How to build a business case for AP automation: a step-by-step guide

Although many companies use their websites as digital storefronts and rely on social media for customer service and engagement, a surprising number still haven't taken advantage of digital solutions to process their accounts payable (AP). Most growing companies find the number of invoices they process each year is only increasing, which means the pain and cost of paper-based workflows is increasing, too.

If your business is considering switching to AP automation, you might be required to create a business case to help convince your executives, IT, and key team members to take the next steps. Without their buy-in, your plan to automate your AP workflows won’t get far.

But you don’t have to do it alone! We're here to help. In this blog post, we'll help you walk through the creation of a business case step by step — including how you can define your needs, identify your key stakeholders and their objections, gather research and case studies to strengthen your case, and zero in on the ROI that an AP automation solution can deliver for your organization.

Step 1: Define your needs

Begin by identifying all the ways that AP automation will improve your business and your current paper-based workflows. This will help you show your decision-makers how strategic and advantageous your proposal is. You can get started with a short-form business case like this one.

Current workflow evaluations

Here are some specific questions to help you identify how key elements of AP automation can help solve some of your accounting team's existing challenges:

Staffing, time, and cost

• How many staff are dedicated to AP functions?
• How much of their time is dedicated to the AP process?
• How many invoices, on average, are processed (day, week, month, year)?
• How many steps are in their current AP workflow (from beginning to end)?
• How much are they spending on physical invoices or paper-based documentation storage costs?

Data entry efficiencies

• How many full-time employees input and manage invoices?
• What percentage of their day is spent on data entry?
• How much time is spent on data entry weekly, monthly, and annually?

Invoice coding and approval process

• How many full-time employees manage the approval process?
• What percentage of their day is spent on invoice approval management?
• How much time is spent managing approvals weekly, monthly, and annually?
• How easy is it for teams to stay ahead of vendor payments and take advantage of early-payment vendor discounts?

Payment workflow improvements

• How many full-time employees are involved in payments?
• What percentage of their day is spent on payments?
• How much time do they spend on payments weekly, monthly, and annually?
• How much visibility do you have into each stage of an AP workflow?

Match your pain points to AP automation solutions

Take the answers to your workflow questions and match them up to how AP automation solutions can solve those specific issues. For example:

Step 2: Identify stakeholders and key objections

Now that you have your needs analysis firmly in hand, you're ready to start creating your business case.

It's important to identify the stakeholders who will be making the final decision about moving ahead with AP automation and the objections they might bring to the table when you present your business case. If you're ready to respond to their concerns with quantifiable counterarguments, you’ll be in a much better position. But you can’t do that if you don't know what they'll be worried about.

Each of your decision-makers will have a different point of view based on their role within the company. Their objections will be based on what they see happening with your current AP processes. Key stakeholders could include:

• C-suite executives/upper management
• IT staff
• Accounting teams

Here are some of the key objections that each group could bring to the table:

• Everything is fine: there's no need to change it.
  For those people not directly involved in the AP workflows, they might not be aware of the challenges the accounting team is experiencing when it comes to wasted time and money or the other pain points associated with paper-based AP workflows. But the truth is, everything isn’t fine. Burnout is a real challenge for companies whose AP processes are manual and paper-based.
• Budget concerns: it’s too expensive.
  Companies are always trying to do more with less. The last thing an IT leader wants to hear is an ask for money to spend on another software tool. However, when they realize that processing an invoice manually actually costs three times more than with an automation solution, investing in an AP automation solution is much easier to justify.
• Overloaded IT teams: no time to take on a new project
  For many IT teams, all they hear when someone starts talking about a project is "We need staff to do this" — and many IT teams today are already underfunded and understaffed. If you can respond to these objections with how easy it is to implement an AP automation solution, this might help alleviate their concerns.
• AP processes are too complex: there's no way automation can handle it.
  Accounting teams might be so deeply entrenched in the complexities of their day-to-day that they don't think an AP automation solution could handle the intricacies. But in fact, the opposite is true. The more complex an AP process is, the better suited that process is for successful automation.

