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Drive Savings with Account Payable Automation

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.

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Categories: Articles
  1. February 8, 2007 at 4:09 am

    We put in Kofax Ascent for Invoices. This software automatically processes invoices through intelligent forms recognition, and then passes harvested data through to other backend applications.

    Link to Kofax below:

    http://www.scanguru.com/e107_plugins/links_page/links.php?cat.2

  2. May 7, 2008 at 10:22 am

    You are quite correct in your assertion that automation can drive savings. Unfortunately, many organizations are not willing to devote the necessary financial resources to get the process going. Then of course there is the additional issue which no one really likes to address. Automation usually results in head count reduction – and while, we’d all like to think the extra people will be placed elsewhere in the organization, this rarely happens. The truth is other departments are going through the same cost cutting initiatives. Well, enough of my blather. I could go on for quite some time.
    Thanks for listening.

    Mary Schaeffer
    author Controller & CFO’s Guide to Accounts Payable (John Wiley & Sons 2007) and 12 other business books
    editorial director Accounts Payable Now & Tomorrow (www.ap-now.com)

  1. March 28, 2007 at 5:07 am

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