It’s not hard to find benefits for shifting to a paperless accounts payable process.
In a recent study (“Accounts Payable Metrics that Matter in 2020”), research firm Ardent Partners found that businesses with best-in-class invoice processing performance had costs six times lower for it. “Top-performing enterprises have taken their AP operations to the next level by leveraging technology to streamline the AP process, make it more efficient, and enable more strategic activities to be carried out,” the study noted.
Yet a lot of companies are still sticking to manual accounts payable processes. 49.7% to be precise, according to the study.
Many CFOs, Controllers, and other business leaders know implicitly that if they could just automate their companies’ AP processes, they’d be legends. The good news: It’s easier than ever to do it.
How Good Systems Help AP Departments Overcome Barriers to Going Paperless
Good AP automation system providers can help companies overcome hurdles. These include the following.
One vendor noted a few years ago that AP automation software might run $20,000 to $35,000 to implement. That could give sticker shock to many companies at a time where unemployment has been close to or above 10% in parts of the country in recent months, according to the United States Bureau of Labor Statistics.
It might seem smart during tough economic times to stick with paying paper invoices, since it theoretically doesn’t cost anything to do this. That said, a good AP automation system can more than pay for itself in short order.
How a good system handles cost: While paper invoices technically don’t have processing costs, an Institute of Finance and Management, or IOFM benchmarking study found that they can cost five times as much as electronic invoices to process.
Considering that Ardent Partners’ research found that the average invoice costs $10.08 to process, factoring in staffing time and other costs, that means a company would only need to process around 2,500 invoices in a lifetime to recoup the cost of a basic automated system. Many companies will process this many invoices in the space of a few months.
AP automation systems can effectively mint money for companies during tough times. As Ardent Partners noted in a recent blog post, “The evidence is clear: the organizations that leverage technology to automate the AP process perform better and deliver greater value.”
Countless hacking schemes in recent years show that web security is one of the greatest challenges facing businesses these days. And COVID-19 has only made these challenges more pronounced, with phishing attacks up 66.7% since February, as PICPA noted in November. Considering that 90 percent of companies have seen fraud most in their accounts payable operations, it stands to reason that AP is under greater threat than ever with the pandemic.
The good news here: Automated AP is actually safer than traditional methods.
How a good system handles security: Top-flight paperless accounts payable process providers make sure to have systems with built-in security features such as encryption and two-factor authentication, making it tougher for bad actors to circumvent them. The systems can also automatically flag fraudulent invoices that might slip past the eye of even a well-trained AP clerk when processed in paper form.
For companies with years of paper invoices on-file and staff who might be reluctant to learn how to use new software, implementing an accounts payable automation solution probably sounds like a nightmare with no guarantee to work.
That said, implementation shouldn’t be any hindrance whatsoever for getting an AP automation system up and running.
How a good system handles implementation: Stampli can implement an easy-to-use, paperless accounts payable process in as little as 24 hours. And once it’s in place, dedicated customer service reps are available to ensure that everyone can have an optimal experience with the software.
Three Reasons It Pays to Go Paperless
It took COVID-19 to give a 40,000-person city in Utah the extra boost it needed to finally implement automated invoice processing software.
“When the pandemic came, it just pushed it right to the front, because we were having all department heads coming into the office, approving, reviewing it on a paper basis, and that just wasn’t possible with COVID,” according to Kent Clark, Finance Director at Spanish Fork City as he told Government Technology magazine Dec. 16. “It wasn’t doable, and we were desperately trying to figure out a way we could solve it.”
Spanish Fork City turned to Stampli to implement the software. Here are three of the reasons why the city was only the latest organization to discover why paperless accounts payable process solutions are becoming more popular.
1. They Help Organizations See Immediate Results
Spanish Fork City had briefly tried to use document management software before calling Stampli, as the article noted.
