Quiz: How Efficient Is Your Accounts Payable Process?
An efficient AP department means streamlined processes, reduced costs, and faster processing time. This short quiz will help you discover how efficient your accounts payable process is, learn key stats from other businesses like yours, and determine if AP automation can optimize your business.
1. How long does it take to process invoices?
A. More than 30 days
B. Less than 15 days
C. Less than 5 days
Processing hundreds or even thousands of emails and paper documents daily can be inefficient and time-consuming for your company. Automation could help you eliminate the manual and unnecessary steps that are holding your business back. If you have mail coming from multiple locations, it can be easy for it to be misplaced and take a significantly long time to sort through. This can lead to late payments, longer processing times, and inefficiency in your company’s workflow.
However, on average, using outsourced digital mailroom services and accounts payable automation has been proven to decrease processing time from 45 to 5 days, according to a 2018 Levvel (formerly PayStream Advisors) study. Using an outsourced mailroom service can result in invoices getting into process within 48 hours. This can improve vendor relationships, decrease late payment fees, and increase employee productivity.
2. How much does it cost to process an invoice?
A. More than $10
B. $3 – $10
C. Less than $3
Is your invoice processing system cost-effective? A 2018 Levvel study found the average cost of processing an invoice was $15. By using an outsourced accounts payable services provider, this cost could be greatly reduced to less than $3 per invoice.
Your employees no longer have to spend hours and hours opening, distributing, reviewing, approving, entering data, and paying invoices. By outsourcing this process, invoices formerly sent to your office can now be sent to a secure outsourced mailroom partner who will digitize and electronically distribute invoices for automated review, approval, and processing. Once paid, your digitized invoices will be securely transferred to and stored using cloud software where you, your staff, and your auditors will have quick and easy access to them from anywhere.
3. Do you print out electronically received invoices to be processed as paper invoices?
An AP automation partner who also provides outsourced mailroom services can receive paper and electronic mail and start processing incoming invoices upon receipt. Invoices sent via email are continuously monitored, multiple invoices received in one email are separated and files are reformatted for optimal processing. Data is then captured and entered directly into your ERP system or used to kick off an automated workflow for review and processing by your staff. Having to track incoming emails, print them, and manually process them is an issue of the past.
4. Are your invoices processed manually?
According to the recent Nvoicepay webinar, 80% of those surveyed said 75-100% of incoming invoices were being processed manually, while the other 20% said 51-75%.
Manual processing is not only more susceptible to human error, but also takes significantly longer. Another study by PayStream/Levvel determined 30% of invoices are approved in 1-5 days after invoice receipt when they are being processed by a third-party provider, compared to 45 days when processed by in-house staff. By outsourcing and automating these processes, the accuracy of data entry increases. It’s a way of getting rid of unnecessary headaches while making your employees’ lives easier and lowering overall costs.
5. Do you rely on a large temporary staff to ensure invoices are processed on time?
A. All the time
B. At the end of the month
Relying on staff for invoice processing can result in your company paying higher costs. An APQC study showed labor costs account for nearly 62% of invoice processing expenses. The approval process from the time your employees receive invoices to when they enter and validate this data against existing data can take up to 45 days. By automating this process, you can decrease processing time and costs, optimize your accounts payable process, and reduce manual errors.
6. Do supervisors and managers need to stop their work to help close out the month?
A. Every month
B. Certain months
Supervisors and managers often spend a disproportionate amount of time sorting out paperwork and tasks that are not necessarily critical to be carried out by them. The Association for Intelligent Information Management (AIIM) discovered that within a year of outsourcing, 46% of companies saw a ROI on their scanning and capture investments. If outsourcing your AP process, make sure to choose an outsourced scanning partner with SOC 2 Type 2 accreditation, which is a third-party verification that the outsourcing service provider has procedures in place to keep your documents secure.
7. How accurate is the data being entered into your ERP system?
A. Below 97% accurate
B. Between 97-99% accurate
C. More than 99% accurate
According to the recent Nvoicepay webinar, 80% of respondents identified manual data entry and inefficient business processes as the biggest pain points in their company’s workflow. An IOMA study found 3.6% of invoices are processed incorrectly. While that may not seem like a large number, if your company has $100 million in payables coming through for a year, that’s $3.6 million that your company could lose. That’s a whole lot of additional time, labor, and costs that must be directed towards figuring out where it went wrong.
8. Can three-way matching invoices be processed and paid automatically, without human touch?
Invoice processing using employee labor is often slow. By outsourcing the work to an accounts payable automation partner, the process becomes optimized with little to no input required from your staff. Instead of having to manually check invoices against the original purchase order and delivery documents, all of this can be managed using AP automation software for a zero-touch receipt-to-payment process. This means your company will save time, processing costs, minimize misplaced or lost invoices, and allow your staff to focus on critical tasks while also giving management better visibility into company processes.
9. Does your company leverage early payment discounts?
According to IOFM, 77% of CEOs want to capture more early payment discounts. With AP automation, your invoices can be paid significantly faster, which is an easy way to improve your bottom line by taking advantage of these discounts.
10. Does management have access to dashboards summarizing realtime AP status, performance and future cash flow needs?
IOFM stated 58% of comptrollers believe access to real time accounts payable data is critical for business planning. Especially during our current economic volatility, access to back office data can help make smarter and more proactive strategic business decisions. With the workflow automation software used by your accounts payable department, it will be easier for your executive team to plan and determine cash flow needs. This gives your company an advantage over competitors who may be using older and slower systems.
Your Next Step
If you got mostly A’s or B’s, AP automation services can turn your accounts payable department around. Contact us to learn how invoice processing automation can improve efficiency and lower costs in your accounts payable department.