David Johnson, AP solutions manager, Perceptive Software
In a day and age where the corporate mantra includes: “do more with less,” “work smarter not harder,” or “Kaisen,” we still see many organizations processing accounts payable invoices the old-fashioned way. That is, many organizations still receive a majority of their invoices via paper, route them through the organization through intercompany mail--or just walking them from desk to desk, move invoices from pile to pile (waiting to be matched, matched/waiting to be entered, entered/waiting to be paid, paid/waiting to be filed, filed/hopefully to be found again).
Perhaps it’s time to say, put your money where your mouth is. Better yet, put more money on your bottom line by investing in an enterprise content management system that will make your AP processing significantly more efficient.
The Institute of Financial Operations recently conducted a survey regarding the automation of accounts payable with the results issued at their annual Fusion Conference in Orlando, Florida. According to their study, more than 75% of the respondents indicated that they receive a majority of their invoices via paper. Of those responding, 39% stated that their paper invoice volume exceeded 90% of their total volume.
When looking at the paper invoice volume, 32% indicated that their volume over the past year has not changed. When combining the following categories over the past year: slightly lower, unchanged, and slightly higher, the results showed that over 80% of paper invoice volume has essentially remained static. There appears to be no end in sight of paper invoices for these organizations.
There is a cost associated with the manual payment process too. According to this same study, 41% of respondents indicated their processing cost per invoice was $5.00 or less while 59% reported a per invoice cost in excess of $5.00. These processing costs savings do not include the potential for early payment discounts offered by vendors.
I attended Disney’s Accounts Payable Department presentation at Fusion on their world-class accounts payable processing. They reported a per invoice cost of $1.61 per invoice with the aid of automation. It’s worth noting that Disney processes in excess of 5 million invoices annually. Thus, a mere change in cost per invoice of $0.01 will affect their bottom line by $50,000.
So c’mon, do more with less and work smarter not harder, let automation bring bottom line results to your organization. Your competitors are.
What do you think? Post your comments below.
Showing posts with label invoice processing. Show all posts
Showing posts with label invoice processing. Show all posts
Tuesday, June 14, 2011
Monday, May 23, 2011
Where’s the automation?
By Mark Brousseau
Despite revenues in the billions of dollars and the document volumes inherent to that scale of operation, many—possibly even most—companies have not made the leap to automated data capture technology for invoice processing, a proven driver of efficiency and value in accounts payable (AP).
That’s the key takeaway of a survey of attendees of Fusion 2011, held May 8-12 at the Gaylord Palms Resort and Convention Center near Orlando, Florida. The survey polled AP professionals around the globe, working in numerous industries and for organizations ranging from less than $500 million in annual revenues to well in excess of $10 billion in revenues. It was conducted by The Institute of Financial Operations and sponsored by Brainware. Fusion 2011 brought together more than 1,800 financial operations professionals and 170 exhibiting companies.
With an increased focus on working capital management, many AP professionals are emphasizing a need for greater visibility into and reporting of invoice processing—a demonstrated strength of available data capture and extraction technologies such as optical character recognition (OCR) and intelligent document recognition (IDR). That’s what makes these survey findings so surprising.
More than half of the survey respondents (56.3 percent) indicated that their AP organization doesn’t use automated data capture technology. And, only 3.1 percent of respondents stated that their AP organization plans to implement automated data capture within the next six months, while 6.3 percent stated their AP organization plans to implement the technology within the next 12 months.
Why aren’t AP departments making greater use of automated data capture and extraction?
Tight capital budgets are undoubtedly a factor. But AP departments also may not see the need.
Despite their lack of data capture technologies, most of the respondents to the survey are doing a pretty good job of holding the line on invoice processing costs. A plurality of respondents (41.9 percent) indicated that their average invoice processing costs have not changed over the past 12 months, while 38.7 percent of respondents stated their invoice processing costs have dropped slightly. Only 12.9 percent of respondents indicated that their average invoice processing costs have increased either slightly (9.7 percent) or significantly (3.2 percent) over the past 12 months.
Similarly, a plurality of respondents (40 percent) indicated that their average cost to process an invoice is between $2 and $5 – in line with the costs published in surveys by industry research firms. Some 16.7 percent of respondents said their average invoice processing costs are less than $2.
But the survey results show that many AP departments could benefit from labor-saving technologies such as automated data capture. More than a quarter of respondents (26.7 percent) pegged their average invoice processing costs between $5 and $10. Worse, 13.4 percent of respondents stated their average invoice processing costs are between $10 and $20, while 3.3 percent of respondents indicated that their average invoice processing costs were between an eye-popping $20 and $25.
“Among other findings, more than a third of respondents claim it still takes them more than twelve days to process an invoice, inhibiting their ability to take early payment discounts, creating backlogs, and often necessitating increased headcount,” notes Charles Kaplan, vice president of sales and marketing at Brainware. Twenty-five percent of respondents stated it takes their organization more than 15 days to pay invoices. “Automated data capture solves those problems and many others.”
To this point, a plurality of respondents (32.3 percent) believe that “better visibility and reporting” is the biggest benefit of the technology, followed by “faster turnaround” (29 percent), “lower costs” (12.9 percent), “better working capital management” (12.9 percent), and “fewer errors” (9.7 percent). Only 3.2 percent of survey respondents stated that they see “no benefit” to automated data capture.
The bottom line is that despite all the hype about automating invoice processing with data capture technology, vendors have a long way to go in convincing AP departments to deploy them.
What do you think?
Despite revenues in the billions of dollars and the document volumes inherent to that scale of operation, many—possibly even most—companies have not made the leap to automated data capture technology for invoice processing, a proven driver of efficiency and value in accounts payable (AP).
That’s the key takeaway of a survey of attendees of Fusion 2011, held May 8-12 at the Gaylord Palms Resort and Convention Center near Orlando, Florida. The survey polled AP professionals around the globe, working in numerous industries and for organizations ranging from less than $500 million in annual revenues to well in excess of $10 billion in revenues. It was conducted by The Institute of Financial Operations and sponsored by Brainware. Fusion 2011 brought together more than 1,800 financial operations professionals and 170 exhibiting companies.
With an increased focus on working capital management, many AP professionals are emphasizing a need for greater visibility into and reporting of invoice processing—a demonstrated strength of available data capture and extraction technologies such as optical character recognition (OCR) and intelligent document recognition (IDR). That’s what makes these survey findings so surprising.
More than half of the survey respondents (56.3 percent) indicated that their AP organization doesn’t use automated data capture technology. And, only 3.1 percent of respondents stated that their AP organization plans to implement automated data capture within the next six months, while 6.3 percent stated their AP organization plans to implement the technology within the next 12 months.
Why aren’t AP departments making greater use of automated data capture and extraction?
Tight capital budgets are undoubtedly a factor. But AP departments also may not see the need.
Despite their lack of data capture technologies, most of the respondents to the survey are doing a pretty good job of holding the line on invoice processing costs. A plurality of respondents (41.9 percent) indicated that their average invoice processing costs have not changed over the past 12 months, while 38.7 percent of respondents stated their invoice processing costs have dropped slightly. Only 12.9 percent of respondents indicated that their average invoice processing costs have increased either slightly (9.7 percent) or significantly (3.2 percent) over the past 12 months.
Similarly, a plurality of respondents (40 percent) indicated that their average cost to process an invoice is between $2 and $5 – in line with the costs published in surveys by industry research firms. Some 16.7 percent of respondents said their average invoice processing costs are less than $2.
But the survey results show that many AP departments could benefit from labor-saving technologies such as automated data capture. More than a quarter of respondents (26.7 percent) pegged their average invoice processing costs between $5 and $10. Worse, 13.4 percent of respondents stated their average invoice processing costs are between $10 and $20, while 3.3 percent of respondents indicated that their average invoice processing costs were between an eye-popping $20 and $25.
