Skip to content

How to Create a Business Justification for Automated Invoice Processing - Part 3

John Stinchcombe
By John Stinchcombe, 05 January 2021

In this 3-part guest blog, digital transformation expert John Stinchcombe considers how end customers can create a business justification for invoice process automation.

Part 1: Introduction, how automated invoice processing solutions work, key success factors for this software application

Part 2: Factors to consider when building a business justification, risks vs rewards.

Part 3: Implementation and ongoing costs, financial and non-financial outcomes, summary.


Part 3

Part 1 and Part 2 have covered the background of automated invoice processing solutions and factors that affect the invoice processing and why to consider them when building a business justification. Now Part 3 will discuss the costs, outcomes and give a summary of the process and its value.


Implementation and Ongoing Costs – Maintaining the Software, Solution or Service

It wasn’t so long ago that the entry-costs for a sophisticated invoice processing system capable of delivering modest levels of automation would have been over £25,000 for a perpetual license, setup charges and on-going support fees.  It wasn’t unusual for customer’s with larger volumes and more complex requirements to spend over ten times this amount.

The SaaS model along with machine learning and a much broader target base has reduced these costs considerably.  Most systems still use the annual volumes of invoices as the basis for charging – however, in a SaaS regime, the approach of paying for a perpetual license up-front along with an annual maintenance charge has been abandoned in favour of subscription contracts that include support and maintenance.

As a result, organisations of every size can now consider AP Invoice Automation and begin the journey of shielding AP teams from tedious, non-value added and error prone tasks such is the case with processing invoices manually.


Outcomes – Financial and Non-Financial

From a financial perspective, the savings are as follows:

  • Reassignment of AP personnel from a low-value process to areas where they can deliver more benefit to the business.
  • Better and more timely access to data allowing for savings to be made on early settlement discounts and cash flow.
  • Fewer errors meaning that fewer invoices will be paid for goods and services that aren’t supplied, earlier identification of fraudulent invoices and finally, fewer instances of paying for goods and services twice because identical invoices are submitted.
  • Lower labour costs as any peaks in volume can be handled without the need for additional human resources or overtime payments.
  • Lower cost of personnel or staff – as AP users can access the system from any location that is internet enabled, specialist staff can be used in a remote location to handle AP Invoice processing.


From a non-financial perspective:

  • Better staff retention as your AP team can focus on core AP functions rather than low value data entry and matching of invoices against POs.  It’s not pleasant or effective for AP team members to spend time fending off chase calls from suppliers.
  • Better visibility of submitted invoices and payments due – this allows for more a proactive approach and can help focus on key partners in the supply chain as well as improving spend analysis.
  • Fewer errors resulting in less ‘re-work’ and back-tracking to rectify the core issues.
  • Better resilience against fraud attacks from bogus suppliers.
  • Improved supplier relations, e.g., early notification of errors and omissions on invoices, avoidance of the need for suppliers to chase payment, fewer late payments and less credit-stop situations.


Summary

This blog post describes the factors that will impact the level of automation your organisation can expect to achieve and thus forms the basis of a Business Justification.

From the experience of implementing hundreds of systems, it’s reasonable to assert that 80% of customers will experience an increase in the productivity (measured in invoices per annum per full-time equivalent) of their AP Invoice Process of between 3x and 4x of the levels achieved in a manual system. 

As this blog outlines, there are numerous factors in play and if a favourable wind is blowing in the right direction for each of them, your organisation could achieve even greater levels of automation. Some companies handling only electronic or e-Invoice format invoices from a small number of vendors with meticulous attention to data hygiene can achieve over 8x productivity gains over manual systems.


Find Out More:

We use cookies to give you the best experience of using this website. By continuing to use this site, you accept our use of cookies. Please read our Cookie Policy for more information.