The best practice techniques of accounts payable automation: top performers revealed
Electronic invoicing, Finance shared services
Earlier this year, PRGX, a leading provider of audit recovery tools, released an Accounts Payable Productivity Index report to provide both end-users and vendors with a valuable insight into the key trends and developments in the market, in addition to best practice techniques of top-performing organisations.
The report, produced in association with AQPC and the Institute of Financial Operations, was the culmination of an international research project involving 375 participants from 16 industry sectors, processing a total of 535m invoices and making combined purchases of $900bn a year.
So sharedserviceslink.com are excited to host PRGX at our forthcoming US Summit for Leaders in Shared Services taking place in Atlanta, where they will be facilitating a panel session to discuss their findings in detail.
PRGX found that compared to the median performers, more streamlined AP functions were around 50% more cost efficient, paying a global average of $5.06 per invoice processed compared to the median $9.59. In addition, the higher performers were processing 65% more invoices per FTE than median performers, with a global average of 15,831 compared to a median 9,552.
So what exactly is it that makes these top performers excel in terms of accounts payable automation? Here are just some of the tips these high flyers have to share:
1. Shared services deployment. If your organisation has more than one finance, HR or IT function department, adopting a shared services model can not only save you money but in addition, can bring more strategic benefits such as visibility, continuity, and scalability.
2. Lean process design. Lean is essentially an improvement approach to eliminate the waste in workflows. It is focussed on what does and what does not add value to the business from the customer’s perspective. Streamlining processes will allow you to increase productivity and prepare you for any changes you want to make in the future, for example upgrading to automation technologies.
3. Automation technology. Be it data capture technology, e-invoicing, or an automated workflow, the use of technology to support the AP function is vital if you want to see true cost savings and efficiencies.
4. Accurate and directional KPIs. Interestingly, but not too surprisingly, the AP professionals who contributed to the report emphasised the need for directional and accurate KPIs. They broke the most common performance indicators into two categories: those to measure effectiveness, and those to measure efficiency. KPIs to measure the effectiveness of a process include the number of FTEs employed, the life cycle of an invoice from receipt through to approval for payment, and the percentage of available discounts taken. Those to measure efficiency would then include cost per invoice, total cost of the AP function per $1,000 revenue, and the number of invoices processed per FTE.
Want to know more? Come to Atlanta and pick their brains of our panellists about how you could deliver such results in your organisation.
For more information visit The Summit for Leaders in Finance Shared Services 2012.