6 Strategies for Selecting the Right AP Automation Solution
When it comes to accounts payable efficiency, nothing moves the needle like automation.
Compared to their peers with little or no automation, highly automated payables departments:
• Spend less than one-fourth as much on average to process a single invoice.
• Take less than one-third the time on average to approve a single invoice.
• Report less than half the percentage of invoices that result in an exception.
• Post more than three times the percentage of invoices straight-through to their ERP.
These statistics from the Ardent Partners 2019 State of ePayables Report clearly illustrate why most accounts payable departments achieve fast payback on automation. It also is a reason that 20% of payables departments surveyed by Ardent Partners are increasing their investments in automation.
What is not clear to many accounts payable leaders is how to select the right automated solution.
Here are six strategies for ensuring that your payables department chooses the right solution:
1. Know what you are trying to achieve: Creating short-term and long-term goals is the first step to selecting an automated accounts payable solution. Want to reduce costs? Accelerate invoice approvals? Improve accountability? Establishing your objectives upfront will help keep your evaluation team focused on what is important as it reviews potential solutions.
2. Establish “the ground rules”: Developing functional requirements is critical before diving into technology evaluations. Start by analyzing the total volume of invoices processed by your department each month, where those invoices arrive, the types of invoices that you receive, the rules for approving invoices, and any staff that are part of the approval, posting and exceptions processes. Be sure to involve frontline staff in developing the functional requirements. And be sure to solicit feedback from stakeholders such as procurement and treasury early-on to avoid functional silos, and to ensure that their needs are met. Also make sure that vendors explain “shades of grey” and that you are comfortable with their response.
3. Do not lose sight of the technology: Ensure that the solution will meet your critical needs for receiving, capturing, routing, posting, and reporting on invoices. Look for solutions with configurable workflows that will eliminate paper shuffling, prevent bottlenecks, and control and track invoices, no matter where staff work. Consider the location of approvers and how the solution will accommodate them. For example, are invoices received at multiple locations? Evaluate the level of integration required with downstream systems such as an accounting or ERP application. Also validate any vendor claims regarding flexible configuration, ease-of-use, and system scalability. For instance, you want to avoid solutions that require a programmer (or vendor fees) for basic changes to workflow configurations. It may be helpful to create vendor pricing matrix that includes standard functionality, add-on features, capabilities that require customization fees and maintenance and support expenses.
4. Do not take a vendor’s word for granted: You have too much riding on your accounts payable processes to risk choosing a vendor that will “sell and run.” Validate vendor claims through third-party references. Ask references about their experience during implementation, the ease of use of the system, the vendor’s level of support and compliance with service level agreements and their satisfaction with enhancements to the solution. Do not hesitate to ask references whether they are meeting their business case for accounts payable automation. In addition, it is important to get a clear picture of the vendor’s commitment to research and development. Make sure to also ask the vendor how frequently software enhancements and bug fixes are released and the process that customers use to request software enhancements.
5. Be price sensitive: The pricing models used by many technology vendors are complicated. In some cases, that is by design. Your goal is to uncover all the costs associated with a solution. Determine whether there are any professional services fees required to properly deploy and setup the solution. Understand the costs associated with training your staff. Also, consider any overtime that might be necessary for your staff to work during off-hours to set-up and learn the new system. Ask about annual support costs and fees for system upgrades. And always keep your available budget in mind when evaluating potential solutions.
6. Be sure that your business case covers all the bases: A business case for accounts payable automation should include three key elements: hard savings (e.g. labor costs), soft savings (e.g. faster cycle times, efficiency improvements, enhanced supplier relations) and risk mitigation (e.g. fewer lost or misplaced invoices, better invoice tracking and control, streamlined reporting and disaster recovery). The hard and soft savings spelled out in your business case should include conservative, moderate, and aggressive estimates. Be sure to calculate your current processing costs. A business case for accounts payable automation also should include an estimated return on investment and total cost of ownership.
Following these steps will help ensure that you choose the right payables automation solution.
Looking to automate your accounts payable process? Then Factura.ai wants to speak with you.
Contact us at factura.ai/quiz/ or call 1-833-905-2159 to arrange a no-obligation consultation and online product demonstration.