Is your business planning to automate its accounts payable function? If yes, then you already know about the slew of benefits you stand to gain from automation, including lower invoice processing costs, higher savings, working capital optimisation, enhanced visibility, and access to better analytics and reporting.
When implementing a solution like automation, it’s vital that you get it right the first time. Although it may seem like a daunting task, sufficient planning and consideration of certain key factors can aid the implementation of AP automation.
Let’s take a look at 7 factors that you should keep in mind while undertaking accounts payable automation.
1) Examine current processes and compare them with industry benchmarks: Start by documenting your existing AP processes and the challenges you might be facing. Don’t forget to capture unique workflows used for various invoices, suppliers and business units. The next step is gathering baseline operational data, such as annual invoice volume, cost per invoice, number of FTEs, and total annual AP cost. Once this data is collated, compare it against industry benchmarks. Utilise the findings from this comparison to decide your business goals.
2) Conduct a cost-benefit analysis: It’s vital that you identify your ROI expectations and gain insights into how long it will take to achieve those expectations. Ensure your calculations are as accurate as possible. If your findings indicate significant gains for your business due to automation, it’s more likely to get approved by the CFO or other senior finance leaders. So, do not skip this step!
3) Engage stakeholders: For any major business change, you’ll require approval and buy-in from higher management. Ensure that key stakeholders are briefed on both how and why this change can be beneficial for the business. You should make the objective and scope of the initiative clear to the senior leadership team. Greater visibility and increased involvement in formulating system requirements will ensure more cooperation and in turn higher success.
4) Assign roles and responsibilities: Decide on one individual or team who will be responsible for overseeing the entire initiative. They will be the single point of contact for dealings with software vendors, identifying and rectifying any issues that crop up, steering things in the right direction, and optimising results.
5) Choose the right vendor/software: You can either outsource AP automation to an experienced vendor/consultant, or purchase a software-as-a-service (SaaS) solution. If you plan on working with a vendor, it’s important to align them with your objectives and specific business needs. Choose a vendor that offers a suite of programs that can also handle purchase orders, payments, and document storage.
If you’d rather implement this in-house, you can opt for a SaaS solution as it can be beneficial in reducing upfront costs of hardware, software and heavy installation. However, it requires a solution that can be integrated with your ERP backend. Don’t forget to involve your IT team while making this decision. They can help you decide on the best software solution for your specific business and support a smooth transition.
6) Have a single source of truth: You can utilise an enterprise-class content management system to securely store any type of document from any source. This will enable access on demand via enterprise applications or through a simple web browser. You can further capture all modifications and annotations in the content management system. Additionally, you can limit access to these documents by modifying the security settings. A single source of truth will enable users to easily access all documents, records, approvals, transactions, and payments that are indexed and stored under one roof.
7) Pay close attention to various metrics: Finance is a numbers game and keeping track of these numbers will enable you to define your success rate. Decide on various metrics that can give you insights into how the automated system is functioning overall. Some key metrics you should monitor include average time spent per invoice, percentage of straight-through processing, number of discrepancies, number of payment errors, and number of returned payments among others. In addition to invoice management and payment processing, automation can also provide insights into payment forecasts, user activities, and approval times.
A well-planned and managed accounts payable automation initiative can offer significant gains for your business. From a 25-30% increase in efficiencies to a 50% reduction in costs, automating your AP system can boost business growth and increase staff morale.
Do you need assistance with automating your accounts payable function? QX is a leading finance and accounting service provider with businesses across industries in the UK and US, among other markets. We use the right mix of process optimisation and technology to significantly improve our clients’ accounts payable KPIs. Partner with QX to get the support you need for transforming your accounts payable function.