The growing divide between the most and least efficient accounts payable departments is increasing, with the cost of doing nothing resulting in decreased productivity and profitability.
A recent report by Ardent Partners revealed that the Top 20 percent of accounts payable departments are reaping the benefits of automating their accounts payable processing, taking just 3.3 days to process an invoice (1).
The question now is no longer if accounts payable automation solutions for MYOB, Xero & Reckon should be deployed, but if your organisation can afford the ramifications of not automating your accounts payable operations?
Choosing to do nothing is still an option for some, but effective CFO’s are calculating the cost of not automating accounts payable processing.
Invoice processing costs
How much does it currently cost your organisation to process an invoice?
Over a decade ago, Ardent’s analysts coined the term “20/20” when it came to invoice processing, because the average time to process an invoice was roughly 20 days and the average cost to process an invoice was $20 (1).
Market averages are now $14.21 and 12.4 days to process an invoice, with best-in-class performers taking 3.7 days at a cost of $2.42 (1). Almost three quarters of these organisations automatically route their invoices for approval, meaning their invoices are automatically processed in a much more efficient manner.
Most Australian businesses are currently reaping the benefits of moving to online financial accounting systems, including MYOB, Xero and Reckon. Automating your accounts payable processing enhances the effectiveness of those systems, by driving further efficiencies.
Missing early payment discounts
The Top 20 percent of accounts payable departments know that early payment discounts result in reduced cost of goods sold (COGS). Inversely, missing out on those early-bird payment options impact cashflow management and, ultimately, business profitability.
Automation enables organisations to participate fully in supplier discounting programs, with 17.2 percent of best-in-class accounts payable departments leveraging the advantage of these programs, compared to 2.4 percent of all other businesses (1).
Manual data entry errors are often the biggest motivating factor for organisations to automate their accounts payable processing, with incorrect invoice entry resulting in incorrect payments and/or time spent resolving mistakes.
Intelligent data capture is one of the benefits of automation with invoice data automatically validated, matched and posted for payment (assuming all relevant conditions are met).
Automation also decreases invoice exceptions, with the best-in-class accounts payable departments processing half (8 percent) the exceptions of the average department (16.4 percent) (1).
Cost of filing, searching and retrieving files
Storing invoices, finding invoices and providing invoices for auditing purposes takes time. People will often make copies of invoices and keep them in their personal files, which also results in duplication and unnecessary storage costs (2). For organisations with multiple offices, there are also costs associated with moving paper from one office to another via mail or express delivery.
Business Process automation reduces storage costs and enables organisations to improve productivity through the sharing of information in real-time and supporting mobile work arrangements.
Automate accounts payable in MYOB, Xero & Reckon
Colourworks Australia has been providing leading business technology services for over 30 years. Through our product Autofile Purchase to Pay, we provide businesses of all sizes, in all industries with a complete business technology service. And as integration partners with MYOB, Xero & Reckon, you can be assured of a seamless improvement in your business productivity.
Contact Colourworks Australia today on 1300 351 594 to learn more about our Autofile Purchase to Pay automated business technology service.
- Ardent Partners 2014, ePayables 2014: The Quest, May 2014
- David Litzenberg, 2014, The cost of doing nothing: What every CFO should know about accounts payable automation, Tungsten Corporation PLC, pp 1-7