“Among other findings, more than a third of respondents claim it still takes them more than twelve days to process an invoice, inhibiting their ability to take early payment discounts, creating backlogs, and often necessitating increased headcount,” notes Charles Kaplan, vice president of sales and marketing at Brainware. Twenty-five percent of respondents stated it takes their organization more than 15 days to pay invoices. “Automated data capture solves those problems and many others.”
To this point, a plurality of respondents (32.3 percent) believe that “better visibility and reporting” is the biggest benefit of the technology, followed by “faster turnaround” (29 percent), “lower costs” (12.9 percent), “better working capital management” (12.9 percent), and “fewer errors” (9.7 percent). Only 3.2 percent of survey respondents stated that they see “no benefit” to automated data capture.
The bottom line is that despite all the hype about automating invoice processing with data capture technology, vendors have a long way to go in convincing AP departments to deploy them.
What do you think?
Monday, May 2, 2011
AP professionals see benefits to cloud computing
By Mark Brousseau
Accounts payable (AP) professionals see "minimal IT involvement" as the biggest benefit of using Software-as-a-Service (SaaS) or cloud computing for AP processing, according the findings of the 2011 AP Automation Study by International Accounts Payable Professionals. Nineteen percent of survey respondents identified "no capital investment" as the biggest benefit of cloud computing or SaaS, while 17.5 percent cited "lower cost per invoice" and 14.3 percent identified "fast start-up."
Some 12.7 percent of respondents identified "no software or hardware " as the biggest benefit.
Randy Davis, vice president of sales and marketing operations for eGistics isn't surprised that these benefits would rank high in the minds of AP staff. "Cloud offerings have always touted minimal IT involvement, no capital investment, fast deployment, and no on-site software as benefits," he notes.
But Davis believes that the ability of cloud-based document processing solutions to remove paper management from AP processing could deliver even greater benefits to AP professionals. "Today's cloud-based AP solutions significantly improve on key usability factors such as electronic capture, structured indexing, search and retrieval, work allocation, data updates and corrections, and audit and tracking -- things that directly contribute to the smooth operation of an AP department," Davis says.
"eGistics believes that business users will increasingly appreciate and accept the benefits of SaaS and cloud computing for critical tasks such as AP processing and management, and that such benefits will soon be taken for granted. At the end of the day, AP departments are looking for solutions that help them do their jobs faster, more accurately and with better accountability," Davis concludes.
What do you think?
Accounts payable (AP) professionals see "minimal IT involvement" as the biggest benefit of using Software-as-a-Service (SaaS) or cloud computing for AP processing, according the findings of the 2011 AP Automation Study by International Accounts Payable Professionals. Nineteen percent of survey respondents identified "no capital investment" as the biggest benefit of cloud computing or SaaS, while 17.5 percent cited "lower cost per invoice" and 14.3 percent identified "fast start-up."
Some 12.7 percent of respondents identified "no software or hardware " as the biggest benefit.
Randy Davis, vice president of sales and marketing operations for eGistics isn't surprised that these benefits would rank high in the minds of AP staff. "Cloud offerings have always touted minimal IT involvement, no capital investment, fast deployment, and no on-site software as benefits," he notes.
But Davis believes that the ability of cloud-based document processing solutions to remove paper management from AP processing could deliver even greater benefits to AP professionals. "Today's cloud-based AP solutions significantly improve on key usability factors such as electronic capture, structured indexing, search and retrieval, work allocation, data updates and corrections, and audit and tracking -- things that directly contribute to the smooth operation of an AP department," Davis says.
"eGistics believes that business users will increasingly appreciate and accept the benefits of SaaS and cloud computing for critical tasks such as AP processing and management, and that such benefits will soon be taken for granted. At the end of the day, AP departments are looking for solutions that help them do their jobs faster, more accurately and with better accountability," Davis concludes.
What do you think?
Monday, April 4, 2011
EIPP takes center stage at NACHA Payments
Mark Brousseau
As businesses continue to push for reductions in operations costs and look for ways to support green initiatives, it’s no surprise that more of them are turning to electronic invoice presentment and payment (EIPP) as a solution. EIPP is a hot topic this week at NACHA’s Payments 2011 in Austin, Texas – great timing with Earth Day just a few weeks away.
“The volume of paper required to support traditional invoice and payments processes can be enormous,” said Michael Lane, CEO for EIPP solutions provider Data Impact. “According to NACHA’s PayItGreen Alliance, a firm initiating 260,000 paper payments annually could save significant resources by converting just 20 percent of those payments to electronic. And similar savings can be gained through electronic invoicing as well.”
Data Impact’s electronic invoicing solution allows suppliers to upload invoices and related documents to a secure site, and then customers can access the website and make a payment.
Considering the high amount of paper invoices that are wasted every year, the benefits to electronic invoicing are substantial, Lane said. International Account Payable Professionals (IAPP) and The Association for Work Process Improvement’s (TAWPI) 2011 Account Payable (AP) Automation Study indicates that 90 percent of respondents still receive paper-based invoices in their organization – a situation that Lane says businesses no longer can afford.
With EIPP, companies can solve their excess paper invoice problem while implementing a green solution. Lane said there are several ways e-invoicing support green initiatives:
· Reduced paper processing, printing, and storage
· Decreased duplication of invoices – “You won’t have four copies of the same invoice in four different places,” Lane noted.
· Reduced paper mailing, handling, and postage
“The green factor is obvious with e-invoicing,” Lane said. “But, its real value is streamlining procedures while providing businesses with a major cost reduction in account receivable functions such as invoice delivery, copy invoice and reconciliation.”
What do you think?
As businesses continue to push for reductions in operations costs and look for ways to support green initiatives, it’s no surprise that more of them are turning to electronic invoice presentment and payment (EIPP) as a solution. EIPP is a hot topic this week at NACHA’s Payments 2011 in Austin, Texas – great timing with Earth Day just a few weeks away.
“The volume of paper required to support traditional invoice and payments processes can be enormous,” said Michael Lane, CEO for EIPP solutions provider Data Impact. “According to NACHA’s PayItGreen Alliance, a firm initiating 260,000 paper payments annually could save significant resources by converting just 20 percent of those payments to electronic. And similar savings can be gained through electronic invoicing as well.”
Data Impact’s electronic invoicing solution allows suppliers to upload invoices and related documents to a secure site, and then customers can access the website and make a payment.
Considering the high amount of paper invoices that are wasted every year, the benefits to electronic invoicing are substantial, Lane said. International Account Payable Professionals (IAPP) and The Association for Work Process Improvement’s (TAWPI) 2011 Account Payable (AP) Automation Study indicates that 90 percent of respondents still receive paper-based invoices in their organization – a situation that Lane says businesses no longer can afford.
With EIPP, companies can solve their excess paper invoice problem while implementing a green solution. Lane said there are several ways e-invoicing support green initiatives:
· Reduced paper processing, printing, and storage
· Decreased duplication of invoices – “You won’t have four copies of the same invoice in four different places,” Lane noted.
· Reduced paper mailing, handling, and postage
“The green factor is obvious with e-invoicing,” Lane said. “But, its real value is streamlining procedures while providing businesses with a major cost reduction in account receivable functions such as invoice delivery, copy invoice and reconciliation.”
What do you think?
Saturday, January 22, 2011
A real-world AP automation journey
Posted by Mark Brousseau
It’s not often that an organization can reduce its workforce while significantly growing its volume, but that’s exactly what University Hospitals, one of the nation’s leading healthcare systems, did by rethinking and automating processes in its accounts payable (AP) shared services department.
The healthcare system’s shared services center has supported a 63 percent increase in invoice volume with a 17 percent reduction in full-time equivalents (FTEs), Jeff Lubbe, corporate finance director, University Hospitals, told attendees at Kofax Transform 2011 Americas this week in San Diego.
