For many enterprises, paying an invoice is not only a necessary part of doing business but a hidden cost center. There are many reasons why receiving, processing and finally paying an invoice from a vendor can be an unnecessary drag on productivity and profitability. It starts with the fact that too many business firms still rely on paper-based and manual processes when they could instead embark on a journey toward accounts payable automation.
The costs incurred by processing a single invoice include manual labor, overhead, and technology, ranging from AP clerks who have to open envelopes or scan paper documents, reviewing and forwarding them for approval, to colleagues initiating payment and eventually filing paper documents so they're available for later accounting and management audits. On average, enterprises racked up 0.89 in costs for each payable invoice they processed in 2020.
Without Smart Automation, the Cost of Invoice Processing Keeps Climbing
That's a year-over-year increase of 8%, according to the latest report by Ardent Partners entitled Accounts Payable Metrics that Matter in 2021. What's even more surprising is that the overall rate of invoices received electronically rose slightly during the past year from 50.3 to 51%. So one might expect invoice processing expense to have gone down.
The report makes clear accounts payable automation means different things to different people and different businesses. And business organizations are tackling the challenge in varying ways with varying results as measured by cost savings and end-to-end processes that promise the most savings and productivity gains.
Current events have presented business and AP departments a lot of opportunities to drive changes in their processes and their teams. Staff in the finance department that were able to continue operations without missing an invoice or payment were able to provide even more value to their organizations and impact operations positively. Those that were using manual paper invoice processes and not utilizing accounts payable automation and technology showed that they needed to invest in process improvements.
“It is clear that room for improvement still exists for most organizations,” the authors conclude after surveying more than 200 respondents in AP and finance roles at companies covering 25 different industries. “Given the challenges of paper-based processes that had to be overcome due to the pandemic, Ardent Partners expects that the use of electronic invoicing will increase in the short term.”
That's an optimistic assessment for automation payable solutions to come, but it's worth taking a closer look at how organizations and finance teams are trying to deal with AP cost per invoice today. Companies that have true, end-to-end accounts payable automation processes and approval systems in place are in the minority. A solution platform such as Yooz offers all the pieces necessary to help cut cost per invoice by up to 80% by speeding up cycle times and boosting the satisfaction of both business employees and suppliers.
The Hidden Costs of Invoice Processing Without End-to-End Automation
Yet many companies and accounting teams still only dabble with AP automation at the front-end of the workflow. According to Ardent, a majority of today's AP and Finance teams are not fully automated and have taken a haphazard approach to automation technology. While scanning and imaging, data capture, and extraction have taken hold in business, “far fewer organizations have broad automation coverage across the full scope of Invoice-to-Pay, P2P and B2B payment operations.”
The further you move along the invoice-to-pay workflow, the more accounts payable automation becomes a process exception, not the norm in business. Ardent found that
- 76% of AP teams use document scanning
- 73% have automated approval in place
- 57% engage in automated capture
- 47% have an eInvoicing solution
- 43% use technology for ePayments
- 39% have outsourced data capture
- 35% utilize a business or payment network and
- only 34% offer a self-service supplier portal.
The latter is particularly surprising since it's an easy way to save time and money. AP team members spend a whopping one-quarter of their time doing nothing else but answering supplier and vendor inquiries. They answer emails and phone calls look for errors and then have to hunt down payable invoices and their payment status. The demand and need for employee time will most likely go up. Especially when management allows staff to continue working from home and documents are not securely stored in the cloud where every team member can access, review and approve them remotely.
More leaders in business and finance realize that to drive operations forward they need to invest and streamline their Accounts Payable with the best automation solutions they can find. By doing this, they can reach the next level of process performance. Even the suppliers are now submitting their purchase orders and payable invoices to AP electronically. Almost one-third of suppliers and their employees are utilizing technology in their payment system. They are seeing the value in their invoice approval workflows and how they can receive payments back even faster when the companies they partner with have accounts payable automation in their process.
Automating Invoice Processing with Yooz Saves 80%
There is a better way to cut AP cost per invoice almost instantly, and it’s called Yooz, the most powerful cloud-based platform for accounts payable automation. Yooz’s unique solution leverages Artificial Intelligence and RPA technologies to deliver an amazing level of automation with extreme simplicity, traceability, and end-to-end customizable features. It integrates seamlessly with more than 250 financial systems, exceeding any other solution on the market. Companies working with Yooz report their average cost per invoice drops to just $0.99, or by roughly 80% when they switch the Yooz invoice automation solution.
According to Ardent’s math, an organization processing 100 invoices per month the old-fashioned way will spend 1,200 x 10.89 or a total of $3,068.00 per year, while Yooz would cut their annual cost to just,$1,188.00.
Today, only one-fifth of the companies Ardent surveyed have taken their AP operations to the next level, meaning they are “leveraging technology to streamline the AP process, make it more efficient and enable more strategic activities to be carried out.” Imagine the financial impact if more than one-fifth of companies adopted more technology to their AP process! Management and departments would have more control and would be able to utilize those savings into additional operations that drive growth and revenue.
They do have high hopes, though, that change is coming. AP departments will soon be characterized by “deepening collaboration with key stakeholders, increased automation, digital transformation of payments, and becoming a source of knowledge for the rest of the organization.” Case in point: 59% of respondents in the Ardent survey expect to have a more fully automated AP process in place by 2023.
8 Steps to Smart and Automated Invoice Processing
There’s no need to wait two years to automate your accounts payable process. The technology to help do it is available today, and the best way to cut down AP cost per invoice comes with zero risks and zero vendor lock-in. Here’s what the workflow on a software platform such as Yooz looks like:
- Capture any invoice, order, or other documents, regardless of channel or format, whether it’s on paper, by email, fax, or electronic submission.
- Automate invoice processing for 80% of invoices without prior configuration, thanks to a powerful combination of AI, machine learning, and robotic process automation.
- Get started with intelligent AP automation in one hour, without training.
- Let the platform flag erroneous or fraudulent invoices, freeing up valuable time.
- Review, approve and initiate payment remotely on a mobile device.
- Create instant visibility and insights, thanks to keyword searches across all captured documents.
- Optimize cash management by avoiding late fees and locking in early-payment discounts.
- Enjoy seamless plug-and-play integration with more than 250 popular accounting and ERP systems.
Yooz has been the leader in accounts payable automation for two decades. Along the way, the platform has seen more than 100 million invoices submitted by more than a million different vendors. It's a learning experience that never stops improving and never stops reducing the AP cost per invoice for clients. The math is that simple.