Last week, our Financial Solutions Manager Shaun Doherty held a webinar debunking some of the common misconceptions we hear about accounts payable automation. You can find a recording of the webinar and other video content here. In brief, Shaun covered the following:
Myth 1: Automation will fix everything
While some people are highly skeptical about what automation software can achieve, others assume that it will be a silver bullet for the shortcomings in their business processes. In truth, there is almost no value in automating a bad process as it will always add to the cost of processing and dilute the return on investment.
For a successful software deployment, procure-to-pay processes should be optimised and streamlined prior to automation. By adopting best practice workflows typically built-into out-of-the-box AP automation products, companies can achieve the highest rate of straight-through processing while ensuring their governance and compliance standards are continually enforced.
Myth 2: It’s too expensive
Ten years ago, AP automation solutions were out of reach for all but the largest of companies. With the rise of cloud computing in recent years though, many more companies can realise the benefits of automating their accounts payable. By choosing a highly configurable, cloud-hosted AP automation software product, firms can deploy a best-of-breed solution that is built to accommodate the needs of many different types of businesses. This option is extremely cost effective and quick to deploy, generating a very attractive return on investment.
The other factor to bear in mind is that businesses tend to vastly underestimate their current cost of invoice processing. Many believe that they are paying just a few dollars per invoice when they are usually paying between $10-$20 (or even more) in invoice processing costs. By getting a true handle on this spend and understanding what they can achieve with automation, firms can gauge what their payback period is and whether the status quo is, in fact, too expensive.
Myth 3: We’d lose control of the process
It’s ironic that many fear a loss of control when software manages the invoice approval process and little or no human intervention is necessary. In fact, the reverse is true – businesses have more control over their accounts payable!
With a highly configurable solution, clients set their own business rules which the software cannot deviate from. Therefore, companies have greater control over accounts payable. Compliance checks are run on all payables and non-purchase order invoices are routed to the nominated individual/s for approval with a full audit history logged. There is clear transparency across the invoice process lifecycle with measures in place to verify the legitimacy of each payable. Conversely, in manual accounts payable departments, staff have very little visibility over inflight invoices, which causes problems for supplier relations, financial reporting and cashflow management.
Myth 4: We’re too small for automation
It’s important to recognise that there are different products on the market that are available at different price points. While one product may not make commercial sense for your business, another one may be just right for your current needs while being flexible enough to adapt to your future requirements.
Certainly, growing businesses benefit from process automation. If a company is ready for an enterprise resource planning software system, then automating accounts payable may be a logical next step. It may be worth viewing the investment through a different lens: rather than being too small for automation, perhaps your company is too small to make overpayments, duplicate payments, or fraudulent payments? Or maybe it’s too small to spend time on invoice administration when staff could be working on more value-add and revenue-generating activities?
Myth 5: Our processes are too unique
When businesses have “unique” processes, they are typically manual, archaic, and propped up by inefficient workarounds. While organisations have unique challenges, the passage of an invoice through a firm does not differ vastly from one company to the next; the invoice will need to go through similar stages of data capture, validation, and approval before it goes to the ERP for payment.
Typically, processes are “unique” because they have evolved over time, and nobody has challenged them. The question is though, do your processes really need to be so different? Automation provides an unparalleled opportunity to challenge the status quo and even restructure processes to reflect the best practice workflows built into the automation product.
There are many myths out there concerning AP automation and most of them can be quickly discredited. If there is something holding you back, talk to us about it – it may be quickly resolved, enabling you to radidly transform your business and increase profit margins. It’s time to leave manual processes long behind.