When University Hospitals set out to revamp its AP operations a few years back, several factors were driving its thinking: external pressure to improve profitability, its desire to reduce back-office costs and reinvest the savings in patient care, and its desire to improve satisfaction with AP processing. What’s more, the AP department’s old technology infrastructure presented several challenges:
• Lost and misplaced invoices
• High costs for non-value added tasks
• Lots of time focused on keying instead of analytics
• Lack of information for workload monitoring
• Lack of accountability to resolve problem invoices
• Difficult verifying non-PO invoice approvals
• Lag time to receive approval on non-PO invoices
• Issues around coding of invoices to invalid accounts
Against this backdrop, it’s not surprising that AP was blamed anytime an invoice was paid late.
With the implementation of an Oracle enterprise resource planning (ERP) system, University Hospitals felt it finally had a strong base that it could build on for its automation strategy.
The first phase of University Hospitals’ automation strategy was to consolidate its AP operations, consolidate invoices and suppliers, identify technology-ready suppliers with high invoice counts (“We wanted to see where we could use EDI [electronic data interchange] or spreadsheet uploads,” Lubbe said), and takea hard look at internally generated transactions for process improvements.
In the second phase of its AP automation strategy, Lubbe said University Hospitals implemented a document imaging and automated workflow solution, and began utilizing a self-service solution for expenses and non-PO invoicing. University Hospitals selected MarkView software from 170 Systems (now part of Kofax) for its document imaging and automated workflow solution.
“Our strategy was to select an Oracle application – since we are an Oracle shop – and if one didn’t exist, to select an Oracle partner that had a solution that was intuitive, cost effective and scalable,” Lubbe told attendees. “We chose 170 Systems because of MarkView’s integration with Oracle, the company’s proven track record of best-practices implementations, its extensive financial automation experience, and MarkView’s breadth of out-of-the-box functionality. It was a really great fit for us.”
Today, University Hospitals has automated about 75 percent of the invoices that come into its enterprise, Lubbe said. The final phase of the medical system’s original AP automation plan will include deploying an optical character recognition (OCR) solution, and refocusing AP staff on analytical tasks, such as problem and hold resolution, statement reconciliation, and discount capture.
To automate its data capture, University Hospitals began deploying Kofax Capture and Kofax Transformation Management in December, and expects to complete the implementation in March. Lubbe said the medical system selected the Kofax products because of their integration with MarkView and Kofax’s leadership position in the intelligent data capture market.
While data capture is sure to provide additional benefits, Lubbe said he’s already pleased with the progress the medical system has made in automating its AP processes. “We have improved internal control, improved productivity of the AP department and its manager, increased visibility, avoided AP headcount increases, and improved the perception of AP and finance,” Lubbe concluded.
It’s not often that an organization can reduce its workforce while significantly growing its volume, but that’s exactly what University Hospitals, one of the nation’s leading healthcare systems, did by rethinking and automating processes in its accounts payable (AP) shared services department.
The healthcare system’s shared services center has supported a 63 percent increase in invoice volume with a 17 percent reduction in full-time equivalents (FTEs), Jeff Lubbe, corporate finance director, University Hospitals, told attendees at Kofax Transform 2011 Americas this week in San Diego.
When University Hospitals set out to revamp its AP operations a few years back, several factors were driving its thinking: external pressure to improve profitability, its desire to reduce back-office costs and reinvest the savings in patient care, and its desire to improve satisfaction with AP processing. What’s more, the AP department’s old technology infrastructure presented several challenges:
• Lost and misplaced invoices
• High costs for non-value added tasks
• Lots of time focused on keying instead of analytics
• Lack of information for workload monitoring
• Lack of accountability to resolve problem invoices
• Difficult verifying non-PO invoice approvals
• Lag time to receive approval on non-PO invoices
• Issues around coding of invoices to invalid accounts
Against this backdrop, it’s not surprising that AP was blamed anytime an invoice was paid late.
With the implementation of an Oracle enterprise resource planning (ERP) system, University Hospitals felt it finally had a strong base that it could build on for its automation strategy.
The first phase of University Hospitals’ automation strategy was to consolidate its AP operations, consolidate invoices and suppliers, identify technology-ready suppliers with high invoice counts (“We wanted to see where we could use EDI [electronic data interchange] or spreadsheet uploads,” Lubbe said), and takea hard look at internally generated transactions for process improvements.
In the second phase of its AP automation strategy, Lubbe said University Hospitals implemented a document imaging and automated workflow solution, and began utilizing a self-service solution for expenses and non-PO invoicing. University Hospitals selected MarkView software from 170 Systems (now part of Kofax) for its document imaging and automated workflow solution.
“Our strategy was to select an Oracle application – since we are an Oracle shop – and if one didn’t exist, to select an Oracle partner that had a solution that was intuitive, cost effective and scalable,” Lubbe told attendees. “We chose 170 Systems because of MarkView’s integration with Oracle, the company’s proven track record of best-practices implementations, its extensive financial automation experience, and MarkView’s breadth of out-of-the-box functionality. It was a really great fit for us.”
Today, University Hospitals has automated about 75 percent of the invoices that come into its enterprise, Lubbe said. The final phase of the medical system’s original AP automation plan will include deploying an optical character recognition (OCR) solution, and refocusing AP staff on analytical tasks, such as problem and hold resolution, statement reconciliation, and discount capture.
To automate its data capture, University Hospitals began deploying Kofax Capture and Kofax Transformation Management in December, and expects to complete the implementation in March. Lubbe said the medical system selected the Kofax products because of their integration with MarkView and Kofax’s leadership position in the intelligent data capture market.
While data capture is sure to provide additional benefits, Lubbe said he’s already pleased with the progress the medical system has made in automating its AP processes. “We have improved internal control, improved productivity of the AP department and its manager, increased visibility, avoided AP headcount increases, and improved the perception of AP and finance,” Lubbe concluded.
Monday, January 17, 2011
Changing the CFO’s Perception of AP
By R. Edwin Pearce
Historically, if you asked a CFO to tell you the first thing that popped into their mind when you mention accounts payable (AP) processing, they likely would have responded with some variation of “cost center.” The fact is, as a percentage of revenue, the costs associated with AP processing typically represent a small blip on the radar of most companies. But as companies have tightened their spending as a result of the recent economic downturn, that blip is now a significant opportunity.
More than 75 percent of AP departments report into the CFO, according to various studies. With CFOs keenly interested in cost containment and improved cash management, AP leaders would be well served to find ways to deliver strategic benefits to the organization. Notably, 56 percent of CFOs believe AP represents a more strategic opportunity for improvements than it did two years ago.
One reason CFOs are changing their tune on AP is that they are seeking ways to avoid further layoffs, while weathering the recession. To this end, most are tightening controls over employee spending and placing greater emphasis on measuring and monitoring the company’s financial health.
These types of activities are clearly in the AP department’s wheelhouse.
CFOs are looking past the traditional paper-encumbered stereotype of AP and focusing more closely on the tremendous amount of financial data that flows through AP. From this perspective, they see AP as a means to improving working capital management, reducing supply chain risk, and greatly reducing the incidence of fraud. Most importantly, CFOs recognize that AP can help a company improve its cash position by extending days payables outstanding, avoiding late payments, capturing early-pay and volume discounts, and ensuring that payments and orders are compliant with contracts.
At many companies, AP no longer is merely a back-office transaction function where efficiency and low cost of operations are the only requisites for success; AP processes are being more tightly linked with treasury functions to help maximize working capital management. This is part of an overall move to align core processes across business functions to support corporate strategic initiatives.
While this increased corporate standing is good news for AP departments, they must also be ready for CFOs to more closely assess their performance based on key criteria such as costs, service delivery, error rates, timeliness of responses to inquiries, compliance, and vendor relationships.
This makes it imperative that AP departments continue their automation initiatives. Not only does automation help AP departments improve on-time payment performance, reduce errors, slash costs and enable greater visibility into financial data. But it also delivers the quantifiable data on process performance that CFOs will require as AP evolves into more strategic partner for their organization.
R. Edwin Pearce is executive vice president of sales and corporate development for eGistics, Inc., a provider of e-document solutions. He can be reached at 214-256-4607 or via epearce@egisticsinc.com.
