November 18, 2006 • 2:30 am
Accounts payable departments require tremendous overhead – without generating revenue for an enterprise. For this reason, many view the AP department as a revenue sinkhole. However, your AP department may provide an opportunity to drive dramatic reductions in operating expenses.
Most account payable departments rely on expensive paper-based methods. Data entry operators key data from stacks of invoices into their ERP systems. Managers receive photocopies of invoices for approval via inter-office mail. Finally, invoices are archived for a decade in room full of file cabinets – or worse, sent to an off site storage location.
An average invoice cost $10 to process (IAPP, 2003). Consider an organization with a volume of 25,000 invoices per month. The overhead of paying these invoices will reach 3 million dollars per year. Organizations have reported between 40% and 60% savings by implementing an invoice automation solution (Aberdeen Group). If we assume only a modest 20% reduction in cost, this AP department can yield $600,000 in savings per year. Even a company that processes 5 thousand invoices per month can benefit from AP automation.
I shall discuss strategies that can be used to achieve such success in later posts.
Filed under: Approval, BPM, Data Capture, Data Entry, Document Imaging, ERP, Invoices, accounts payable
October 13, 2006 • 2:30 am
Today I attended a webinar given about Travel Expense Management (TEM) solutions. It was hosted by the people at PayStream Advisors. I generally pigeon-hole webinars into two categories. First, there are webinars that are truly helpful and provide valuable information. The second category includes webinars that are obvious sales pitches. I am happy to report that this event was full of useful information. There was only a small sales pitch at the end – which is perfectly acceptable.
What is Travel Expense Management?
A TEM system allows a company to automate the creation, approval and payment of employee travel expense reports. Why bother automating? Well, consider a large company with approximately 1,000 business travelers. They may generate about 60,000 expense reports a year. The average cost of manually processing an expense report is around $34 per document. Not to mention the turnaround may average three weeks.
A well designed TEM can save a company 60% in processing cost. Also, corporate policies are more easily enforced; thus reducing fraud and helping with SOX compliance. A typical TEM workflow may look something like this:
Example Travel Expense Management Workflow
click for larger image
The top three reasons companies look for automated solution are:
- Employee Satisfaction
- Lower Processing Cost
- Faster Reimbursement
What is missing from most Travel Expense Management solutions?
A typical TEM is not a comprehensive solution. The approval process for expense reports is very similar to the approval process for direct invoices (often called non-PO invoices). The same managers need to review both types of documents. Why force your people to work with completely different systems? Or, worse rely on a costly paper-based process. A complete solution should allow users to process both invoices and expense reports. While we are at it, let’s include check requests, human resource documents, and every other piece of paper in your office!
There are several reasons that people choose a solution – total cost of ownership, time to implement, and ability to scale. I recommend that people consider solutions that handle more than just one problem. Look for solutions that are part of a larger, more comprehensive strategy that address all your information management needs. It will help you maximize your investment…and make your workday simpler.
Filed under: Approval, Business Process & Workflow, Business Process Management, Check Request, Expense Reports, Invoices, Workflow
