AP Automation for Yardi Users

Make sure to mark your calendars to attend the next Bean Services webinar to be held on Tuesday, August 24. 

In this session we will discuss;

• Beanbills integration with Yardi
• How we are helping Property Management companies go paperless with Accounts Payable Automation
• Why it won’t cost that much and it’s easier than you think

Date: Tuesday, August 24, 2010
Time: 11:00 AM - 12:00 PM PDT

Register for the Webinar here:   http://tinyurl.com/32cmvaa

Accounts Payable Performance, Are You Measuring Up?

Recently a discussion was started in LinkedIn about tracking AP performance and what metrics are used to make process improvements. There were some very interesting comments from AP professionals from around the world. Here are some of the ideas shared.

Popular measures;

•    Cost per Invoice. This is calculated by taking the time and cost that goes into processing each invoices divided the total number of invoices processed. The cost should take into account all the AP FTE time, which is obvious, but should also include the all labour time that goes into processing the invoice including all management time on the approvals, and error fixing, duplicates, searching, handling and vendor enquiries etc. The labour portion adds up to around 60-70% of the total cost. The rest is desk costs as well as storage, courier and related costs. The average for a manual process is around $15-$20 per invoice. The electric al=automated process can be south of $5.
•    Number of Invoices processed per FTE. This is productivity measure. To calculate you’re simply looking at the number of AP FTE’s per the monthly amount of invoices processed. You’ll find the average is between 750 – 1250 depending on the nature of the industry and complexity of the process. Automation can push you upwards of 5,000 per FTE.

When driving efficiencies into the process, whether it’s manual, automated, or mixture of both, you need to drill much deeper. This is equivalent to a production line in a manufacturing process, where you’re analysing each minute detail to drive quality and controls into the process.

Higher focussed measures;

•    Speed to process an invoice in days.
•    Late payment and penalty percentages as well as exceptions.
•    The percentage of early pay discounts available and the percentage that are taken.
•    Tracking error rates. Both payment errors and data entry errors. Goes without saying accuracy is an important part of the process.
•    Tracking payment types. This is used to ensure that the most cost effective payment type is used.
•    Total dollar amount of payment runs (EFT vs manual) as well as Foreign payments made.
•    If AP automation and eInvoicing were in place, tracking the volumes of electronic invoices and electronic payments and set a deliberate plan in place to increase those volumes every year and quarter.
•    Aging of invoices, from date received to paid. From invoice date to paid (we could analyze the vendors that send in invoices late and improve processing).
•    Discounts achieved and discounts lost.
•    Days waiting for Approval
•    Date of receipt of invoice (manual or electronic) to date of entry.
•    How many PO invoices, how many non PO invoices.

For those with high volumes, who are well automated and paying electronically, can use these to further enhance your process;

•    First Time Pass percentage (%) in invoice processing.
•    Analysis by Hold Code for the invoices that fail at First Pass. This gives insight into the hold reasons which are creating re-work. One can apply Pareto (80:20) rule to and tackle the major ones.
•    Compare number of FTE's deployed on tasks other than processing activity. Ideal ratio is 1:2
•    Review of debit balances (mainly aged ones) in various Supplier Id's. It is very important to keep an eye on this area as any major aged balances will attract audit comments as well.

One of the participants had this meaningful contribution “All AP metrics should be based on process exceptions that are actionable, meaning weekly/monthly meetings with those responsible for the root causes of the exceptions. The put through metrics are mostly worthless… if you aren't improving the process, you aren't managing the process!”

I turn to a famous quote or dictum “If you can't measure it, you can't manager it”. How many of you are managing and measuring your AP performance? What metrics are you using?

I have posted a link to the LinkedIn discussion at the bottom of the page for reference purposes where you can find all the contributors comments. Group: Account Payable Professionals. http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=25327807&gid=128842&commentID=20261936&trk=view_disc
You can also find useful information regarding metrics from: http://www.ioma.com, http://www.iappnet.org, http://www.tawpi.org, http://www.aberdeen.com, http://paystreamadvisors.com.

Paying Invoices, but to the Wrong Vendor...BIG MISTAKE!

Has this happened to you or someone you know? Of course if you aren’t an accountant you might not see the humour in there! But then you would also not be reading this either!