Historically, if you asked a CFO to tell you the first thing that popped into their mind when you mention accounts payable (AP) processing, they likely would have responded with some variation of “cost center.” The fact is, as a percentage of revenue, the costs associated with AP processing typically represent a small blip on the radar of most companies. But as companies have tightened their spending as a result of the recent economic downturn, that blip is now a significant opportunity.
More than 75 percent of AP departments report into the CFO, according to various studies. With CFOs keenly interested in cost containment and improved cash management, AP leaders would be well served to find ways to deliver strategic benefits to the organization. Notably, 56 percent of CFOs believe AP represents a more strategic opportunity for improvements than it did two years ago.
One reason CFOs are changing their tune on AP is that they are seeking ways to avoid further layoffs, while weathering the recession. To this end, most are tightening controls over employee spending and placing greater emphasis on measuring and monitoring the company’s financial health.
These types of activities are clearly in the AP department’s wheelhouse.
CFOs are looking past the traditional paper-encumbered stereotype of AP and focusing more closely on the tremendous amount of financial data that flows through AP. From this perspective, they see AP as a means to improving working capital management, reducing supply chain risk, and greatly reducing the incidence of fraud. Most importantly, CFOs recognize that AP can help a company improve its cash position by extending days payables outstanding, avoiding late payments, capturing early-pay and volume discounts, and ensuring that payments and orders are compliant with contracts.
At many companies, AP no longer is merely a back-office transaction function where efficiency and low cost of operations are the only requisites for success; AP processes are being more tightly linked with treasury functions to help maximize working capital management. This is part of an overall move to align core processes across business functions to support corporate strategic initiatives.
While this increased corporate standing is good news for AP departments, they must also be ready for CFOs to more closely assess their performance based on key criteria such as costs, service delivery, error rates, timeliness of responses to inquiries, compliance, and vendor relationships.
This makes it imperative that AP departments continue their automation initiatives. Not only does automation help AP departments improve on-time payment performance, reduce errors, slash costs and enable greater visibility into financial data. But it also delivers the quantifiable data on process performance that CFOs will require as AP evolves into more strategic partner for their organization.
R. Edwin Pearce is executive vice president of sales and corporate development for eGistics, Inc., a provider of e-document solutions. He can be reached at 214-256-4607 or via epearce@egisticsinc.com.
Tuesday, October 12, 2010
The Proper A/P Toolkit
By Bruce Bourdon, CPCP
Vice President, Healthcare Channel Sales Manager
U.S. Bank Corporate Payment Systems
Two key challenges face healthcare accounts payable departments today: Shrinking profit margins due to rising costs, and decreased cash flow due to slower collections and reimbursements.
The cash flow pipeline often plugs up due to an inability of the healthcare provider to extend payment terms with its top suppliers. Operational costs, meantime, have been soaring due to the high cost of printing and mailing paper checks, and often re-issuing and re-mailing checks that get lost. Finally, AP staff spent far too much time researching vendor inquiries about the status of the payment they are owed.
If any industry could stand to benefit from going paperless, it’s healthcare. Yet, a 2010 U.S. Bank/IAPP survey showed that 61 percent of all healthcare payments today are made by paper check. A similar survey, this one by PayStream Advisors in late 2009, found that 68 percent of all invoices are traded by paper, and only about 25 percent of all purchase orders are sent electronically to suppliers.
That’s about to change. The U.S. Bank/IAPP survey that showed such a high rate of paper check payments also predicts a 2/3 reduction in check payments and a three-fold increase in use of purchasing cards over the next three years, based on feedback from respondents.
Some may wonder, what is taking the healthcare industry so long to jump on the technology conversion bandwagon? The answer: it is hampered by many of the same roadblocks being experienced by other industries. Namely, perceived external barriers such as limited willingness or capability of suppliers to handle e-payments, and perceived internal barriers such as the high cost of conversion to e-payments or worries about their own capability to manage the transition.
Such concerns are often overblown. The cost of conversion, for example, is dwarfed by the savings realized over time, according to recent studies. To the extent that it’s measured at all, cost-per-paper-invoice can vary from a dollar to over $15 dollars, says the PayStream Advisors survey. But interestingly enough about half the companies surveyed have no idea what it’s costing them to process each paper invoice.
Electronic processing makes the costs much more transparent and easier to measure, therefore making it easier to spot the cost bottlenecks and act upon them. Aberdeen Group has shown that electronic invoice processing shaves $6 to $7 off the cost or processing each invoice. How? By accelerating the approval cycle, reducing the number of lost and missing invoices, reducing the number of “exceptions” and, ultimately, reducing FTE or allowing redirection of work into more value-added activities.
Annapolis Consulting puts it this way: Automation increases ease of use, ease of use increases adoption, adoption increases on-contract spend, on contract spend enhances visibility and visibility reduces wasteful spend. Just as important, visibility enhances leverage when it comes time to negotiate contracts with suppliers.
Today’s payables toolkit brims with options for the healthcare provider, from Electronic Invoice Presentment and Payment (EIPP) to a wide array of paperless e-payment options including commercial cards, virtual or “ghost” card accounts, wire payments and Automated Clearinghouse (ACH). End-to-end automation is both possible and achievable. It’s easier than ever to establish e-payments as the standard for conducting business with your key suppliers.
Vice President, Healthcare Channel Sales Manager
U.S. Bank Corporate Payment Systems
Two key challenges face healthcare accounts payable departments today: Shrinking profit margins due to rising costs, and decreased cash flow due to slower collections and reimbursements.
The cash flow pipeline often plugs up due to an inability of the healthcare provider to extend payment terms with its top suppliers. Operational costs, meantime, have been soaring due to the high cost of printing and mailing paper checks, and often re-issuing and re-mailing checks that get lost. Finally, AP staff spent far too much time researching vendor inquiries about the status of the payment they are owed.
If any industry could stand to benefit from going paperless, it’s healthcare. Yet, a 2010 U.S. Bank/IAPP survey showed that 61 percent of all healthcare payments today are made by paper check. A similar survey, this one by PayStream Advisors in late 2009, found that 68 percent of all invoices are traded by paper, and only about 25 percent of all purchase orders are sent electronically to suppliers.
That’s about to change. The U.S. Bank/IAPP survey that showed such a high rate of paper check payments also predicts a 2/3 reduction in check payments and a three-fold increase in use of purchasing cards over the next three years, based on feedback from respondents.
Some may wonder, what is taking the healthcare industry so long to jump on the technology conversion bandwagon? The answer: it is hampered by many of the same roadblocks being experienced by other industries. Namely, perceived external barriers such as limited willingness or capability of suppliers to handle e-payments, and perceived internal barriers such as the high cost of conversion to e-payments or worries about their own capability to manage the transition.
Such concerns are often overblown. The cost of conversion, for example, is dwarfed by the savings realized over time, according to recent studies. To the extent that it’s measured at all, cost-per-paper-invoice can vary from a dollar to over $15 dollars, says the PayStream Advisors survey. But interestingly enough about half the companies surveyed have no idea what it’s costing them to process each paper invoice.
Electronic processing makes the costs much more transparent and easier to measure, therefore making it easier to spot the cost bottlenecks and act upon them. Aberdeen Group has shown that electronic invoice processing shaves $6 to $7 off the cost or processing each invoice. How? By accelerating the approval cycle, reducing the number of lost and missing invoices, reducing the number of “exceptions” and, ultimately, reducing FTE or allowing redirection of work into more value-added activities.
Annapolis Consulting puts it this way: Automation increases ease of use, ease of use increases adoption, adoption increases on-contract spend, on contract spend enhances visibility and visibility reduces wasteful spend. Just as important, visibility enhances leverage when it comes time to negotiate contracts with suppliers.
