Automating End-to-End Accounts Payable for the Mid-Market

Transcription

1 Automating End-to-End Accounts Payable for the Mid-Market A Guide to AP Technology for Medium-Sized Organizations Featuring insights on...»» Common Challenges for Mid-Market Businesses»» The Lifecycle of Automated and Efficient Mid-Market AP»» Software Adoption Best Practices for the Mid-Market Underwritten in part by

2 Contents Introduction 3 AP Challenges for the Mid-Market 4 Mid-Market AP Efficiency: An Overview 6 The Trademarks of Mid-Market AP Implementation 10 Conclusion 12 About Yooz 13 About PayStream Advisors 14 2

3 Introduction Accounts payable automation is a relatively new technology, but one that has become highly respected for the efficiency and reduced processing costs it brings to organizations. However, over the past few decades, these benefits were mostly obtainable only by large organizations enterprises with extensive operations and huge budgets. For other organizations, such as smaller companies with far fewer resources to invest in AP solutions, automation adoption was simply not an option. A large barrier to adoption in the mid-market has been the nature of the software s design; solution providers often build their products according to the needs and budgets of larger corporations. However, with the rise of cloud-based configurable technology and the growing demand from smaller organizations, the market for financial software is becoming much more inclusive, diverse, and affordable. Software companies are building and pricing their products in a way that is accessible to the mid-market, bringing those organizations the same benefits and advanced functionality as enterprise-centric solutions, but at a more suitable price point. This publication explores the needs of mid-market organizations, from their greatest pain points to their unique process requirements, and gives an example of an automated AP lifecycle that is optimal for the medium-sized business. 3

4 AP Challenges for the Mid- Market In today s business world, companies of all sizes face problems in terms of productivity and cost control. For medium-sized businesses, scarce and stretched resources often heighten these problems. Fewer employees, more cost-sensitive processes, and smaller investment budgets all mean that productivity breakdowns cause greater issues and are more difficult to fix than in larger organizations. Figure 1 PayStream Advisors 2014 SME report explored trends in AP automation usage among small to medium-sized enterprises (SME). In the SME report, survey-based research showed that the main AP problems SMEs were experiencing revolved around manual processes, lengthy processing cycles, and frequent invoice errors, see Figure 1. SMEs Experience Most Trouble from Manual Front-End Processes Manual routing of invoices 32% Please rate the prevalence of the following problems that lead to late payments and missed discounts in your organizations. Lengthy approval cycles Missing information on invoices 27% 31% Lost invoices 22% Decentralized invoice receipt 20% Large number of exceptions 19% Before medium-sized businesses can move away from manual processes, they must eliminate paper. In a manual system, paper invoices can quickly become overwhelming in volume and diversity. It is almost impossible to efficiently manage paper invoices: there are many difficulties, including matching invoices to their original orders, catching duplicate invoices or invoice errors, and paying them on time 4

5 in order to capture early payment discounts. A manual paper process is also very harmful for control and compliance. Companies that cannot fully see into the lifecyles of their invoices are not able to recognize the weak points in their system. For medium-sized companies, one relatively small mistake can spell much bigger and more serious problems for future operations. Historically, eliminating paper has not been easy for these medium-sized organizations. Research shows that AP automation technology provides answers to invoice management challenges, but mid-market organizations often face barriers to adoption. There is a belief that these businesses cannot afford the advanced software, nor do they have the IT resources to implement, customize, and maintain these solutions. There is also the belief that the length of time it can take to install these systems is also daunting for organizations with smaller operations they often do not want to risk the time and money that must be spent before the product even goes live. What must a solution offer to truly answer the problems and needs of the mid-market? Medium-sized organizations require software that facilitates an easy transition from paper to an electronic invoice format, offers a simple and easy-to-learn functionality, and brings transparency into invoice activity and workflow. Companies also need software that is affordable and requires minimal implementation time and setup. While software with the these features was largely unobtainable for medium-sized businesses a short time ago, the rise of cloud technology has opened the door to mid-market adoption. Now, virtually all organizations can gain the advanced capability and productivity enhancements of top-of-the-line solutions, at a price tailored for their budgets. The following section gives an example of an AP automation technology that is specifically designed to accommodate the diverse needs of medium-sized businesses. 5

