When it comes to determining the cost of your accounts payable processing, don’t forget to factor in the time your staff spends processing invoices — time they could be spent working on other things that bring more value to your business. Streamlining, standardizing and automating many of your company’s financial functions, from accounts payable to payments, saves you money and time and allows your staff to become more valuable assets.
Studies have shown that the most successful companies spend considerably less time processing transactions than less successful firms — 56% vs. 30% according to one survey.
If you have not done so already, now is a good time to consider improving your transaction processing. The good news is that there is a relatively straightforward process for taking inefficiencies out of your financial processes.
- Standardize processes: Before setting up a standard process, you first need to outline your existing process, paying special attention to identifying bottlenecks and redundancies. Itemize inconsistent financial data and systems and then set up a standard process that will be used going forward. Determine if the change in processing will require any employees to have additional training and take steps to make sure they get the training they need. You also should consider a procure-to-pay (P2P) solution that gives you a holistic approach to streamlining your operations and one that you can integrate into your existing ERP system.
- Create benchmarks: Once you have solidified the new process, establish benchmarks that allow you to measure the finance function’s performance. It should include items like cost reductions and time savings. Check your progress against these benchmarks on a regular basis so you can spot problem areas quickly and make adjustments as needed.
- Improve process: To get the full benefit of process standardization, you need to digitize and automate your processes. Your best option is a cloud-based solution that provides real-time visibility into all transaction data as well as reports on the status of invoice and payments.
The amount of savings per company varies by company size and the number of invoices or payments processed. According to APQC, a consulting company with a focus on benchmarking, and process improvements, top-performing companies can process $1 billion in payables revenue with just two people; low performers need 10. Imagine having the talent of those eight employees focused on things like better forecasting, performance analytics and providing actionable data to finance executives to allow them to take more control over managing spend and working capital.