Today’s payables toolkit brims with options for the healthcare provider, from Electronic Invoice Presentment and Payment (EIPP) to a wide array of paperless e-payment options including commercial cards, virtual or “ghost” card accounts, wire payments and Automated Clearinghouse (ACH). End-to-end automation is both possible and achievable. It’s easier than ever to establish e-payments as the standard for conducting business with your key suppliers.
Friday, October 8, 2010
Calculating ERP TCO
By Erik Kass
It's no secret that ERP is a major investment. ERP systems are company-wide and have long-term implications for the financial, human resources and information technology departments and various other aspects of the business as a whole - which is why careful upfront planning is so critical.
Total cost of ownership, or TCO, analysis can help business owners determine how much it will really take to make their ERP implementation projects a success.
Undertaking ERP implementation can be a risky decision, but TCO analysis is designed to help mitigate that risk by preparing a company for all the costs of ERP ownership - not just the obvious ones.
When done right, a good TCO analysis will help companies separate a good ERP investment from a bad one. However, a high TCO doesn't necessarily signal a poor investment if the corresponding returns on that investment are high enough to offset the expenses. The ratio between costs and rewards is more important than the numbers alone.
TCO begins with an estimate of all the direct and indirect costs associated with ERP implementation, including the cost of the software itself, maintenance costs, operational expenses, upgrades and eventual replacement. Naturally, this necessarily involves making some projections and assumptions about the future, so to achieve the most accurate predictions possible, TCO analysis includes several alternative scenarios.
One industry that is heavily invested in TCO analysis is the automotive and transportation industry. Owning a vehicle comes with a few obvious costs - the initial cost of purchasing the car, for example - and a whole lot of hidden costs that accrue over time. First, just driving the vehicle out of the dealership results in a significant loss of value, which means that even if a car owner sold his or her vehicle mere days after purchasing it, he or she would not be able to sell it for the same value the dealer did. Second, owning a car comes with a lot of responsibility. Car owners need to pay for maintenance and check-ups, buy new tires every few years and of course pay for gasoline. All of these factors combine to give an estimated TCO for the cost of owning a car - and that figure going to be significantly more than the car's MSRP on the lot. A similar line of thinking can be applied to determine the cost of a business to own a jet or a yacht, for example.
The same principle goes for ERP software. The cost of owning an ERP system is likely to end up being significantly more than the sticker price on the software, but companies that understand, prepare for and budget for these expenses will find that their ERP systems save them a lot more money than they cost.
The basic tenet of TCO is this: You cannot manage what you do not measure.
There are five major components of TCO analysis - acquisition, implementation, operations, maintenance and replacement. These five components represent the five life-cycle stages of an ERP system, and each one is associated with specific costs. Understanding all of these costs - in other words, planning beyond simply the initial ERP software costs - is one of the best ways that companies can prepare themselves for ERP and better their chances of becoming an ERP success story.
A graph of these expenses often resembles the Nike "swoosh" logo. There is an initial peak in costs when the software is first purchased and implemented, a dip as it begins running smoothly, and then a steady rise as the system becomes older, requires more maintenance and is eventually replaced. This is the natural cost cycle of an ERP system, and budgeting accordingly will help businesses steer clear of any unpleasant cost surprises.
A second critical part of TCO analysis is determining the direct and indirect costs and risks associated with ERP systems, and managing and controlling these costs and risks accordingly. Direct or budgeted costs include anything paid to clients, servers, peripherals and networks, along with capital, fees and labor in each area. Indirect costs are things like downtime and service to end users - costs that can be hidden and difficult to measure.
Once all these costs and risks are known, TCO analysis conducts a series of what-if scenarios to determine the best implementation strategy that will yield the lowest cost of ownership and offer the highest potential reward with the fewest risks.
Evaluating the TCO is the first step to understanding the potential return on investment, or ROI. Once a company is prepared for all the expenses of ERP - from the software to the maintenance to the upgrades - it can begin reaping the significant financial benefits without worrying about unexpected costs.
Erik Kaas is Director of Product Management for Mid Market ERP products at Sage. He is responsible for managing the product line life cycle from strategic planning to tactical activities. Erik manages a team of product managers responsible for specifying market requirements for current and future products.
It's no secret that ERP is a major investment. ERP systems are company-wide and have long-term implications for the financial, human resources and information technology departments and various other aspects of the business as a whole - which is why careful upfront planning is so critical.
Total cost of ownership, or TCO, analysis can help business owners determine how much it will really take to make their ERP implementation projects a success.
Undertaking ERP implementation can be a risky decision, but TCO analysis is designed to help mitigate that risk by preparing a company for all the costs of ERP ownership - not just the obvious ones.
When done right, a good TCO analysis will help companies separate a good ERP investment from a bad one. However, a high TCO doesn't necessarily signal a poor investment if the corresponding returns on that investment are high enough to offset the expenses. The ratio between costs and rewards is more important than the numbers alone.
TCO begins with an estimate of all the direct and indirect costs associated with ERP implementation, including the cost of the software itself, maintenance costs, operational expenses, upgrades and eventual replacement. Naturally, this necessarily involves making some projections and assumptions about the future, so to achieve the most accurate predictions possible, TCO analysis includes several alternative scenarios.
One industry that is heavily invested in TCO analysis is the automotive and transportation industry. Owning a vehicle comes with a few obvious costs - the initial cost of purchasing the car, for example - and a whole lot of hidden costs that accrue over time. First, just driving the vehicle out of the dealership results in a significant loss of value, which means that even if a car owner sold his or her vehicle mere days after purchasing it, he or she would not be able to sell it for the same value the dealer did. Second, owning a car comes with a lot of responsibility. Car owners need to pay for maintenance and check-ups, buy new tires every few years and of course pay for gasoline. All of these factors combine to give an estimated TCO for the cost of owning a car - and that figure going to be significantly more than the car's MSRP on the lot. A similar line of thinking can be applied to determine the cost of a business to own a jet or a yacht, for example.
The same principle goes for ERP software. The cost of owning an ERP system is likely to end up being significantly more than the sticker price on the software, but companies that understand, prepare for and budget for these expenses will find that their ERP systems save them a lot more money than they cost.
The basic tenet of TCO is this: You cannot manage what you do not measure.
There are five major components of TCO analysis - acquisition, implementation, operations, maintenance and replacement. These five components represent the five life-cycle stages of an ERP system, and each one is associated with specific costs. Understanding all of these costs - in other words, planning beyond simply the initial ERP software costs - is one of the best ways that companies can prepare themselves for ERP and better their chances of becoming an ERP success story.
A graph of these expenses often resembles the Nike "swoosh" logo. There is an initial peak in costs when the software is first purchased and implemented, a dip as it begins running smoothly, and then a steady rise as the system becomes older, requires more maintenance and is eventually replaced. This is the natural cost cycle of an ERP system, and budgeting accordingly will help businesses steer clear of any unpleasant cost surprises.
A second critical part of TCO analysis is determining the direct and indirect costs and risks associated with ERP systems, and managing and controlling these costs and risks accordingly. Direct or budgeted costs include anything paid to clients, servers, peripherals and networks, along with capital, fees and labor in each area. Indirect costs are things like downtime and service to end users - costs that can be hidden and difficult to measure.
Once all these costs and risks are known, TCO analysis conducts a series of what-if scenarios to determine the best implementation strategy that will yield the lowest cost of ownership and offer the highest potential reward with the fewest risks.
Evaluating the TCO is the first step to understanding the potential return on investment, or ROI. Once a company is prepared for all the expenses of ERP - from the software to the maintenance to the upgrades - it can begin reaping the significant financial benefits without worrying about unexpected costs.
Erik Kaas is Director of Product Management for Mid Market ERP products at Sage. He is responsible for managing the product line life cycle from strategic planning to tactical activities. Erik manages a team of product managers responsible for specifying market requirements for current and future products.
