7 Serious Problems Your Manual Accounts Payable Processes Could be Causing

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
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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.
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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
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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).
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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.
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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).
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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