Anyway, this kind of thing is more common than you might think. Paper causes problems; they can get lost, burnt, wet, ripped – you name it - paper is easily destructible. And we people make mistakes. So is there a system and a way to reduce that human touch and error? YES! AP Automation is here, and solves much of these issues. And to obvious those embarrassing situations, e-pay is here to help.  It all starts with electronic purchase orders.

In the “olden days”, companies had to hand write PO’s in triplicate, send off copies to accounting, the supplier and the receiver. Then the product came in and was received and that information had to be send to accounting with another piece of paper and so on a and so on. In fact this system could cost anywhere from $31 per PO to $88 depending on the organizations size (source The Supplier Enablement Benchmark Report - AberdeenGroup KPIs & Metrics Mar, 2006). Even the “best-in-class” spend $28 to produce and process a PO.  So once you had spend $50 ordering the item you then spend between $30 and $60 paying for it, in processing costs of manual AP and printed cheque payment. Invoices arrived, were stamped, routed for signature and coding (some never left the supervisors desk!) and manually entered into the accounting software for payment. Then a check is cut and mailed out, if there were no errors made along the way. The average company takes 10 to 25 days to get through this process and is spending far too much on the process.

Stay tuned for more fun demonstrations of AP hazards, there are so many! And think about automation, the paperless, painless way to make the computer work for you for a change!

Controllers Rejoice, an Invitation to the Backroom Auditors Party

This has been a long requested feature that's finally here. Now in Beanbills you can tell who did what and when in regards to any transaction. Like AP cost allocation changes, user changes or the status changes, including what was changed. Tracking changes to your payables workflow should be simple, and we kept it that way, so the interface is a basic report where you can filter by user, date and transaction. Example, show me all Jim's transactions for last week. Or show me all events that happened to this invoice through its process from day one.

It's very challenging to stop someone from doing something bad. You never suspect someone in your organization usually until it's too late. Unless you have some premonition about what they're doing. The audit trail provides that information dynamically. Obviously if the horrible event happens where an employee has done something bad, or simply gone beyond company policy, the evidence is there in black and white to prove what happened. I can see your auditors now having a party in the backroom. And for those controllers out there, although you may not admit it, you're dancing and have a drink with them.

We plan to extend the audit trail feature as Beanbills evolves. Help us improve it. Any and all feedback are super welcome.

Who Said Invoice Images Can’t Dance

Good news! In Beanbills you can now rotate, move and delete your images for each invoice. We call it image manipulation for lack of a more creative title. All of it possible from the details view. If an image is in landscape, and you want it portrait. One click and it's portrait. If you need a different page order, select a page, click the arrows up or down until it's in the right place.

You can also delete images. However, as Controllers well know, that's not such a good thing. We thought about this and what appears as delete is really a hide images feature. Select an image, click delete. You're presented with a choice to delete or move the image to scans page or to another transaction. If you delete, a link appears in the view where you can return at any time and add that image back to the invoice.  It's never going to just disappear.

If you move the image to another invoice. Move it back to the scans page. Then go to the intended invoice and click add image, and it directs you to the scans page where you select the image and attach. Obviously this is super handy for images scanned or attached in error, like packaging slips.

This was one of the top feature request list. We listened and we're excited get it out to you. Keep the requests coming.

Data Entry Be Gone, Hello Email to Capture

Life just got so much easier for anyone who has to deal with ap invoices. Now in Beanbills, you can simple stand at your scanner, load up your invoice, push scan, and bright and early the next day you'll have the invoice image electronically with all its verified data. Ready to push along its workflow.

Even better, give your suppliers a Beanbills email address, and they can email directly into Beanbills, no more scanning!! No more data entry!!

What has been standing in the way of the paperless future is not technology, because that's available. But all the technologies that have to communicate to make it possible. Using email, which everyone knows and trusts, is robust and common, and the simplest way to make getting invoice information into electronic  usable data. Without any disruption to the way we work and using the same technologies.

Start getting your suppliers to email their invoices to you. Email bill presentment is a happening trend. It's an obvious time saver for everyone, especially the supplier/vendor. No more printing, wasting paper, stuffing envelopes, mail costs... it's an expensive operation.

One more benefit. Every Beanbills user has an email capture address. You can stand at the copy machine and scan-email an invoice, or forward them if they came via email, to Dave in AP's address. Bang, the next day they're in his Intray all electronic and ready to deal with.

