Accounts Payable can be simple if it wasn’t for all the paper, as anybody who works in the space will let you know. Paper-based, handbook accounting techniques 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 handbook information entry; time misplaced sorting and submitting paper, or making an attempt to find matching buy orders. All of which ends up in gradual processing, which may influence instantly on the organisation’s monetary popularity with companions and suppliers. What’s extra, handbook AP techniques make it virtually unimaginable to fulfill the regulatory and compliance calls for of Sarbanes Oxley, IFRS and others for full doc traceability and auditability.
All in all, it’s a recipe for a fruitless paper chase. Throwing manpower at the downside isn’t a viable resolution. More individuals means extra invoices processed – however employment and labour prices are important for such expert workers, which limits enlargement in the AP operate. On common, a full time AP worker can course of round 8500 invoices per yr utilizing handbook processes. Yet world-class firms can course of upward of 80,000 invoices per individual per yr – a quantum leap in effectivity.
Flicking the swap
So how is a ten-fold increase in productiveness doable? It’s merely a query of automating as many features of the AP operate as doable. The actual prices concerned in AP are the man-hours concerned in handbook duties, together with: discovering buy orders and good obtained notes; checking and matching these; handbook information entry into core enterprise techniques equivalent to ERP; handbook validation; processing complicated invoices which can contain checking in opposition to service stage agreements, and extra.
Even extra prices are incurred in duties equivalent to long-term submitting and storage of paperwork, workers turnover and instructing techniques to new workers. If these duties will be automated, then accounting workers will be redeployed in additional strategic roles equivalent to information evaluation, and never be concerned in time-consuming paper trails.
The final purpose is typically 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 mechanically. And though it’s not but doable to flick off the gentle swap all the time, the latest-generation bill information seize and processing options actually do ship good points in productiveness of as much as 1000%, serving to to show AP right into a revenue centre, not a value centre.
Let’s take an in depth have a look at precisely how this may be achieved. We will use a real-life instance of the AP division of a big enterprise in the licensed commerce, which undertook a phased migration from paper-based handbook 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 among 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 think about the choice to deploy, DrinkCo undertook a proof-of-concept train with Digital Vision [http://www.dvtl.co.uk] that demonstrated that ROI was doable inside months, fairly than years.
The proof-of-concept was based mostly round an bill seize resolution from Paradatec, built-in with information extracts from the Peoplesoft system in order that invoices will be matched with buy orders and items obtained notes. This demonstrated that prime ranges of accuracy have been doable with information seize on the majority of invoices obtained.
Before optimisation of the seize course of, information seize on basic 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 engine’s AI guidelines may very well 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 photos saved in an IBM Content Manager repository.
When the inexperienced gentle was given to proceed with the automation challenge, further pressures reared their head. One of DrinkCo’s places of work was to be closed and the work transferred to its Midlands HQ. This additionally meant redundancies amongst AP workers – which utilized further stress to get the automated bill processing system dwell as rapidly as doable. As workers was leaving, a backlog of invoices was increase.
The resolution was deployed in simply 8 weeks. The backlog of 4500 invoices constructed up whereas workers have been leaving was handled by simply 4 workers, who validated and corrected the backlog in lower than three days. Under its earlier system, clearing a similar-sized backlog would have taken 12 workers over 10 days – clearly demonstrating the financial savings in time and manpower doable with the automated resolution, and instantly delivering ROI. The AP staff continues with 4 validation workers, and the challenge achieved full return on the authentic funding in simply 8 months.
Planning for lights-out accounting
As effectively as exhibiting the ROI doable 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 doable, conduct a pilot to make sure that invoices will 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 techniques to automate bill matching with supporting documentation equivalent to buy orders, and to spotlight any exceptions (e.g. invoices with out orders) which should be escalated into the workflow of an authorised member of workers. This workflow needs to be ruled by customised, business-specific guidelines, to allow AP workers to handle bill processing by exception fairly than hands-on – releasing workers to carry out extra strategic duties.
Third, use an bill automation system which ensures that each transaction, modification and motion of knowledge 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 provide full visibility of the bill’s path by the organisation. This proof eases audit pressures that, in flip, will be transformed to lowered audit prices.
Given the compelling proof of ROI from AP automation, it’s not a case of if you’ll ever be capable of flip the lights out, however whether or not you possibly can afford to not.