. 21: Gartner Research publication G00163833 Dec 2008. 22. 19. 11. 4. coupled with their vast consulting experience. 17. 18.White Paper © 2011 . suppliers). 14: The Aberdeen Group: The CFOs View of Accounts Payable: Cash is King Feb 2009. Collaboration. 20: PayStream Advisors Inc Invoice Automation Benchmarking Report Q2 2010. 3. data capture (and resulting quality of invoice data) and routing of invoices for approval. 3. Match the AP automation solution that provides the best-fit 5.Accounts Payable Automation Benefits Page 11 (11) Five Steps to Success While the savings and strategic benefits of AP automation are compelling. 2. 9. The Hackett Group Automating the AP Process June 2010. Build the business case and agree on performance metrics and ROI targets. 8. standardizing processes across the Organization. Define all the goals and objectives is it global. Enabling solutions that handle unstructured content alongside financial/accounting transactions and improve workflow/process management will bring efficiency to financial processes through reductions in administrative support and costs. Gauge current invoice receipt and workflow capabilities such as invoice cycle time. This will assist decisions regarding centralized data capture. ReadSoft . References: 1. 7. 23: The Aberdeen Group E-Payables Solution. 6. Updated April 2011. only one third of all enterprises currently have any significant level of automation in place.

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