“It was the best of times, it was the worst of times…” So begins the classic novel, A Tale of Two Cities, by Charles Dickens. It refers to the premise of the story: A time of despair and suffering on one hand, and joy and hope on the other. It also began our own story, “A Tale of Two AP Departments,” with Chapter 1 about the despair and suffering of the AP department that still struggles with manual payables processes (introducing our character Mister John Jones) and the joy and hope of the AP department that is already realizing the benefits of automating its invoice processing workflow (introducing our character Miss Jane Smith).
John is being challenged by senior leaders to reduce costs and expenses, starting with the finance and accounting departments. When considering all the costs of a manual payments process—facility, salaries, paper, shipping and storage, time—the average cost of an invoice is around $15.551. As the company grows, so do the piles of paper documents and payroll costs when he has to keep adding staff. John feels like invoicing processing costs will be forever on the rise.
Not only that, the average time it took to process an invoice, from receipt of the document to paying the bill, was 33 days2. Forget about being able to claim early payment discounts, John and his team were often paying late payment penalties. John feels a lot like Bob Cratchit in A Christmas Carol (another Dickens novel) and his team’s morale is low feeling like their work is drudgery.
In addition to saving money with her cloud-based AP automation solution—the average cost of processing was reduced to $3.203—Jane and her AP team enjoy a combined benefit of avoiding late payment fees and being able to take advantage of early payment discounts. Not to mention the significant cost savings on consumables that most companies don’t factor into the cost of processing an invoice. Jane was a hero in her company when all of those savings applied directly to the bottom line. They celebrated with cake in the breakroom.
And since Jane and her AP team are able to process a higher volume of invoices in a much shorter amount of time—only taking an average of 3 days to process a document4—it allows for a greater degree of growth while maintaining existing staffing levels. AP staff is energized about performing more strategic and value-added tasks, such as negotiating supplier pricing, setting standard processes, and developing best practices.
How can John turn things around? He needs to find a cloud-based automation solution that:
- Offers maximum flexibility and customization according to their business goals
- Allows suppliers to submit invoices in the format they choose
- Leverages advanced technologies such as OCR, smart data extraction, and machine learning to power a complete, end-to-end invoice processing workflow, from receipt of document to paying the bill
When he finds that solution with Yooz, his team is cleared of mundane, inefficient and cost-causing AP processes, and finance leaders at his firm now have valuable insight into utilized resources, systems, and financials. And John’s AP department is actually turned into a profit center.
John and Jane have lunch together, outside of their respective offices, and collaborate on ideas about how to make the most of their AP automation solution. Instead of asking, “How do we manage this ever-growing pile of invoices?” they are instead asking, “How can we allocate our financial resources that have been freed up as a result of automating?” They are excited to present ideas to their senior leaders, and Jane shares a piece of her celebration cake with John for dessert.
It was the best of times.
Download our infographic, The Highs and Lows of AP Automation for a quick reference on the benefits of automating your invoice processing workflow.
1–4IS YOUR AP PERFORMANCE TOP TIER? HOW TO USE KEY METRICS TO CHART YOUR AP IMPROVEMENT JOURNEY, 2017, Institute of Finance Management (IOFM), Diversified Communications