AP Automation, Why Don’t We Change?

I recently read a great blog post called "4 Obstacles to Starting and Completing Challenging Projects" by Amber Singelton Riviere posted on http://www.webworkerdaily.com

This article relates very much to AP Automation, as going paperless and streamlining your AP is a project. And a change. It involves many people in your organization. However the benefits of the change are so obvious and become ever more glaringly so when you look at the facts. Organizations are saving left, right and centre. The benefits are abundant. So why is everyone not doing it?

Most of us shy away from challenges like taking on a new project. We procrastinate or quite halfway. There are so many obstacles that get in the way, ultimately most of them are self fulfilling if you let them.

Inspired by from Amber's post, where I list her thoughts and include my own below. Here are the 4 obstacles to overcome when initiating an AP Automation project.

Obstacle #1: Fear

Whether we want to acknowledge it or not, fear (of success and failure, of ticking people off, of looking stupid, etc.) is debilitating. A lot of times, it's easier to just keep our heads down, avoid eye contact, and not raise our hands (even when we know the answer). We ask ourselves:

• "What if it doesn't work?"
• "What if it gets me fired?"
• "What if I do this, spend a lot of time/money/energy, and it gets me nowhere?"

Fear is always going to be present, but nine times out of ten, the thing we fear doesn't even eventuate. Yet we still let it hold us back, even though we know it's not likely to occur.

When it comes to AP Automation, we fear changing the way we do things today. Disturbing the peace. Ultimately the way we are doing things today is SO manual and inefficient, and when we look back in 10 years from now, it will be retarded. Our kids will be laughing at us, saying "you used do what with paper?". When making change there are always a few hot coals to walk on. Under the worst case scenario you can always go back to the way you were doing things before.

Obstacle #2: Avoidance

More often than not, we know what we need to do, yet we make excuses about why we can't or haven't made progress. Maybe we need to get that new marketing strategy off the ground, maybe we need to start that new business, or maybe we need to write that e-book. Whatever the case, we don't get it done or don't even get it started and instead say things, like:

• "I would have started it, but I've just been so busy at home."
• "I've been meaning to finish that, but I've been swamped lately."
• "I got sick, then the kids were off a week, then my in-laws came to visit, and I just haven't had the time."

We convince ourselves that our complete avoidance of getting things done is caused by legitimate delays and distractions, because they are legitimate. The question is, how badly do we want to complete that big project/challenge? For example, how much do we really want to get our businesses off the ground, or how much do we really want to see them succeed?

Everyone wants electronic documents. Unless you're a luddite and don't believe in email or computers, the benefits are enormously obvious. So why aren't you doing anything about it? This is often the most common delay with AP Automation, the excuse that something else has to get done. Sure, there are more important things, but to Controllers, CFO's and financial executives out there what's more important than knowing what's going one with every transaction in the business at anytime. Who has it, where its been, where's it going. And who's doing their job and who is not. AP Automation presents that operational visibility where managing your workforce with measured facts is an undeniably powerful administration tool.

Obstacle #3: Motivation (Or Lack of It)

I think a lot of times, we say we want something because maybe we should want it (or think we should want it).  Maybe we say, "I want my business to make more money," but in reality, we're pretty comfortable where we are, and even if we're not completely comfortable, the discomfort is not so overwhelming to make us want to put out the extra effort to effect change in our situation.

If there is no real motivation to do something, we have to admit it, own it, and say, "I don't even want that," and so, it's not necessary to put out all that effort to complete some arbitrary project or challenge. If we can't at least get to the place where we can accept our lack of motivation, then there's this feeling of obligation or guilt that constantly nags at us.

If your organization is happy with traditional paper pushing, documents getting lost, approvals taking forever and lack of transparency, then you have no motivation to change. And we truly wish you all the best with that.

Obstacle #4: No Map

Sometimes we'd do what we needed to do, if only we knew where to start or how to get it done. Especially in business, there are times when we walk around clueless and have to figure things out as we go, and that leads back to the first obstacle. If we don't know what we're doing, how can we get people to believe in us, and how do we avoid looking stupid when people figure out that we don't know what we're doing?