Wednesday, July 7, 2010
Putting the kibosh on the soaring software maintenance and upgrade costs
By Randy Davis (rdavis@egisticsinc.com)
Finextra reports that in a recent speech to the Committee for Economic Development in Australia (CEDA), CBA Chief Information Officer Michael Harte lambasted legacy technology vendors for their slow embrace of cloud-based computing and their apparent preference for solutions that lock-in users to a "never-ending spiral" of costly maintenance and upgrades.
"We're saying that we will never buy another data center. We will never buy another rack or server or storage device or network device again," Harte said. "I will never let any organization that I work for get locked into proprietary hardware or software again. I'll never tell my teams in the business that it will be weeks to get them hardware provision. I'll never pay upfront for any infrastructure and certainly would never pay for any, or rent any, infrastructure that I would never use."
Harte concluded: "I will never implement an internal solution for a common problem that I could procure on subscription across the Web."
With increasing demand for cloud-based solutions, combined with a general reluctance to pay hefty upfront capital costs, Harte's comments would seem to reflect growing dissatisfaction with the traditional licensed software model -- and its “never-ending spiral” of ongoing expenses.
Are you as fed-up as Harte?
Finextra reports that in a recent speech to the Committee for Economic Development in Australia (CEDA), CBA Chief Information Officer Michael Harte lambasted legacy technology vendors for their slow embrace of cloud-based computing and their apparent preference for solutions that lock-in users to a "never-ending spiral" of costly maintenance and upgrades.
"We're saying that we will never buy another data center. We will never buy another rack or server or storage device or network device again," Harte said. "I will never let any organization that I work for get locked into proprietary hardware or software again. I'll never tell my teams in the business that it will be weeks to get them hardware provision. I'll never pay upfront for any infrastructure and certainly would never pay for any, or rent any, infrastructure that I would never use."
Harte concluded: "I will never implement an internal solution for a common problem that I could procure on subscription across the Web."
With increasing demand for cloud-based solutions, combined with a general reluctance to pay hefty upfront capital costs, Harte's comments would seem to reflect growing dissatisfaction with the traditional licensed software model -- and its “never-ending spiral” of ongoing expenses.
Are you as fed-up as Harte?
Monday, July 5, 2010
How to communicate without saying a word
Posted by Tom Walker, portfolio manager, SAP Accounts Payable Solution, Open Text Corporation:
How to communication without saying a word?
This can be a difficult challenge in the world of Accounts Payable when working to post invoices accurately and quickly. Just accurately and quickly alone is a major task but when you add “quietly”…is it really possible?
Think of all the people involved…Accounts Payable Professionals, Approvers, Corporate Procurement, Field Procurement, Receiving, Contract Management, Master Data Management, Tax Professionals…just to name a few. There are a number of Vendors offering solutions to address the accurate and quick...although in many cases you have to decide…do you want it accurate or quick…one or the other but not both. Yet very few address the quietly issue.
Why is this important? For invoices that are received and immediately posted without any human intervention due to issues such as problem resolution or approval, communication is not a critical factor. Yet when that 80/20 rule kicks in where 20% of your invoices result in 80% of the problems, the Accounts Payable Professional must reach out and communicate. They need to communicate with the individuals that have both the knowledge and security authorization to resolve / approve invoices as required by best practice separation of duties.
As an example, in an ERP such as SAP this communication is often started by running a report such as MRBR to find invoices blocked for payment. Without a solution that includes “quietly” as a building block, the first communication triggers a barrage of activity including but not limited to emails, phone calls, entries into spreadsheets for follow up, follow up calls, making copies of invoices and pulling contracts.
So how do you add “quietly” to the process flow? You must examine the entire process flow from how you receive the invoice, how you capture the meta data at the header and line item level, how you determine if there is a problem and then who must be involved to resolve / approve. Equally important is anticipate what that person requires to complete the task…such as…access to invoice and related document images, history of others that have worked on the process including their comments, transactional data such as purchase order, goods receipt, prior postings to purchase order and options to resolution / approval.
One excellent example of a “quite” solution is provided by SAP with their SAP Invoice Management and optional OCR.
One last thought…quiet extends to reporting also…you need to anticipate the need for information related to the invoice. While invoice payment status is certainly important you must also anticipate others will want to know trends such as invoices paid without problem and if a problem…what type of problem is most common. Yet a truly quiet process goes beyond the expected reporting…the invoice occurred because of a purchase…the purchase occurred due to a larger business process such as a building project and so on. You must anticipate that others must be able to see the invoice as part of the bigger picture.
This bigger picture is ECM. You would expect that a large ERP would anticipate this more holistic requirement and SAP has also done that by providing an ECM solution through it partnership with Open Text that takes the invoice and quietly makes it available as part of the ECM big picture. This allows you to see for example all the invoices from one vendor on one project in one virtual view or to see all the invoices related to the project regardless of vendor. No longer is it required to communicate and ask the Accounts Payable Professional to accumulate all the related information and wait for a response…it is already waiting for you to access immediate and quietly.
So…accurate…quick…quiet…yes it is possible!
How to communication without saying a word?
This can be a difficult challenge in the world of Accounts Payable when working to post invoices accurately and quickly. Just accurately and quickly alone is a major task but when you add “quietly”…is it really possible?
Think of all the people involved…Accounts Payable Professionals, Approvers, Corporate Procurement, Field Procurement, Receiving, Contract Management, Master Data Management, Tax Professionals…just to name a few. There are a number of Vendors offering solutions to address the accurate and quick...although in many cases you have to decide…do you want it accurate or quick…one or the other but not both. Yet very few address the quietly issue.
Why is this important? For invoices that are received and immediately posted without any human intervention due to issues such as problem resolution or approval, communication is not a critical factor. Yet when that 80/20 rule kicks in where 20% of your invoices result in 80% of the problems, the Accounts Payable Professional must reach out and communicate. They need to communicate with the individuals that have both the knowledge and security authorization to resolve / approve invoices as required by best practice separation of duties.
As an example, in an ERP such as SAP this communication is often started by running a report such as MRBR to find invoices blocked for payment. Without a solution that includes “quietly” as a building block, the first communication triggers a barrage of activity including but not limited to emails, phone calls, entries into spreadsheets for follow up, follow up calls, making copies of invoices and pulling contracts.
So how do you add “quietly” to the process flow? You must examine the entire process flow from how you receive the invoice, how you capture the meta data at the header and line item level, how you determine if there is a problem and then who must be involved to resolve / approve. Equally important is anticipate what that person requires to complete the task…such as…access to invoice and related document images, history of others that have worked on the process including their comments, transactional data such as purchase order, goods receipt, prior postings to purchase order and options to resolution / approval.
One excellent example of a “quite” solution is provided by SAP with their SAP Invoice Management and optional OCR.
One last thought…quiet extends to reporting also…you need to anticipate the need for information related to the invoice. While invoice payment status is certainly important you must also anticipate others will want to know trends such as invoices paid without problem and if a problem…what type of problem is most common. Yet a truly quiet process goes beyond the expected reporting…the invoice occurred because of a purchase…the purchase occurred due to a larger business process such as a building project and so on. You must anticipate that others must be able to see the invoice as part of the bigger picture.
This bigger picture is ECM. You would expect that a large ERP would anticipate this more holistic requirement and SAP has also done that by providing an ECM solution through it partnership with Open Text that takes the invoice and quietly makes it available as part of the ECM big picture. This allows you to see for example all the invoices from one vendor on one project in one virtual view or to see all the invoices related to the project regardless of vendor. No longer is it required to communicate and ask the Accounts Payable Professional to accumulate all the related information and wait for a response…it is already waiting for you to access immediate and quietly.
So…accurate…quick…quiet…yes it is possible!
Thursday, June 3, 2010
Priceless gem or fool's gold?
Posted by Mark Brousseau
Priceless gem or fool’s gold? Laurel B. Sanders (lsanders@docfinity.com) of Optical Image Technology (OIT) offers 10 strategies for cost justifying an automated invoice processing solution:
Remember the stuff we called fool’s gold as kids? Our first discovery led plenty of us to think we were striking it rich as we ran home with sample treasure in hand. Reminiscent smiles and chuckles quickly told us we had been fooled by something that held more apparent than intrinsic value. Similarly, some technology improvements are priceless. Others seem like a great idea, but deliver only moderate value.
