7 Serious Problems Your Manual Accounts Payable Processes Could be Causing The seven serious problems that we detail on the following pages are significant impediments to operational efficiency and cost savings, and should make you think about automating, or further automating, your accounts payable processes. ICM Document Solutions www.icmdocs.com 800-676-4261 1 High labor cost and low productivity Every invoice received requires the participation of several individuals. When you have hundreds or thousands of invoices to process each month, the time and cost of labor to fulfill the manual functions can become immense. According to a 2013 survey of AP professionals, the majority of respondents (most at companies with $1-5 billion or more in annual revenue) use 5-15 full time equivalents (FTEs) for the task of invoice entry and matching.1 The greatest share of survey respondents reported that the cost to process a paper invoice is $210. In contrast, the largest share of respondents reported the cost of processing electronic invoices is less than $2. Yet the vast majority of companies are still processing most invoices on paper: the greatest share of survey respondents reported that more than 90% of total invoice volume is paperbased. So there is a huge opportunity to reduce costs and increase productivity through AP automation. Depending on where your organization falls in the processing cost range and how much of your invoices are processed manually on paper, the potential for cost reduction by automating accounts payable is significant. You could easily cut processing costs in half. 1 Institute of Financial Operations, 2013 AP Automation Study, July 2013. www.icmdocs.com 800-676-4261 2 Noncompliance 3 Fraud When it comes to accounts payable, one of the key components of Sarbanes-Oxley accounting regulations is “segregation of duties.” In other words, the Requisitioner, Goods Receiver, Approver, and Payer must be different individuals. Ensuring this segregation of duties and a clear audit trail to demonstrate them is key to minimizing regulatory noncompliance risk. But it is difficult in a manual system that doesn’t provide an easy way to document the audit trail and ensure compliance with internal policies and external regulations. According to the 2014 AFP Payments Fraud and Control Survey, 60% of organizations were exposed to actual or attempted payments fraud in 2013. 82% of survey respondents reported that checks were the primary target for fraud attacks at their companies.2 With an average cost of $23,100, fraud is important to prevent. But that requires full, real-time visibility into the AP system and process control that is difficult to achieve manually. 2 Association for Financial Professionals, 2014 AFP Payments Fraud and Control Survey, April 2014 www.icmdocs.com 800-676-4261 4 Duplicate Payments When the AP process is manual and paper-based, there are often multiple copies of any given invoice floating around, and no visibility into that fact. Whether it is because the vendor sent a single invoice to multiple individuals across the company or one department sent it to another, duplicate payments tie up cash flow unnecessarily while the issue gets resolved, and adds time and complexity to the AP process. The risk of duplicate payment is exacerbated when invoices are not paid on time, as vendors often re-send the original invoice. 5 Lost Invoices and Missed Payment Deadlines Without full, real-time visibility into invoices that are in the system, it is relatively easy to miss payment deadlines or lose invoices altogether. This poses cost risk for the organization, as many vendors apply late payment fees, but it also potentially damages the relationship with the vendor, especially if it happens often (just as you are dependent on AR to manage cash flow, so are your vendors). www.icmdocs.com 800-676-4261 6 Failure to Act on Discount Opportunity Writing in Proformative, Finance VP Laresa McIntyre explains why one of the top 10 best practices for AP is to “Watch your payables carefully to take advantage of any discounts being offered by vendors: It can add up to a nice sum by the end of the year.”3 Yet according to the 2013 Institute of Financial Operations survey of AP professionals, the majority of companies typically capture less than 10 percent of early payment discounts. Why? Because a lack of visibility into the AP system makes timing difficult. 7 Difficult Cash Flow Management Efficient AP, explains advisor Ernie Humphrey, is one of the keys to working capital optimization. 4 And according to Capgemini, “By optimizing working capital, the typical Fortune 1000 company would have an opportunity to net over $620 million from optimizing payables.” Yet, “Accounts payable constitutes the biggest drain in the working capital management of most organizations.” 5 3 Proformative, 10 Best Practices for Accounts Payable, 24 Aug 2013. 4 Proformative, Working Capital Optimization: An Enterprise Approach, 17 May 2010. 5 Capgemini, Working Capital Optimization - What’s It All About? 20 Sept 2012. www.icmdocs.com 800-676-4261 The Solution ICM Document Solutions’ affordable Intelligent Accounts Payable Automation solution, AP Center, (www.MyAPCenter.com) is driven by business rules and automated workflow to improve accounts payable processing, from invoice receipt through approvals and payment; and it works alongside and seamlessly interacts with any ERP and accounting system. The solution reduces costs, improves operational efficiency, reduces errors, and improves visibility (which makes compliance, fraud prevention, and cash flow management easier). www.icmdocs.com 800-676-4261 Click here to see for yourself the ROI that AP Center could deliver for your organization or call ICM at 800-676-4261 About ICM Document Solutions: ICM Document Solutions helps organizations, in the United States and internationally, adhere to compliance requirements and improve efficiency. ICM delivers high-quality and complete document and content management solutions and intelligent accounts payable automation. More specifically, ICM provides the following expert and best-in-class products and services: • • • • Capture services including paper documents and film scanning Complete state-of-the-art full document and content management software Intelligent accounts payable automation Professional Services including Business Process Management (BPM), document conversion services, Configuration Management and Data Services (CMADS), and custom software and application development Since 1988, ICM has been offering secure and affordable business automation solutions with unwavering commitment to customer service and a single point of accountability. ICM clients include government agencies at all levels, law enforcement agencies, educational institutions, non-profit organizations, and private sector companies including fortune 500 corporations. For more information about ICM Document solutions go to www.icmdocs.com or call 800-676-4261 www.icmdocs.com 800-676-4261