Reduce AP Costs with Invoice Automation
As a company grows, maintaining an efficient and cost-effective AP team is a formidable challenge, but multiple studies show how important it is to reduce AP costs with invoice automation solutions. In 2021, the Institute of Finance and Management (IOFM) estimated that a single invoice can cost as much as $16 to process when all system, staff, and company variables are calculated. Other analyst surveys put costs as high as $30-$40 per invoice depending on the size, age, and complexity of the AP system. In comparison, the top 25% of businesses with automated and optimized solutions spend an average of $2.07 per invoice.
Calculate Your Per Invoice Costs
Depending on how detailed you get, it’s generally not difficult to estimate your own AP costs. Simply total your costs per year and divide by the number of invoices you’ve processed. The largest cost is usually labor, but you should also include infrastructure such as software and hardware; physical goods such as paper checks, envelopes, and stamps; transaction fees of any kind; and any other expenses you need to run your department. (MineralTree has a useful overview with more details.) Calculating your cost per invoice is extremely helpful as an indicator of AP health, as well as one valuable KPI used to evaluate longer term improvements.
As an SAP Gold Partner and North America’s leading provider of SAP invoice management solutions, we’ve been able to analyze systems and deliver the benefits of invoice automation through hundreds of projects. While every client has been unique, we’ve found several AP issues that plague companies of all sizes.
3 Most Expensive Invoicing Issues
- Intake Errors – The most frequent issue is simple intake errors, especially when there are paper invoices in the mix. Incorrect vendor data, product or service details, and pricing adjustments are avoidable yet time-consuming errors.
- Approval Bottlenecks – Approval bottlenecks occur when AP teams struggle to find the information they need hidden in variable invoice layouts and fractured document pipelines across paper, email, fax, PDF, and even voice assets.
- Payment Delays – The most expensive issue, delays in payment result in lost early payment discounts, lost preferred pricing terms, and often added late fees and penalties. These avoidable costs can directly add as much as 15% to your total cost per invoice.
Additionally, clients are surprised to find that many of the root causes of their issues reside in the difference between “how we think our system runs” and “the way it actually runs.” Day-to-day shortcuts, workarounds, and ‘unique exception’ cases, while intended to speed up execution, often become standard practices that drain time, money, and resources from the AP team. Optima has a proven process to uncover and address root causes of AP inefficiency and deliver a streamlined solution with efficient, effective workflows that increase the ROI of your software environment. We also have programs available to monitor and maintain your environment to detect and eliminate issues before they become problems. (Learn more about Optima TotalCare™ here)
Benefits of Invoice Automation
Fortunately, there are modern solutions that are specifically designed to solve these issues and are proven to deliver substantial improvements to even the most complex AP workflows. By minimizing manual invoice processes and taking advantage of an automated solution, most companies realized substantial savings in multiple areas.
As mentioned above, the degree of improvement and savings generated varies depending on individual system details, but all organizations find improvements in:
- Reduced cost per invoice – With streamlined intake, approvals, and processing, the amount of labor required for each invoice is minimized, allowing staff to increase their capacity, or direct their efforts to more value-adding projects
- Reduced errors on all types of invoices – Automated scanning and processing eliminates many errors caused during manual input of vendor, quantity, and cost details. Best-in-class automation systems also provide advanced machine learning capability to improve intake accuracy over time.
- Reduced storage costs – Retaining paper transactions takes up space, and must be stored for 7-10 years. The cost savings of square foot storage, document management and retrieval, and eventual disposition of paper documents is substantial.
- Reduced risk – Centralized automation solutions are exceptional at exposing and eliminating common AP risks such as duplicate invoice payments, incorrect payments, rogue spending, vendor mismanagement, and fraudulent invoices.
Best-in-Class Solution: OpenText Vendor Invoice Management for SAP Solutions
There are a variety of invoice processing solutions on the market, but most only address a minority of the challenges described above, and even less can extend their capability further into other critical business needs. OpenText Vendor Invoice Management (VIM) for SAP® Solutions (also sold by SAP as SAP Invoice Management by OpenText) is an intelligent, automated solution for enterprises to streamline accounts payable (AP), procurement, and invoice management.
This solution allows you to:
- Automatically manage and process complex invoices
- Take advantage pre-configured roles, rules and actions to automate invoice posting
- Share order confirmations, delivery notes, remittances, and more automatically by extending VIM’s capability with VIM Beyond Finance
OpenText VIM automatically embeds into your SAP solution, helping you optimize end-to-end data processing within one platform and control your SAP data for more secure, streamlined workflows.
Industry Experience and Trust
OpenText VIM is built on years of experience in the industry with a dedicated focus on the future needs of complex businesses. It continually updates and integrates with modern software to keep enterprises on the cutting edge of technology. In addition to continual updates that enhance existing capabilities, enterprises trust OpenText VIM thanks to:
- Advanced machine learning and AI capabilities – Continually improve the accuracy of actions linked to invoice approvals and data entry with VIM’s new AI tools.
- Cost-effective approach – Free up staff resources and reduce the number of FTEs required to operate smoothly.
- Enhanced compliance – Comply with regulatory requirements and best practices out-of-the-box with VIM’s pre-configured rules.
OpenText VIM is a best-in-class solution that streamlines AP from invoice creation to routing. With an OpenText VIM upgrade consultant like Optima, your enterprise can maximize the benefits of this innovative solution.
Talk to a Trusted VIM Consultant
As an always-improving, best-in-class solution for invoice management, it’s essential that enterprises get the full advantages of VIM’s current version, understand how it can affect migrating to SAP S4/HANA, and strategize how they can get more value out of their VIM licenses.
But your enterprise doesn’t have to do this alone. Optima is an SAP Gold Partner with a team of invoice management experts dedicated to the platform. We’ve worked on the most successful VIM projects in North America and have a proven track record of helping enterprises maximize their VIM solution.
Optima’s VIM Health Check
To get you started, Optima developed a unique VIM Health Check, a low-cost, comprehensive evaluation of your current environment. Our proprietary methodology analyzes your current system to prepare you to get the most from your system. We will:
- Evaluate your VIM implementation and overall health.
- Comprehensively understand your risks, maintenance and opportunities for ROI.
- Prioritize your needs, establish timelines and create a budget to align OpenText VIM with your business goals.
Learn more about our Health Check below, and discover how it is a vital first step to get the most from your technology environment.
