Accounts Payable can be straightforward if it wasnt for all the paper, as anybody who works in the space will let you know. Paper-based, guide accounting programs have been the bugbear of company AP departments for many years.
Even the most rigorously organised AP system has loads of alternatives for issues, together with misplaced or misplaced invoices; incorrect guide information entry; time misplaced sorting and submitting paper, or attempting to find matching buy orders. All of which ends up in gradual processing, which might impression instantly on the organisations monetary status with companions and suppliers. Whats extra, guide AP programs make it nearly unimaginable to fulfill the regulatory and compliance calls for of Sarbanes Oxley, IFRS and others for full doc traceability and auditability.
All in all, its a recipe for a fruitless paper chase. Throwing manpower at the drawback isnt a viable resolution. More individuals means extra invoices processed however employment and labour prices are vital for such expert employees, which limits growth in the AP perform. On common, a full time AP worker can course of round 8500 invoices per yr utilizing guide processes. Yet world-class firms can course of upward of 80,000 invoices per individual per yr a quantum leap in effectivity.
Flicking the change
So how is a ten-fold enhance in productiveness attainable? Its merely a query of automating as many features of the AP perform as attainable. The actual prices concerned in AP are the man-hours concerned in guide duties, together with: discovering buy orders and good obtained notes; checking and matching these; guide information entry into core enterprise programs resembling ERP; guide validation; processing advanced invoices which can contain checking in opposition to service stage agreements, and extra.
Even extra prices are incurred in duties resembling long-term submitting and storage of paperwork, employees turnover and instructing programs to new employees. If these duties may be automated, then accounting employees may be redeployed in additional strategic roles resembling information evaluation, and never be concerned in time-consuming paper trails.
The final intention is usually known as lights-out accounting [http://www.dvtl.co.uk/index.pl?art=14] in different phrases, switching off the lights whereas the work proceeds robotically. And though its not but attainable to flick off the gentle change all the time, the latest-generation bill information seize and processing options actually do ship positive aspects in productiveness of as much as 1000%, serving to to show AP right into a revenue centre, not a value centre.
Lets take a detailed take a look at precisely how this may be achieved. We will use a real-life instance of the AP division of a giant enterprise in the licensed commerce, which undertook a phased migration from paper-based guide processing to completely automated bill processing.
Raising a glass to automation
DrinkCo is a UK-based enterprise that owns a number of well-known pub chains. As one in all the largest pub operators in the UK, the firm processes 600,000 invoices per yr. As a Peoplesoft (now Oracle) Accounts consumer, DrinkCo wished to deploy an bill seize [http://www.dvtl.co.uk/index.pl?art=31] resolution to carry key monetary information instantly into the Peoplesoft resolution and speed up processing.
With ROI being a key consider the choice to deploy, DrinkCo undertook a proof-of-concept train with Digital Vision [http://www.dvtl.co.uk] that demonstrated that ROI was attainable inside months, reasonably than years.
The proof-of-concept was primarily based round an bill seize resolution from Paradatec, built-in with information extracts from the Peoplesoft system in order that invoices may be matched with buy orders and items obtained notes. This demonstrated that top ranges of accuracy had been attainable with information seize on the majority of invoices obtained.
Before optimisation of the seize course of, information seize on common invoices was 73%. By specializing in invoices from large-volume suppliers, this was raised near 100%. Furthermore, the course of proved that the synthetic intelligence system carried out no matter bill structure, and that that the bill seize engines AI guidelines could possibly be tailored to deal with completely different bill layouts, or these from new suppliers.
On finishing the proof of idea, Digital Vision gave an in depth specification to DrinkCo to combine the Paradatec seize resolution, SpeedKey validation and Contempus bill processing with Peoplesoft Accounts, with bill photographs saved in an IBM Content Manager repository.
When the inexperienced gentle was given to proceed with the automation mission, further pressures reared their head. One of DrinkCos workplaces was to be closed and the work transferred to its Midlands HQ. This additionally meant redundancies amongst AP employees which utilized further strain to get the automated bill processing system reside as shortly as attainable. As employees was leaving, a backlog of invoices was increase.
The resolution was deployed in simply 8 weeks. The backlog of 4500 invoices constructed up whereas employees had been leaving was handled by simply 4 employees, who validated and corrected the backlog in lower than three days. Under its earlier system, clearing a similar-sized backlog would have taken 12 employees over 10 days clearly demonstrating the financial savings in time and manpower attainable with the automated resolution, and instantly delivering ROI. The AP crew continues with 4 validation employees, and the mission achieved full return on the unique funding in simply 8 months.
Planning for lights-out accounting
As nicely as exhibiting the ROI attainable from automation, the course of adopted by DrinkCo is a superb instance of how companies can plan their transfer towards lights-out accounting. First, consider the bill seize resolution, and if attainable, conduct a pilot to make sure that invoices may be captured prepared for processing with near-100% accuracy and with excessive ranges of automation. This builds the funnel for automated processing and helps in defining subsequent workflow paths.
Second, combine seize with core enterprise programs to automate bill matching with supporting documentation resembling buy orders, and to spotlight any exceptions (e.g. invoices with out orders) which must be escalated into the workflow of an authorised member of employees. This workflow needs to be ruled by customised, business-specific guidelines, to allow AP employees to handle bill processing by exception reasonably than hands-on liberating employees to carry out extra strategic duties.
Third, use an bill automation system which ensures that each transaction, modification and motion of information is absolutely audit trailed, offering irrefutable proof of any work-around and non-sanctioned processes. The log needs to be saved with the digital model of the bill to offer full visibility of the bills path via the organisation. This proof eases audit pressures that, in flip, may be transformed to diminished audit prices.
Given the compelling proof of ROI from AP automation, its not a case of if youll ever have the ability to flip the lights out, however whether or not you’ll be able to afford to not.