6 Mid-Market AP Efficiency: An Overview In AP departments, mid-market businesses are concerned with accurate accounting, time-saving processes, and minimal costs for their invoice process. However, these organizations limited time and resources make these benefits difficult to obtain. An AP automation solution that is made for the mid-market will serve as a support system that brings extra visibility and control into business operations, allowing AP departments to focus on more strategic tasks, such as identifying more cost savings opportunities. Figure 2 1 Mid-Market AP Lifecycle Invoice capture OCR and automatic account assignment Workflow to automate approval Export to financial system Launch payment Invoice Receipt The beginning of any AP lifecycle begins with invoice receipt. Many medium-sized organizations receive thousands of invoices each month, which is often the greatest barrier to overcome in terms of improving processes and moving towards automation. There are many different strategies organizations can use to achieve invoice receipt automation, and while a fully electronic system is a good long-term goal, most medium-sized businesses do not have the time or up-front resources to invest in an elaborate einvoicing network implementation or supplier onboarding campaign. Many businesses must start small, focusing simply on entering invoices into their system electronically. For this reason, solutions geared toward medium-sized businesses are built to improve the current state of an organization s process with simple, yet advanced, scalable data capture technology, such as an inexpensive scanner and optical character recognition (OCR) delivered from an AP automation vendor. Advanced recognition technologies can capture even the smallest line items in a scanned invoice. This ensures higher accuracy and greatly reduces manual reentry and validation, speeding up invoice movement down the line. 6

7 Besides OCR technology, efficient AP solutions also offer other methods for invoice entry that encourage suppliers to participate in automation. Suppliers can access self-service functionalities online, allowing them to verify data and submit invoices electronically and reducing the time and expense for SMEs of keeping up with supplier information and queries. By automating the invoice process, mid-market AP solutions help companies reduce the time and expense of searching for lost documents, and greatly improve the visibility and traceability of data. This helps mid-sized organizations avoid fraud, better manage auditing procedures, and control spend. PO and Expense Reporting Functionality In today s market, it is common for larger organizations to turn to different solution providers for different automation needs. For example, a large enterprise may use one software company for their electronic procurement system and another for their AP management. However, for businesses with less extensive and more centralized operations, leveraging many different solutions is not a practical strategy. Solutions geared toward medium-sized businesses often offer simplified versions of other process functionalities within their product, bringing holistic automation on a smaller and more affordable scale. For example, providers often offer purchase order (PO) requisitioning functionality, allowing users to create POs from their computer or mobile devices. This allows for two- and three-way matching, which validates the invoice before it enters approval workflow and prevents future problems, enabling additional control and visibility in their AP spend. Many solutions also offer expense reporting functionality. For organizations with a smaller workforce, or one that travels only rarely, built-in expense reporting is very appealing. Solutions with this feature can capture and manage expense reports with attached receipts, as well as manage the workflow and archival of contracts and other documents. 7

8 Approval Workflow Efficient invoice management includes automatic GL coding, duplicate invoice detection, and other features that prepare the invoice for the approval workflow. While AP systems for larger organizations often entail extensive workflow routing setup, solutions for mid-sized companies feature a very simple, user-friendly configuration in order to accommodate fewer employees, less time, and no IT resources. The setup can have multiple steps and routes with conditions, as well as easily-activated alerts, escalations, and delegations. Mid-sized AP systems also provide high levels of visibility into these workflows, creating a traceable audit trail for an invoice throughout its lifecycle. Efficient automatic workflows reduce cycle time and helps eliminate late payment penalties and supplier calls, as well as capturing all possible discounts from suppliers. Mobile functionality allows AP employees to approve invoices out of the office and at any time, bringing more speed and flexibility to the process. In addition, approved and paid invoices can be archived for several years to enable quick retrieval and ensure audit compliance. This archive also eliminates the need for offsite document storage. Payment Integration Electronic payment functionality is very important for efficient AP, as it is the final step for a secure and swift workflow. Many solutions offer in-house payment capability, or directly integrate with leading payment solution providers. These offerings include check, ACH, and virtual card management, as well as rebate programs. 8

9 Reporting Reporting and analytics functionalities provide mid-sized companies with vital visibility into spend activity and employee compliance. Dashboard and reporting capabilities improve monitoring and information discovery with KPIs and activity graphs analyzing spend, suppliers, process productivity, delays, and more, see Figure 3. These services allow organizations to fine-tune their current processes to become more controlled and cost-efficient. Many solutions include a document archive and a full-text search that allows users to retrieve files based on any word in the document. Figure 3 Amounts and Invoice Count Example of a Reporting and Analytics Dashboard 14.0% Daily Average of Invoice Recieved This Month Amount $ 40M Dynamic Count Mb 15k 35M Invoices Yoozing 14K 30M 12K 25M 10K Invoices Awaiting for Entry Process 20M 5K 15M 6K Invoices Awaiting for Validation Process 10M 5M 4K 2K January 2013 March 2013 May 2013 July 2013 September 2013 November 0 9

