How Much ROI Can You Expect from Accounts Payable Automation

The information provided above is compelling but the question is — How much can your organization save? How much more efficient can you be? What can you expect as a reasonable return on investment (ROI)?

While we realize that every situation is unique, these four general scenarios can help you determine the range of savings and improved efficiencies you can achieve

As you review each of these four scenarios, determine which of these is closest to your current environment.

Scenario 1: Manual (Non-automated), Very High Cost

1. Paper-based invoices (most or all received on paper)
2. Interoffice mail (overnight mail) and faxes
3. No front-end scanning of invoices
4. Non-documented and/or chaotic approval methods
5. No scanning of paid invoices
6. Manual or ad-hoc approval workflow
7. No visibility/follow-up to inquiries/ no knowledge of liabilities
8. No process monitoring metrics
9. No vendor help desk—can’t find records when people call for status; Questionable vendor relations
10. Storage issues – where do I put all this paper?
11. Invoices and other docs are stored in disparate locations
12. Late payment penalties/duplicate payments; can’t take advantage of early-pay discounts
13. No exception-handling process

If this is your scenario, your efficiency gain from automation can range from 100-150%. Your ROI can range from 100-300%.

Scenario 2: Low Automation, High Cost

1. Still mostly paper invoices
2. Some fax or e-mail invoices
3. Limited front-end capture/invoice imaging
4. Documented process for approval but lacks automation
5. May scan images after the invoices are paid
6. No workflow tools (relying on e-mail)
7. No visibility – Error-prone and discrepancy prone
8. Limited process metrics
9. Better vendor relations but lots of staff time needed
10. May have storage issues, on or off-site storage
11. Invoices may not be stored somewhere accessible to all who need them, no easy way to search for invoices and related docs
12. Over payments and late payments may be issues
13. Clunky exception-handling process
14. No ERP integration

If this is your scenario, your efficiency gain from automation can range from 75-100%. Your ROI can range from 90-140%.

Scenario 3: Moderate Automation, Moderate Cost

1. Mixture of paper and electronic invoices
2. Greater percentage of faxed and e-mailed invoices
3. Full scanning of invoices up-front
4. Documented and automated approval process
5. High percentage of purchase orders with automated handling
6. Automated rules-based/electronic routing and approva
7. Visibility including audit trails and reports
8. Process metrics to enforce performance standards
9. Limited staff devoted to vendor inquiries and better relationships
10. Paperless processes with no storage issues
11. Ability to easily search for and locate invoices
12. No issues with overpayments or late payments
13. Smooth and automated exception-handling process
14. ERP integration limited to flat file transfers

If this is your scenario, your efficiency gain from increased automation can range from 25-50%. Your ROI can range from 30-60%.

Scenario 4: High Automation, Low Cost

1. Most or all invoices are electronic
2. Invoice data is intelligently captured and extracted
3. Front-end scanning and capture of any paper image
4. Automated escalations
5. Full/high visibility
6. Precise/finely tuned process metrics
7. Minimal-to-no staff because you have a vendor dashboard to handle vendor payment inquiries
8. Totally paperless environment
9. Global/24x7 access to all docs and data
10. Cash-flow benefits from early-pay discounts and vendor negotiations
11. Hands-free exception-handling process; high degree of automation
12. Full ERP integration

If this is your scenario, you have already received the benefits of automation. Congratulations.

Assuming that you fall into one of the first three scenarios (like most companies), there are several options for you to embrace the Automation Imperative and turn it into your own success story.

Naturally, we hope that you will talk with us about the benefits of accomplishing this with a Web-based SaaS solution. Here are some steps to consider.

First, sit down with a knowledgeable AP expert (preferably an unbiased person outside your company) and map out your current processes — in other words, you want to capture the “As is state.” You will then be able to properly plan for the “desired state.”

It bears repeating again — the more manual and ad hoc the exiting processes — the greater the opportunity for cost savings and efficiency improvements.