Seth Godin talks about working without a map in his book "Linchpin: Are You Indispensable?", and discusses about how we have to be OK with working without a map and just get used to not knowing our way around. If there was a map, everyone else would be following it, and then the journey and destination would probably not be as worthwhile.

It can be hard to take on big projects and challenges and even harder to actually complete them, but by identifying the root cause of our hesitation or procrastination, we'll be much more likely to tackle those big challenges and get things done.

Every organization is different. Every person is different. Thank goodness for that! The same applies in accounts payable. All organisation process their documents with slight differences. However there are major overriding themes to processesing vendor invoices like:  Most of them arrive on paper. They need to be coded or allocated to an account, job cost or item. They need to be approved and, for better or worse, they need to be paid. By connecting those main themes into a flexible online business process and workflow, that caters to most scenario's, you can find your way around without map.

What are some of your obstacles to automating your AP? What's holding you back from taking steps to go paperless?

Join the Revolution! Reduce Your Invoice Processing Costs

Further to the discussion on Accounts Payable processing costs, we thought you might want to know what gets in the way of automation. Paper AP is the necessary evil in many organizations and change is harder than it seems. 

Some might not trust the digital image concept, others like to "feel it" in their hands and yet others have disbelief around the real costs of their manual system versus automation and the potential savings. It is true that reducing the overall costs from $37 to $4 is quantifiable but are those savings really coming off the bottom line and what needs to happen to achieve that? Yes absolutely, opportunity costs and labour costs are real. 

How can an organization find its way to embrace the future rather than fear it?
 
In the last 35 years, computers changed accounting dramatically, gone was the way of the hand written ledger and its manual posting. If any accountant heard of a company NOT using computerized accounting software today, they would assume their clients were in the dark ages! But how did that change occur? To trust the DOS based systems of those early days, must have been very difficult for many. Nevertheless, they adopted and adapted to the faster easier way. Let machines do the repeated work that is mindless.
 
Mo Kelly, from Rockwall Computers says it well in his blog; http://www.accountingsoftware411.com/Press/PressDocView.aspx?docid=11038

"The big changes in accounting seemed to happen when we changed platforms. Major changes happened when we went from paper to computer. Another major change was from mainframe computers to PC's. Then the next big change was from text based user interfaces to graphic user interfaces. Everyone says that someday we will no longer have software to load on our computers. We will only have browsers and servers. That will be a major platform change.

The motivating factor for changing platforms has been to take advantage of new ways to integrate software. The one concept that is responsible for 90% of the time saved with computers? - Integration.

I honestly believe that we are seeing the final revolution in accounting software. Now accounting packages can grow endlessly and never be obsolete. Object oriented software allows us to reuse software for other applications. Development takes less time. There will never again be a need to create new software because of a platform change. Web based software can be integrated with any process anywhere in the world. How can any new concept compete, especially since it is free?

What does this revolution mean to you? If your company is not ready to get rid of an old, obsolete, client-server, proprietary software package, you may experience similar problems to those in the 80's that claimed they did not need a computer in their business. That is what happens in a revolution."

Well, this holds true for automation of AP workflow too. We have entered a new century with a new way to do this work with much less effort and the mindless tasks and delays that go with paper should be gone. The same things that must have interfered with the adoption of modern accounting software (sadly, I am old enough to say I used the one-write system!) are effecting AP automation adoption today. Innovative thinking controllers will lead the way and then the rest will fall or follow.
 
Accounting went relatively unchanged from the time of the Egyptians until the invention of the computer and its realistic application in the 1970's. Now software applications are moving to the web.

The ability (or inability) to implement change is a company's best asset or worse enemy. Early adopters of technology will be the pack to the pot of gold. This is true for AP automation. Money is wasted every day on the paper way. Organizations need to go back in time to remember what was like before computers, and how much time was wasted on manual systems.

Electronic Invoice – The Second Step in AP Automation

In my last article, I had discussed how the scan invoices step is the first and crucial one in the march (or race?) towards AP Automation.  Of course, there is another step to consider, electronic invoice or e-invoicing.  If your AP staff are now happily scanning all inbound invoices, why not take it one step further and have someone else ease the workload?  