10 The Trademarks of Mid- Market AP Implementation PayStream Advisors 2014 SME report showed that many organizations were not adopting AP automation technology because of resistance from internal change management, difficulty integrating with in-house and supplier systems, and struggles in gaining supplier adoption, see Figure 4. Figure 4 Internal change management 67% SMEs Struggle Against Internal Challenges and Supplier Participation in AP Automation Adoption What challenges do you face in migrating invoices from paper to electronic format? Integration with in-house and supplier systems Gaining supplier adoption Solution does not function as expected 10% 43% 48% These issues result from the fact that smaller organizations cannot easily jump into automation. They face problems in internal and external cooperation, and they fear they cannot easily integrate their existing systems. Fortunately, solution providers with a focus on the mid-market recognize these barriers and have responded accordingly. PayStream s research has found that efficient and successful midmarket AP automation solutions share the following characteristics: Integratable with the Current State: Mid-market AP solutions are built to integrate easily with an organization s current state. Companies can automate their invoice process step by step, starting with an easy-to-use AP automation software that includes portable cloud scanners. With simple but efficient AP tools laying the groundwork, advanced automation like einvoicing networks and full supplier participation will easily follow in time. 10

11 Unobtrusive and Quick to Implement: Cloud-based solutions enable easy and quick implementation, no advanced IT involvement, and minimal user training. These types of systems can be operational within a few hours, rather than days, weeks, or months. They do require some information from the user, such as GL lists, vendor lists, POs, and workflow setups, but after this data is transferred, the system is loaded in a matter of hours and does not disrupt the current business flow. Priced According to Businesses Needs: AP solutions can be priced according to organizations specific financial needs. Many are zero-risk, requiring no investment and no IT costs, and organizations can often try out a solution for free before they make a final decision. In addition, many pricing structures are based on usage, allowing organizations to directly control costs. Many providers allow their customers to cancel any time with no fees. 11

12 Conclusion Mid-market AP performs best with an all-in-one system, one that combines Purchase-to-Pay business functions with advanced document management and payment features all at an affordable price. One example of a modern, mid-market-focused AP automation provider is Yooz. The company s solution offers the components necessary for efficient AP with a design that caters to the requirements of mid-market companies. Yooz boasts more than 30 years of experience in AP automation. The system is customizable and easy to integrate with existing financial systems, ERPs, and accounting packages. It handles invoice receipt, purchase requisition, workflow approval with mobile capability, PO import from the ERP, automatic matching of invoice and PO for approval, and invoice payment. Yooz offers OCR through the high performance technology ITESOFT, with a high level of accuracy that reduces user interaction. Other Yooz features that simplify the front-end invoice process include the YoozStamp (patent pending), a date stamp that is applied on the first page of each document before the scanning phase. The YoozStamp removes the invoice-sorting phase by automatically separating invoices, providing customers with a proof of scan to prevent the risk of scanning the same invoice twice. Businesses can also automate invoice capture directly from their mailboxes with Yooz s capture feature. The solution s easily-configurable workflow offers thorough process visibility, as does its reporting module. Customers can capture all possible discounts from suppliers by compressing cycle times and receive rebates by clearing their invoices with a virtual card. Yooz s solution typically reduces clients processing time and costs by more than 70 percent, and the average cost per invoice goes down significantly from $10 per invoice to $3, depending on invoice volumes. Organizations can test the system for free and only pay for the services they use, and they can also cancel at any time. This SaaS subscription requires no investment, IT, or setup costs, and it only takes a few days to implement. To try out the Yooz solution at no cost, visit 12

13 About Yooz Yooz brings intelligence to AP automation. It is designed and built for the era of cloud computing, empowering SMEs to streamline their financial workflow in order to save time and money. Yooz was initially developed and launched by ITESOFT (PARIS: ITE), a European company that has been a leader in intelligent document capture and process automation for more than 30 years. Yooz is now an independent company within ITESOFT-Yooz Group and has more than 1,300 customers. 13

14 About PayStream Advisors PayStream Advisors is a technology research and consulting firm that improves the way companies plan, evaluate, and select emerging technologies to achieve their business objectives. PayStream Advisors assists clients in sorting through the growing complexities of IT applications related to business process automation with the goal of making objective, analytical, and actionable recommendations. Wherever business process automation technology is an issue, PayStream Advisors is there to help. For more information, call (704) or visit us on the web at 14