How to efficiently choose the right AP automation software provider
Although the accounts payable department is important to the organizational success and financial growth of the firm, it has generally been a back-office activity not considered central to a company's strategic plan. However, recently, businesses, especially small to mid-market, see the AP department in a new light, acknowledging that it is not only a key contributor to the bottom line of the business through cost reductions and discounts, but also offers useful knowledge that can help finance leaders make more informed decisions about setting strategy and bottom line investments.
According to B2B Payments Automation Playbook, a survey data of 400 financial decision-makers in more than 12 industries, over a quarter of enterprises have reported that they already adopted some form of account payable automation to boost their AP efficiency. Almost three-quarters of those who have not, are expecting to do so in three years. 74% of businesses that have not yet implemented AP automation are planning to do so within 3 years.
To help you with the journey into digital transformation, there are plenty of AP automation software in the market. The problems arise when you get into this oversaturated market of solutions with very little clarity on what to look for, how to plan, or correct queries to ask the vendors.
Effective Vendor Evaluation for AP automation software
There are multitudes of features provided by solutions for AP automation that will help your AP department do more with less. But you need to be certain that it extends the right features that will assist your business to focus on the unique challenges of your AP department. Even though there is no one-size-fits-all AP automation software, there are some specific features that you could look for in a vendor that is required to be solved by their AP automation solution.
- Fully automated intake of invoices from multiple sources (email, scan, EDI/iDOC, supplier self-service, Ariba)
- Out-of-the-box smart AI solution, that improves data extraction, recognition, and accuracy levels using self-learning capabilities
- Multiple invoice processing options: PO-based, non-PO-based, credit memo, lease invoices
- Optical character recognition (OCR) for unstructured data
- 3-way invoice matching to purchase orders, goods receipts, and supplier invoices to avoid overpayments, duplicate payments, and inaccuracies
- Intelligent Duplication Check – Detects duplicate invoices at early stages without going through the entire workflow
- Tight integration with financial systems such as SAP
- Support for multi-language, multi-country, and global accounting regulations
- Per diem and down payment processing support
- Automated parallel approval workflows
- Automated bulk approval workflows
AP automation software Vendor Evaluation Checklist
Being ready to evaluate and assess potential vendors of AP automation solution begins with a solid vendor review based on the below checklist.
Cost is obviously a crucial factor in deciding the AP automation software that you end up choosing among the many. The major cost concern is however not 'How much would it cost?' but ‘How easily can your investment be returned with the solution? Not only can an AP automation software pay for itself, but it will also produce stable cost savings for your business. Using the vendor’s ROI calculator is one way to find out how much can the solution for AP automation save for your business per year. Running a net savings analysis of the proposal of each vendor is also an ideal way to get an idea of how much the investment can scale up your business profit.
If you are an organization that handles 25,000 invoices per year or more, the sophistication of your invoice processing system needs to be tailored to your workflows, approvals, and General Ledger coding. A completely customizable automation framework unique to your processes and needs is highly recommended as you choose your AP solution vendor. However, for smaller enterprises, turnkey solutions are perfect. But even turnkey systems need to be customizable to match your particular requirements. So, make sure that all the options you look at are sufficiently versatile to fulfill your needs.
Make sure that the AP automation software you consider does not merely integrate with your accounting, ERP, and other systems but is explicitly configured to work with your accounting and business applications as well. While interacting with your shortlisted vendors, also make sure that they have hands-on experience in integrating the AP automation software with your invoice processing systems. If they do not have real experience in solution integration, then they will not be the ideal vendor for you!
It is important to keep in mind that you entrust the AP automation software vendor you pick with a vital feature of your business. They are going to be a business partner in your journey to success. Therefore, refer to their support policy before signing the project. Take a close look at how they have dealt with the implementation issues from the referrals and decide whether they pose a great support policy that would go in line with yours.
5. Important KPIs to Track the Efficiency of an AP automation software
While assessing the performance of the AP automation software, start by addressing your priorities in concrete, observable terms to simplify and streamline your processes. Instead of worrying about budgets and what you initially have to invest in, focus on the important KPIs that you want to evaluate. Some KPIs that can be considered to track the efficiency of your solution are:
- Average expense for handling an invoice
- Average lead (or cycle) time of invoices
- Number of invoices per employee
- Value of discounts on early payments
- Rate of incorrect payments made
To learn more about how AP automation can increase efficiencies and drive profits by providing auditable transparency onto invoice artifacts throughout the invoice processing cycle for early detection of duplicates, frauds, and errors, visit https://www.applexus.com/applexus-insite .