With the idea of electronic invoices, it would seem the logical next step would be “why not just ask our suppliers to get on board and start sending their invoices by PDF and email?” it’s not that simple.  In reality and according to PayStream Advisors, only 10% of companies have been successful migrating more than half of their suppliers to electronic invoicing … it doesn’t have to be that difficult.  One specific thing to note is that not all suppliers are technically capable or have the wherewithal to adopt electronic invoicing; some will oblige willingly while others have to be dragged kicking and screaming.  Perhaps a carrot and stick approach?  

If anything, it’s about leverage, a value proposition back to your suppliers with a “what if” scenario; build a business case, take the time length in days from receipt to payment of invoices and gauge how your company is doing with “Net 30” payment terms …. Our experience reveals that most companies go beyond the time limit in terms of invoice payment … “Net 35, Net 40, do I hear Net 45?”

Next, determine how many of your suppliers offer early payment discounts, it’s typically a low number, say 10% to 15% but it’s money well worth pursuing.  With AP Automation now underway in your AP workflow, you will be able to capture those previously unattainable incentives.  Now to go after the rest of your suppliers; “what if” you ask, you were able to pay faster than Net 30?  They would likely ask how this would be so and then you would propose delivery of their invoices by PDF and email and that you would work with them to implement this change.  Odds are they would be pleased, considering everyone wants to be paid faster and also do away with paper, handling, envelopes, postage, etc … then propose this; what if we were able to pay faster than Net 30 and with “electronic invoices” then would you extend an additional 2% discount?  Time is money proposition isn’t it?

It’s all starting to come together, scanned invoices as the first step and electronic invoices as the second step.  

To put it all in perspective, consider this point of information from PayStream Advisor’s eInvoicing Adoption Benchmarking Report based on the results of their eInvoicing Survey of January 8, 2010;

“When asked about the usage of an electronic invoicing solution (whether a stand-alone portal or a network), 40 percent of respondents stated that they were currently not using an e-invoicing solution and had no plans of implementing it. Only 18 percent of companies that participated in the survey were currently using an e-invoicing solution. However, it was encouraging to note that more than a third of companies (36 percent) were evaluating the usage of such a solution and six percent were in the deployment stage with the solution going live within six months.”

You are not alone, take these first steps toward AP Automation

Scan Invoices - The First Step in AP Automation

There is an encouraging sign. The number of times on a monthly basis I've heard prospects and clients that want to improve their AP workflow processes. Of course, when the dialog begins, the main theme is the amount of time and "touches" any person has to make when dealing with paper and accounts payable invoices ... It really can be overwhelming. 

From receipt by mail, photocopying, file cabinet storage, interoffice mail for approval & signatures, routing to payables, pulling invoices back out of storage for audit, monthly ends and fiscal year ends ... How many times does one have to repeat this? Well, factor in the number of monthly invoices X, number of people Y and number of unique processes Z and you may have a formula ... for what? that depends on the level of pain each organization goes through on the monthly paper merry go round ... It may not be rocket science but it also doesn't have to be that complicated either ...

The rationalization is, that if one were to implement a scanning automation process, they can "get rid of three processes in a busy day". Of course this entire exercise begins with the common copier printer fax scanner. Of note, a recent blog comment (http://blog.abctechsolutions.com/2009/09/copier-printer-fax-scanner-costs-on-the-rise/) puts into perspective the rising costs of keeping the hard copy use of these machines;

" ... According to the GSA, company's printers, fax machines and copiers cost "on the average $1000 per employee per year or more." According to Xerox, company's copier printer environment costs an average of 3% of a company's TOTAL GROSS revenue ..." Something like EEK!

"Every dollar you save in your copier printer scanner increases your company's profit. Budgets for toner cartridge supplies are growing by 20-40% per year; Dataquest, IDC and CAP Ventures have all concluded that copier printer scanner page volumes are growing at a compound annual growth rate of roughly 8%. Printer cost is increasing not decreasing and the majority of the company's do not have controls in place ..." Or more appropriately YIKES!

So, here's a final thought ... accounting departments have finally grasped that they have to do something about their accounts payable workflow processes ... they are the ones feeling the pain of overwhelming manual and paper processes and the associated "many touch" costs at each step along the way. Many have just starting to use the scanner, either standalone smaller desktop units or the more central photocopier scanner hardware to begin to scan invoices ... all in the direction of accounts payable automation ... so why not use this step to help drive down the hardware cost and printing costs of all this paper?

One caveat, we haven't even started talking about e-invoicing ... Stay tuned!