After years of false starts, accounts payable departments are automating.
An eye-popping 84 percent of accounts payable practitioners are optimistic about the progress their department will make over the next three years in eliminating paper invoice and payment processes. That’s according to the Institute of Finance and Management’s (IOFM’s) 2018 Future of Accounts Payable Survey.
And the reasons are clear. We’ve all heard them: Saving time, saving money, increasing efficiencies and staff productivity. But for finance leaders, what does that mean exactly?
In this blog, we’ll calculate how the benefits of AP automation translate directly to the bottom line, giving real examples from industry research and real Yooz customers.
Industry reports cite better staff productivity as the top reason for automating. Highly automated accounts payable departments process 16 times as many invoices per FTE each month as their peers with little or no automation, per IOFM’s Is Your AP Performance Top Tier?. 1,350 invoices/FTE processing manually versus 22,756 invoices/FTE with a highly automated workflow, to be exact. Simply put, you can do more with your existing staff. Not only that, staff will be freed to do more strategic value-added work, such as improving supplier relationships and leveraging early payment discounts (more on that later).
Tim Carter, CFO, Salsarita’s Fresh Mexican Grill knows. “Rather than hiring additional people, give your existing staff the automation tools to make their roles multi-faceted. Your finance department—all departments for that matter—can run lean and take on more strategic, value-added duties. Had we not implemented the Yooz solution, we would have had to hire additional bookkeeping staff by now.”
The Dollars and Sense? Multiply the salary/wages of one AP department full-time employee times the number of staff you would need to hire as your processing volume grows. That’s how much you’ll save with an automated AP solution.
Capture 97 percent of early-payment discounts offered
Eighty percent of the businesses surveyed for IOFM’s AP Department Benchmarking & Analysis report receive invoices that offer discounts on the invoice due amount in exchange for early payment.
With an automated system and the ability for approvers to access documents in the Cloud from anywhere at any time, invoices move efficiently through the process. No more lost invoices. No more late payments.
The Dollars and Sense? Multiply the average dollar volume of invoices paid per month by 10% (the average early payment discount offered by suppliers). That's how much you have the potential to save with an automated AP solution.
Save money on shipping and storing of documents
When finance leaders think about the costs of processing invoices, they might only consider number of staff and time it takes each to manually enter data, track down lost invoices, and get approvals. But what about the costs to ship invoices to a central location for processing via courier or overnight service? Or storing boxes and boxes of paper documents? Those are real tangible costs that are eliminated with automation. Ask Tim Carter, CFO, Salsarita’s Fresh Mexican Grill, Jason Kleve, controller Transwest Auto Group, and Bryan Schmidt, UNITE HERE HEALTH:
Salsarita’s store managers at each of the individual restaurants were manually receiving paper invoices—food and supply delivery people would leave paper invoices along with the delivery—then routing these documents back to headquarters either via courier or overnight services, costing hundreds of dollars a week.
Transwest was spending thousands of dollars a year storing, shredding, and shipping documents from dealership to central processing.
At UNITE HERE HEALTH all regional offices were required to collect documents and send them to headquarters or the Las Vegas office for manual entry, proper coding, review, and approval for payment. And each year, boxes full of paper invoices had to be packed, shipped, and stored offsite.
The Dollars and Sense? Easy! Tally up the total dollars spent each year on the shipping and storing line item on your expense sheet. When that number becomes $0 with the Yooz AP automation solution, the savings go straight to the bottom line.
Spend only $2.36 to process a single invoiceAutomation eliminates the manual processes that drive up the cost of accounts payable processing—to the tune of more than $15 per invoice on average—including additional staff as volume of invoices to process increases, keying invoice data, physically routing invoices for approval, filing invoices, and all the things we’ve covered so far in this blog series. Levvel Research puts the numbers to it:
The Dollars and Sense? Patsy Price, director of operations, Peterson Auto Group saved more than $35,000/year when she switched from a manual AP workflow to Yooz AP automation? Real savings translated into real profits.
Now those are dollars you can make sense of!