Monday, April 12, 2010

Getting Out of the AP Paper Rut

Posted by Mark Brousseau

Hosted information management solutions may hold the key for helping organizations finally get out of the AP paper rut. R. Edwin Pearce, executive vice president of sales and corporate development for eGistics ( explains:

As a result of the economic downturn, companies are reevaluating their internal operations for opportunities to generate cost savings and unlock hidden value. Nowhere is this value proposition clearer than in accounts payable (AP) processes.

Most enterprises are still employing manual methods of invoice-processing, which has inflated both processing costs and AP cycle times. Seventy-five percent of enterprises are currently mired in a manual and paper-based rut when it comes to managing the initial phase of the AP process, reports Aberdeen Group. Inefficient manual processing can cost $20 or more per invoice, Forrester finds. When you consider that invoice processing typically accounts for more than a third of purchase-to-pay processing costs (Hackett Group), and, similarly, a third of the time of AP personnel is spent in responding to inquiries concerning invoices, it's no wonder that enterprises are focused on cost containment and driving efficiencies in their AP departments.

By reducing their paper handling and manual processing, enterprises also are able to take more early payment discounts and optimize supplier payment strategies.

The Key to Savings
The key to streamlining AP lies in automating the invoice receipt and approval workflow, the initial phase of the AP process, says Aberdeen's Christopher Dwyer.

In a new IAPP study, enterprises cite discrepancy resolution, approval processing, and matching as the activities that cause their AP departments the most "pain."

Workflow technology can relieve all of these challenges. IAPP's study reports that 23 percent of AP departments that have implemented an automated approval workflow say they are "extremely satisfied" with the technology. An additional 37 percent of respondents describe themselves as "satisfied."

Using workflow technology to automate the invoice approval process can provide AP departments with compelling benefits, including: lower operations costs, streamlined processes, reduced AP cycle times, and better quality controls.

The challenge for AP departments is deploying a platform that can bridge their legacy systems, and providing anyone involved in the approval process with real-time access to images and data -- all while ensuring security and tracking.

This is where a hosted information management platform comes in. By combining repository management with workflow capabilities, a hosted information management platform provides:

• the ability to store any paper-based or electronic financial documents, including vendor bills, bank statements, credit card statements, and correspondence
• instant retrieval of any stored document
• compatibility with an enterprise's preferred front-end capture system and ERP system
• notifications when documents are ready for review and/or processing

With a hosted information management platform in place, AP staff no longer has to waste time searching for documents through crammed file cabinets or their e-mail inboxes for third-party inquiries or internal purposes. A hosted platform can accept and securely store feeds from other systems, such as those for electronic invoicing, or from any scanning solution an enterprise might use to capture documents, including distributed desktop scanners or centralized high-speed devices -- all in support of front or back-end AP systems

To process an invoice, AP staff can view a document in their hosted platform and enter the data into the corresponding record in their legacy AP system.

Additionally, unlike traditional licensed, on-premises solutions, a hosted platform doesn't require upfront capital expenditure for hardware and software or annual maintenance fees. And hosted solutions are designed to support approvers across departments or far-flung offices without additional licenses or customization.

IAPP's study found that 9 percent of AP departments plan to implement approval workflow technology in the next year. Hosted information management platforms can help by providing a more effective way of storing, sharing and accessing invoices and other documents -- and getting enterprises out of their paper rut.

What do you think?

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