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More often than not, when an individual or organisation considers the benefits of supplier invoice automation, they will focus on a few key points, normally the easy to define and associate a cost to.

However, as with all technology, solutions designed to automate this process advance in not only the solution capabilities but by default the benefits they can offer.

If you work in an organisation that is considering supplier invoice automation, or you are involved in the project itself, it is worth considering the multitude of additional benefits that can be gained from leveraging technology.

No longer is it simply a case of “how many head counts can we save” vs “how much does this solution cost”. With the move to SaaS, and cloud based technology, even these numbers are often not as clear as they once were.

Equally, organisations have typically found that they may not make headcount reductions, rather they will leverage the knowledge and skills of their teams to deliver more cost benefit to the business.

So, with this in mind, the following are just a few of the benefits an organisation may gain from supplier invoice automation. Traditionally, a number of these would have been considered “soft” benefits. Now, it can be easier to associate a real cost, and subsequent benefit and return on investment.

1. Improving moral, and reducing staffing turnover

Supplier invoice automation solutions are designed to remove the most tedious and repetitive tasks faced by your Accounts Payable teams. No longer are stacks of invoices manually handled, sorted, coded, filed.

All of these steps can be completely removed with a strong solution. If you add in e-mail capture or a supplier portal, then manual touchpoints are reduced even further.

This may seem like a very difficult benefit to associate a cost to, but consider the amount of time that is spent on recruitment; agency fees, interview time, scoring, decision-making, wages for anyone involved in the process.

Then consider the amount of time it takes to on-board a new employee and the costs of this; IT set up, payroll, HR, and again associated wage costs.

Now, how long does it take to train a new starter to use your systems? How long before they are able to effectively code an invoice with minimal risk of errors (if ever).

If you are in the early stages of a project, these costs can seriously add up. Whilst you may not have the answers yourself, try engaging with the heads of each of these departments and ask them to provide the associated costs.

By removing the most tedious and repetitive tasks, and upskilling your team, you will see a reduction in staff turnover, people want to feel valued, they want to feel that their contribution is valued, and in most cases they want to work in an environment that offers them a future. Remove the worst elements of a job, and people are more likely to invest themselves into your business.

You may even want to consider this one step further, a report published by Regus Workplaces in 2017 suggests that more than 50% of global workforces work remotely from their main office for at least 2.5 days a week.

We already know that a person’s work / life balance is normally one of the key drivers for employees moving jobs, with supplier invoice automation technology, there is very little reason that some work expected of your AP team cannot be completed remotely.

A final point in this section, for now, is to consider whether you ever have to employ temporary staff to support the function. Again, a good solution could remove this requirement for your business. The savings are not just in the costs of recruiting, paying, etc. but will also include savings from errors, duplicate payments, recover auditing etc. etc.

2. Reduced costs associated to storage

Whatever your process is before implementing a supplier invoice automation solution, there are going to be costs that you may not even have considered when it comes to the storage of associated information.

As previously, this is not something that is normally taken into account, but should be.

If you can remove the costs of manually storing all the documents associated with a purchase and an invoice, they will soon mount up. Consider, floor space for filing, 3rd party contracts for shredding and disposal, to name just a few costs from a completely paper based process.

Now, consider if you do have a partially electronic process. You scan your invoices and PO’s for storage. By leveraging a proper automation solution, there is a reduced need for the high support & maintenance of document management solutions, reduced impact on internal IT costs such as server capacity or SaaS costs for hosting.

Again, you will likely need to engage with the people whose budgets these costs are associated to, in order to be able to apply a number to them. But there will be one, and if there isn’t? Maybe there should be, how can your business know that the document disposal service they have is the best for them if they don’t know the costs.

3. Supplier reconciliation statement handling

Recently, ITESOFT have been exploring the costs and benefits of supplier portals. Some of this has involved considering the wider benefits of supplier invoice automation, to suppliers themselves.

Alongside this, something we quickly established is that the cost of managing supplier reconciliation statements is vast.

This is also something that it is very simple to associate a cost to, simply put:

How many supplier invoices do you receive?

What is the average time spent handling them? (consider all time spent here, including in the business, chasing lost invoices and purchase orders).

What is the recognised hourly cost of one person to the Accounts Payable department? (Again remember to talk to the right people, what are the tax costs, benefit costs, desk space and utility costs etc.)

Now for some simple maths…

Before we start I should say, we are just taking some very low figures for the purposes of this, you will need to establish what these figures are for your organisation and don’t be surprised if they are significantly higher!

But for the purposes of this article, let us say you have;

  • 2000 suppliers on your ledger
  • 25% of these send a supplier statement each month
  • Each statement takes 1 hour of business time to manage
  • 1 hour of cost to the business for an employee is £20

2000/100*25 = 500 supplier statements PCM.

500*12 = 6000 supplier statements PA.

6000*£20.00 = £120,000 PA

Yes, that reads as One Hundred and Twenty Thousand Pounds a Year spent handling reconciliation statements.

What if you could remove this tedious, boring element of the job? What if your suppliers could reconcile their own accounts based off of information you have made available to them via a supplier portal.

Supplier invoice automation is not necessarily just about capturing an invoice, it includes offering organisations even more ways to do business together, reducing the costs and impacts for all parties. Nowhere is this more obvious though than within a high quality supplier portal.

Food for thought

Hopefully this will have given you some food for thought, and you will start to really consider the positive impacts that automation solutions can have on a business, both in terms of its bottom line and also the way in which it is perceived internally and externally.

This is not an exhaustive list of additional benefits that you could be considering, and even then not all of these will apply to every organisation.

Maybe a good place to start, if you or the company are looking at solutions, is by really truly defining the current processes, and understanding all the costs associated to them.

Consider not just the physicality of how an invoice is processed, but who this impacts on at every step. From your AP team, to the department heads signing off on purchases, to the Directors who need to know where spend is happening, and to your suppliers who just want to get paid on time.

If you would like some more information, ITESOFT recently ran a webinar looking at some key elements of building a successful business case.