Digital technology has transformed the way we do business, and its presence is especially apparent in front office and customer-facing transactions. But all too often, organizations neglect the back office when it comes to paperless initiatives, and they are leaving money on the table in the form of time- and labor-intensive processes.
Enterprise organizations have led the charge in recent years to apply the same resourcefulness to their payables operations that they are already applying to their front offices. They have removed most of the manual roadblocks to accounts payable (AP) efficiency, including paper invoice processing, resulting in a low cost per invoice and more productive workforces.
Small and mid-size companies are now following suit, seeking to get a handle on excessive paper volumes. However, while the goal to reduce or even eliminate paper is a valid starting point, many companies begin the journey, but stop short of the kind of transformation that is possible with a holistic Invoice Workflow Automation (IWA) solution.
This trend can be attributed to budget concerns, certainly. But PayStream Advisors’ research has also shown a tendency for managers and directors to claim that their current processes work well enough to get the job done. If they do recognize high paper volume as a significant problem, they typically find a way around it. Many times, this involves some combination of scanning and email. They may scan paper invoices from suppliers, then attach them to an email to route for approval, then follow up on those emails if approval is overdue.
These kinds of workaround strategies may do the job in the short-term, but the processes are time-consuming and highly irregular, varying greatly depending on which staff member receives the invoice. Organizations that use an automated, standardized process experience fewer delays in invoice approvals and, consequently, fewer late payments than those who use a combination of scanning and emailing.
Additionally, the more scanning, emailing and manual processing involved in payables transactions, the more disputes crop up for AP staff to resolve and the higher the cost per invoice. Staff members are pulled from strategic tasks to sort through emails so they can answer questions from vendors wanting to know when payment can be expected.
The following table contains calculations of organizations’ labor costs for dispute management, assuming an average annual salary of $45,000 per AP staff member, three weeks of paid time off (PTO), two weeks of combined holiday and sick leave, and 20 percent overhead calculation.*
Annual AP Issue Resolution Costs
| Hours Spent | Annual Costs Per Employee |
| 1-3 | $1,350 – $4,050 |
| 4-8 | $5,400 – $10,800 |
| 9-20 | $12,150 – $27,000 |
Getting rid of paper is a good place to start, but it shouldn’t be the end goal. Organizations that persist in their process transformation efforts yield tremendous benefits including, but not limited to: Quicker approval times, increased productivity and improved visibility over liabilities. With configurable approval hierarchies and automated dispute management tools, dynamic IWA solutions essentially remove non-value-added tasks from AP staff’s workload.
* Source: PayStream Advisors Invoice Workflow Automation Report