Automated invoice processing is no fool’s gold. Implemented well, it’s a priceless gem that boosts profitability, service reputations, and employee morale. If you understand the ROI, it’s easy to defend making the investment. Integrating electronic document management (EDM) and business process management (BPM) software with your line-of-business (LOB) applications saves time, money, and aggravation by letting you:
1. Access payment-related documents instantly
• Integrating a digital repository with your LOB apps gives you instant access to images of invoices, purchase requisitions/orders, packing and delivery slips, checks, GL info, and more within your preferred invoicing system. No more cumbersome search. No lost documents. No re-creating missing files.
2. Match documentation automatically
• Rules-driven BPM searches for identical customer data, invoice numbers, product codes, descriptions, payment terms, and more, validating invoicing readiness. Automated matching gives you more time for meaningful work.
3. Identify discrepancies and errors quickly
• BPM easily identifies missing or inconsistent information so you can take appropriate action. Email alerts notify workers of tasks requiring human intervention. Everything else keeps moving.
4. Expedite invoice routing and approval
• ECM and BPM gather, package, and flow documentation to the right people for timely review. Automated routing with links to files requiring approval, and task assignment based on hierarchies and attendance rules ensure each invoice is handled promptly and appropriately. Turnaround: typically 50-90 % faster (with less effort).
5. Eliminate errors by re-using data intelligently
• As new documents are created (purchase orders following approved requisition orders; invoices after shipping), meaningful data is extracted and re-used, improving content integrity and transactional accuracy. No more $10 invoices for $100 goods or multiple bills to Mr. Smyth/Smithe/Smith. Say goodbye to costly errors.
6. Collect receivables quickly and cost efficiently
• Automated document review, instant file access, and automated routing/approval for documents that meet billing criteria minimize human involvement while ensuring quick, accurate processing.
7. Take advantage of more early-payment discounts
• Automated invoicing based on business rules and real-time data such as invoicing terms lets you keep pace with 2/10 net 30 and other discounts, saving $$.
8. Eliminate late payment penalties
• Don’t (ever!) miss an important date. Automated invoice processing relies on stored information rather than human accuracy and reliability to ensure timely decisions. Stored data (such as due dates and discount opportunities) keeps work prioritized, removing the potential for errors and missed opportunities.
9. Help staff to be more productive
• Work is most satisfying when employees’ skills and talents are used well. Automation lets workers focus handle routine work quickly, giving them time to focus on problematic cases and accomplish typically 30-60% more each day than they would without it.
10. Create a better work environment
• Creating a balance between work’s challenges and rewards isn’t easy. Automation lets employees apply the skills they have worked to develop, be more productive, and accomplish what needs to be done so they can have a life beyond the workplace.
Still wondering if it’s worth it? Consider your own work environment. Are you extracting full value from your people, systems, and business information? If there’s room for improvement, there’s no better time to start than right now.
Priceless gem or fool’s gold? Laurel B. Sanders (lsanders@docfinity.com) of Optical Image Technology (OIT) offers 10 strategies for cost justifying an automated invoice processing solution:
Remember the stuff we called fool’s gold as kids? Our first discovery led plenty of us to think we were striking it rich as we ran home with sample treasure in hand. Reminiscent smiles and chuckles quickly told us we had been fooled by something that held more apparent than intrinsic value. Similarly, some technology improvements are priceless. Others seem like a great idea, but deliver only moderate value.
Automated invoice processing is no fool’s gold. Implemented well, it’s a priceless gem that boosts profitability, service reputations, and employee morale. If you understand the ROI, it’s easy to defend making the investment. Integrating electronic document management (EDM) and business process management (BPM) software with your line-of-business (LOB) applications saves time, money, and aggravation by letting you:
1. Access payment-related documents instantly
• Integrating a digital repository with your LOB apps gives you instant access to images of invoices, purchase requisitions/orders, packing and delivery slips, checks, GL info, and more within your preferred invoicing system. No more cumbersome search. No lost documents. No re-creating missing files.
2. Match documentation automatically
• Rules-driven BPM searches for identical customer data, invoice numbers, product codes, descriptions, payment terms, and more, validating invoicing readiness. Automated matching gives you more time for meaningful work.
3. Identify discrepancies and errors quickly
• BPM easily identifies missing or inconsistent information so you can take appropriate action. Email alerts notify workers of tasks requiring human intervention. Everything else keeps moving.
4. Expedite invoice routing and approval
• ECM and BPM gather, package, and flow documentation to the right people for timely review. Automated routing with links to files requiring approval, and task assignment based on hierarchies and attendance rules ensure each invoice is handled promptly and appropriately. Turnaround: typically 50-90 % faster (with less effort).
5. Eliminate errors by re-using data intelligently
• As new documents are created (purchase orders following approved requisition orders; invoices after shipping), meaningful data is extracted and re-used, improving content integrity and transactional accuracy. No more $10 invoices for $100 goods or multiple bills to Mr. Smyth/Smithe/Smith. Say goodbye to costly errors.
6. Collect receivables quickly and cost efficiently
• Automated document review, instant file access, and automated routing/approval for documents that meet billing criteria minimize human involvement while ensuring quick, accurate processing.
7. Take advantage of more early-payment discounts
• Automated invoicing based on business rules and real-time data such as invoicing terms lets you keep pace with 2/10 net 30 and other discounts, saving $$.
8. Eliminate late payment penalties
• Don’t (ever!) miss an important date. Automated invoice processing relies on stored information rather than human accuracy and reliability to ensure timely decisions. Stored data (such as due dates and discount opportunities) keeps work prioritized, removing the potential for errors and missed opportunities.
9. Help staff to be more productive
• Work is most satisfying when employees’ skills and talents are used well. Automation lets workers focus handle routine work quickly, giving them time to focus on problematic cases and accomplish typically 30-60% more each day than they would without it.
10. Create a better work environment
• Creating a balance between work’s challenges and rewards isn’t easy. Automation lets employees apply the skills they have worked to develop, be more productive, and accomplish what needs to be done so they can have a life beyond the workplace.
Still wondering if it’s worth it? Consider your own work environment. Are you extracting full value from your people, systems, and business information? If there’s room for improvement, there’s no better time to start than right now.
Wednesday, April 14, 2010
Great Expectations (And How to Manage Them)
Posted by Mark Brousseau
Getting the most out of an AP automation project has a lot to do with managing expectations. Jim Thumma (jthumma@docfinity.com), vice president of sales and marketing for Optical Image Technology, Inc. (OIT), explains:
The greatest barriers to successful AP automation are the same as the obstacles to implementing any new technology solution: the failure to manage people and their expectations.
Rarely does an automation project fail because of inadequate technology. The software that is used for automation today, as well as the hardware that supports it, is mature. Although technology continues to improve, many solutions in the marketplace today are fundamentally strong, reliable, secure, and consistent.
Problems typically surface―and projects sometimes fail―because of people’s mindsets and management’s lack of preparedness to help them to change. Many workers resist changing from something familiar to something new, even if the solution offers better tools than the ones they currently use. After all, as the saying goes, the devil you know is better than the one that’s unseen. At least the old way of doing things is familiar.
If you want to move your people from resistance toward acceptance (and ultimately enthusiastic support) of AP automation or any other new technology initiative, you must give equip them with confidence. This means:
... Sharing your vision with staff early in the planning process;
... Getting their input and feedback as plans develop so they have ownership in the solution;
... Setting clear milestones and benchmarks for progress;
... Communicating transparently and encouraging regular feedback;
... Unearthing what additional training staff will need to succeed;
... Addressing each and every fear staff members have early in the process;
... Starting the training process early so fear of change can be dispelled;
... Making sure rigorous testing is in place so the project is successful when it “goes live”;
... Recognizing employee achievement as worker efforts result in success; and
... Encouraging ideas for continual process improvement.