Still, that software didn’t meet the city’s needs, lacking critical features such as good communication tools (which, by contrast, are a core part of Stampli’s suite.) “We went three months with another software, and it was a struggle every moment,” the Finance Director told the magazine. “We never really got to process one invoice after three months.”
Public agencies or private companies reluctant to invest in an end-to-end AP suite might try to go a la carte, whether with document management software, invoice scanning, or other limited tools that handle a small part of the AP process. But as officials in Spanish Fork found, going a la carte is a pennywise, pound-foolish decision which can quickly turn into wasted money.
2. They Help Meet the Changing Role of Accounts Payable
The ongoing COVID-19 pandemic has upended normal business operations for months, with 58% of workers saying in a Gallup poll in October that they were working remotely at least some of the time.
For accounts payable, the dramatic rise in remote work throughout 2020 can mean fewer trips to the office for check runs, less opportunity to meet in-person with invoice approvers, and trickier access to paper records like purchase orders and receipt reports that prove that a company agreed to goods or services that it’s being billed for.
Still, even before the pandemic, the role of accounts payable specialists had been evolving. Long gone are the days where all AP clerks had to do were cut checks and perform monthly reconciliations. Today, AP is arguably as much about paying bills as it analyzing payment trends, rooting out fraud, and cutting the cost and time it takes to pay each invoice. AP automation software can help with all of this.
3. AP Automation Makes Early Payment Discounts Attainable
One of the signs of a superb AP clerk can be catching every early payment discount, the 2% to 3% off that a vendor will give a company in exchange for paying a bill earlier than it absolutely must. Multiply this by the hundreds or thousands of invoices that companies process each year and the discounts can quickly become tens, if not hundreds of thousands of dollars.
Companies still let these discounts go by the wayside, even if there’s starting to be a trend upward. Ardent Partners noted in its study that 27% of early payment discounts had been captured in the most recent year, up from 19% the preceding year.
AP automation software can make it easier for organizations to receive early payment discounts, given the boosts in productivity it allows for. As a member of Spanish Fork’s AP staff told Government Technology, “What used to take up to 12 hours can now be done in about one hour.”
Best Tips for Implementing a Paperless Accounts Payable Process
For companies that have decided to implement a paperless accounts payable process, here are a few tips to ensure that everything goes smoothly.
Get Your Team Involved When Working With Your Solution Provider
When finding an automation system for an accounts payable department, perhaps CFOs or Controllers might try to go it alone for a bit, researching their options and letting them mentally sit before going forward.
While a little bit of thought is probably wise, it’s also smart to quickly make contact with a solution provider who can guide companies toward a system that will meet their needs and can give them an idea of what to expect through the implementation process. They can also help get all internal stakeholders on the same page and provide them the necessary training and materials so that they’ll know how to use the new system from Day 1.
It speaks to one of the greatest challenges to reach the next level of AP identified in the Ardent Partners’ study, with 49% of businesses saying they needed enhanced collaboration with key stakeholders. Good solutions providers can help make sure this high-level teamwork occurs.
Gather Existing Accounting Documentation and Records
One of the nice things about getting an AP automation system? It doesn’t negate all the years of paper records, which can be easily scanned into the new system with the help of tools like optical character recognition, or OCR software.
The key is to get all the records together ahead of the implementation, which can allow for the possibility of the vendor being able to help scan them or at least offer tips on how to do so.
Have a Plan for Reviewing Systems Periodically
As noted earlier, Stampli can have a new paperless accounts payable process up and running in as little as 24 hours, deploying expertly-developed software with savvy. Still, even the best of implementations isn’t a one stop shop.
Plan to periodically review how your employees and vendors are liking the new system. This can be done both in the form of informal check-ins and formal audits, which many companies opt to do on an annual basis.
Achieving a paperless accounts payable process remains a dream for far too many companies. But with awareness and a willingness to change, great things are possible.
Stamps are for old paper invoices. Stampli’s for the future of accounts payable. Come see the difference today.