Does it really cost $37 to process a vendor invoice?

Many small companies today are still pushing paper invoices through for payment and wasting resources in the process. When I first started researching AP costs I was flabbergasted to find out that an average company spends as much as $37 pushing one invoice through their paper system. How can that be? First, bear in mind an average company in this case is one that is not automated and is average in terms of productivity or how many invoices it can process a month. The cost of $37 comes from a recent AP study done in the US. So where is all that money being spent? Most of it is in the data entry.

One company I worked with briefly had the equivalent of one full time AP clerk that cost $42K annually and could only push through 250 invoices a month; that works out to be 38% of the cost right there. The rest is harder to "see" but think about what is required both in time and utilities when handling the invoice; opening and routing the mail, photocopying for back up, stamping, coding, approving, mailing, printing the cheque for payment, filing the invoices, storage costs, answering inquires on missing or unpaid invoices, data entry errors and the cost of duplicate payments, missed discounts etc. and it all adds up.

And what about companies that must re-bill costs to clients like property management or construction companies. There is a lengthy process of standing by the copier and having separate files etc. What is you could do it all with a click of a mouse and in a few seconds email if off?

Automation of your accounts payable system from invoice arrival through to electronic payments can reduce that $37 per invoice to as little as $4. Imagine if your company processes a few as 300 invoices a month that is over $100,000 in savings annually. So why isn't everyone doing it and doing it now?

Stayed tuned........

Bring on the AP Automation for Timberline

We're pleased to announce that beanbills is now fully integrated with Timberline Office. Thanks to our friends at Constructive Solutions who helped implement the solution. Our customers using Timberline can now take advantage of all the benefits of Accounts Payable Automation by exchanging data directly with their Timberline software.

KISS applies to Accounts Payable

Accounts payable is not rocket science. However complexities in the process seem to be common place.  Complexities cost mucho time and effort ultimately taking a big bite out of the bottom-line.

 

Most organizations payables processes grow organically or through acquisition along with the needs of the business. Over time, with added volume and locations, those processes often become cumbersome and unmanageable.  By this time, they review their options and either turn to a pricey accounting system upgrade or live with the current setup.  It’s up for debate on which ultimately costs more, however it’s usually the later as resistance to change is generally the road most travelled.

 

Let’s take another look at these home grown complexities. The belief that each company runs their ap differently “we are unique” is standard fair amongst operations. Sure there is uniqueness to industries, or how business is conducted. But the objective and outcomes are always the same, place an order, receive a bill, code and approve it, and pay it.  Really companies are running the same process in slightly different and mostly manual ways.

 

When the Ford model T was introduced to world through standardized production, it made a huge amount of sense and continues to be a massive factor in everything we serve and produce today.  Are the benefits of standardization not available to the ap process? If the objectives are the same, and the outcome is the same, why are businesses not looking to standardize and take advantage of the same efficiencies and economies.

 

Truth is most are not… yet. Most companies are not in the accounting business, nor should they be. It’s a necessary evil. They don’t have time to focus in on process improvement while running their business.

 

Incorporating accounting best practices right from company inception is ideal but hardly realistic, at least not until recently.  Today, there are solutions that expand the functionality of conventional accounting applications and many of them are web-based and affordable to the small and medium sized businesses.  These solutions offer built-in best practices to help businesses with compliance and efficiency to allow them to concentrating on the core competencies of the business rather than the paperwork involved with running the business.

 

Creating efficiencies on your own, without the expertise and tools is impossible. Standardizing and incorporating best practices right from company inception is ideal but hardly realistic, at least not until recently. Today, there are solutions that expand the functionality of conventional accounting applications. Many of them are web-based and affordable to the small and medium sized businesses. These solutions offer built-in best practices which help standardize processing, boost efficiency, and focus businesses on their core instead of the time consuming paperwork that surrounds their core.

 

Standardization is becoming essential to create efficiencies in business process. As my beloved marketing prof repeatedly broadcasted, "KISS, Keep It Simple Stupid" in other words don't get caught up in the complex when there are proven simple ways to process your ap.