Poor communication, lack of project transparency, neglecting to inform and prepare workers for new initiatives, and failing to give people the time they need to learn and grow can shake people’s confidence. Project managers must work diligently to keep lines of communication open and to address concerns proactively.
Choosing a technology solution that is user friendly also goes a long way toward managing people’s expectations. Intuitive software and hardware that offer extensive and user-friendly guidance make adoption quicker, easier, and far less costly to support, resulting in a quicker turnaround from project implementation to producing measurable ROI.
Those responsible for choosing an AP solution must carefully consider the needs of their IT staff and end users―before, during, and after implementation, if they expect to achieve their goals. If people are properly prepared for what’s coming, and careful thought, planning, and follow-through are matched with a technology solution that is tailored to business needs, there is no reason any AP automation project should fail.
What do you think?
Getting the most out of an AP automation project has a lot to do with managing expectations. Jim Thumma (jthumma@docfinity.com), vice president of sales and marketing for Optical Image Technology, Inc. (OIT), explains:
The greatest barriers to successful AP automation are the same as the obstacles to implementing any new technology solution: the failure to manage people and their expectations.
Rarely does an automation project fail because of inadequate technology. The software that is used for automation today, as well as the hardware that supports it, is mature. Although technology continues to improve, many solutions in the marketplace today are fundamentally strong, reliable, secure, and consistent.
Problems typically surface―and projects sometimes fail―because of people’s mindsets and management’s lack of preparedness to help them to change. Many workers resist changing from something familiar to something new, even if the solution offers better tools than the ones they currently use. After all, as the saying goes, the devil you know is better than the one that’s unseen. At least the old way of doing things is familiar.
If you want to move your people from resistance toward acceptance (and ultimately enthusiastic support) of AP automation or any other new technology initiative, you must give equip them with confidence. This means:
... Sharing your vision with staff early in the planning process;
... Getting their input and feedback as plans develop so they have ownership in the solution;
... Setting clear milestones and benchmarks for progress;
... Communicating transparently and encouraging regular feedback;
... Unearthing what additional training staff will need to succeed;
... Addressing each and every fear staff members have early in the process;
... Starting the training process early so fear of change can be dispelled;
... Making sure rigorous testing is in place so the project is successful when it “goes live”;
... Recognizing employee achievement as worker efforts result in success; and
... Encouraging ideas for continual process improvement.
Poor communication, lack of project transparency, neglecting to inform and prepare workers for new initiatives, and failing to give people the time they need to learn and grow can shake people’s confidence. Project managers must work diligently to keep lines of communication open and to address concerns proactively.
Choosing a technology solution that is user friendly also goes a long way toward managing people’s expectations. Intuitive software and hardware that offer extensive and user-friendly guidance make adoption quicker, easier, and far less costly to support, resulting in a quicker turnaround from project implementation to producing measurable ROI.
Those responsible for choosing an AP solution must carefully consider the needs of their IT staff and end users―before, during, and after implementation, if they expect to achieve their goals. If people are properly prepared for what’s coming, and careful thought, planning, and follow-through are matched with a technology solution that is tailored to business needs, there is no reason any AP automation project should fail.
What do you think?
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 (epearce@egisticsinc.com) 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?
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 (epearce@egisticsinc.com) 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?
Thursday, October 22, 2009
Healthcare System Automates AP
By Mark Brousseau
Catholic Healthcare West (CHW) has improved the productivity of its invoice processing by 12 percent by implementing a data capture solution from Kofax, Beverly A. Carling, manager, accounts payable at CHW, said yesterday at Transform 2009, the Kofax Annual Conference, held October 21-22 at the Manchester Grand Hyatt, in San Diego. What’s more, Carling expects productivity to climb further as the organization becomes more experienced with the automated invoice technology. “We are projecting a productivity gain of 25 percent in 2010 compared to 2008,” Carling told attendees.
With the Kofax solution, CHW’s validators can now process 2,100 invoices per day, Carling said. “That’s a lot of transactions,” she said, adding that the organization now has an average of 1-2 days of unprocessed invoices in the queue – far below industry average for AP departments.
CHW is a healthcare system comprised of 41 acute care hospitals and approximately 20 health-related affiliated corporations located in California, Arizona and Nevada.
CHW implemented Kofax Advanced Data Capture earlier this year. It also uses ProcessFlow to manage AP work queues. The implementation of the Kofax technology came as CHW was consolidating its 30 invoice processing facilities, which processed about 1.6 million invoices a year (about a third of which are handled electronically), into two centers located in Sacramento and Phoenix. At the end of the transition, CHW’s invoice volume rose to 1.7 million invoices annually.
“Our goal was to build an AP center of excellence,” Carling said.
The Kofax solution is delivering data capture read accuracy of 80 to 85 percent, Carling explained. “We’re still experiencing some false positives, but we have an action plan in place to address that,” Carling said. “I’m expecting that we’re going to see results of 95 percent.” To eliminate some manual processes, CHW has 75 different AP companies set up in its system – providing the ability to read the name on an invoice and convert it into an AP number. About 65 percent of CHW’s total invoice volume is processed through data capture. “Data capture has helped us standardize what we are putting into the system and reduce the number of manual errors that we may have.” Carling said.
CHW’s results are even more impressive when you consider the complexity of invoice processing. The organization has tens of thousands of vendors, Carling said, and there is no standard of how vendors present the data. “And we don’t really have any leverage to dictate how data is presented.”
But the results are impressive. And additional savings may lie ahead.
“We haven’t been on data capture very long,” Carling said. “We continue to do issues tracking, mostly on the false positive side, and look for ways to improve the quality of the data capture.”
Catholic Healthcare West (CHW) has improved the productivity of its invoice processing by 12 percent by implementing a data capture solution from Kofax, Beverly A. Carling, manager, accounts payable at CHW, said yesterday at Transform 2009, the Kofax Annual Conference, held October 21-22 at the Manchester Grand Hyatt, in San Diego. What’s more, Carling expects productivity to climb further as the organization becomes more experienced with the automated invoice technology. “We are projecting a productivity gain of 25 percent in 2010 compared to 2008,” Carling told attendees.
With the Kofax solution, CHW’s validators can now process 2,100 invoices per day, Carling said. “That’s a lot of transactions,” she said, adding that the organization now has an average of 1-2 days of unprocessed invoices in the queue – far below industry average for AP departments.
CHW is a healthcare system comprised of 41 acute care hospitals and approximately 20 health-related affiliated corporations located in California, Arizona and Nevada.
CHW implemented Kofax Advanced Data Capture earlier this year. It also uses ProcessFlow to manage AP work queues. The implementation of the Kofax technology came as CHW was consolidating its 30 invoice processing facilities, which processed about 1.6 million invoices a year (about a third of which are handled electronically), into two centers located in Sacramento and Phoenix. At the end of the transition, CHW’s invoice volume rose to 1.7 million invoices annually.
“Our goal was to build an AP center of excellence,” Carling said.
The Kofax solution is delivering data capture read accuracy of 80 to 85 percent, Carling explained. “We’re still experiencing some false positives, but we have an action plan in place to address that,” Carling said. “I’m expecting that we’re going to see results of 95 percent.” To eliminate some manual processes, CHW has 75 different AP companies set up in its system – providing the ability to read the name on an invoice and convert it into an AP number. About 65 percent of CHW’s total invoice volume is processed through data capture. “Data capture has helped us standardize what we are putting into the system and reduce the number of manual errors that we may have.” Carling said.
CHW’s results are even more impressive when you consider the complexity of invoice processing. The organization has tens of thousands of vendors, Carling said, and there is no standard of how vendors present the data. “And we don’t really have any leverage to dictate how data is presented.”
But the results are impressive. And additional savings may lie ahead.
“We haven’t been on data capture very long,” Carling said. “We continue to do issues tracking, mostly on the false positive side, and look for ways to improve the quality of the data capture.”
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