These are just some of the objections that your stakeholders could present. To help get everyone on board and feeling involved and included in the decision-making process, you'll want to:

• Involve decision-makers early and often.
• Make them feel heard and included in your decision-making process.
• Provide ongoing communications and transparency.

Once you've identified your stakeholders and their potential objections, you're ready to start gathering data to speak against these objections and in favor of your AP automation proposal.

Step 3: Gather your data

Nothing delivers more solid arguments to automate an AP process than tangible, measurable, real-life data. There are two main sources for this information:

• Research
• Case studies

Research

There are lots of great places to find AP research. You'll want to focus on research statistics that speak to how companies without AP automation are lagging behind, and how companies that have adopted AP automation are thriving. If possible, find targeted research that will also combat your stakeholder's key objections.

Here are some great examples to get you started:

• One third of finance executives use manual methods (like spreadsheets) for data collection, calculations, and reporting.
• North American businesses spend an estimated US$187 billion annually on AP processing.
• 70% of SMBs have seen an increase in productivity with automation.
• AP automation can provide roughly 60-70% net savings in processing and labor costs.
• Small businesses account for approximately 80% of spending on AP processing.
• Adopting an automation solution can reduce the overall cost by around 75%.
• Reducing the hours spent on manual AP workflows can save up to $20,000 per year.
• Automating document processing can reduce administration costs by 10-15%.
• Reduced manual invoice processing costs can lead to annual savings of $35,000 USD.

Case studies

The only thing better than research is research that is relevant to your specific industry. That's where case studies come in! If you can share case studies from within your industry that demonstrate how AP automation has made significant, positive impacts to an organization's workflow and bottom line, those examples will go a long way towards helping you positively influence your key stakeholders.

If you're not sure where to find these types of case studies, Quadient has you covered with compelling examples from both small and medium-sized businesses (SMBs) as well as large enterprises, in industries including non-profit, hospitality, healthcare, technology and logistics, manufacturing.

Step 4: Zero in on the ROI

Now that you're armed with research and case study data, it's time to focus on the potential return on investment (ROI) of your proposed AP automation solution.

Here's how:

1. Calculate the total cost of the AP automation project (including licensing, subscription costs, maintenance, support, etc.).
2. Calculate the expected savings.
   Include both time and money savings expected thanks to improved AP workflows. Make sure to include both 'hard' costs such as data storage, printing and mailing paper-based invoices, employee work hours, etc., as well as 'soft' costs such as improved employee workplace conditions, reduced cases of burnout, improved vendor relationships, etc.
3. Tie your calculated ROI directly to the potential for improvement of your organization's unique KPIs. This will help your key stakeholders deeply understand how your proposal will benefit your organization.

And with that, you'll have a complete case study ready to present to your stakeholders, about why implementing an AP automation solution is the next and necessary step in your organization's evolution.

A real-life example

Here's an example of how you could construct an argument in favor of an AP automation solution like Quadient AP.

Staffing, time, and cost savings

• Help you take control of your cash flow workflows and vendor and supplier PO payment timings, empowering you to take advantage of early payment discounts.
• Automate your entire data entry process, letting your organization allocate staff to more strategic accounting tasks, leading to reduced burnout and a reduction in overtime.
• Eliminate checks as a form of payment, saving the time and cost they take to issue, print, and post.
• Get cash back rebates through Quadient's virtual credit rebate program, generating revenue for you as you pay your vendors.
• Use Quadient's Electronic Document Management System (EDMS) to efficiently digitize and capture data, archive documents, and automate routing and processing, saving you time and money and reducing the cost and risks associated with physical document storage.

Data entry efficiencies

• Save your company hours each week on manual data entry and invoicing, thanks to a 99% accurate invoice header data entry automation process.
• Integrate seamlessly with your existing accounting software (like QuickBooks, Sage, Oracle, Xero, and many others) to help you strengthen AP control and visibility while reducing inefficient tasks.

Invoice coding and approval process

• Use a combination of SmartCoding and human auditors to intelligently code invoices, along with automatic PO-to-invoice matching for a fast AP process.
• Approve invoices from anywhere, anytime, significantly reducing approval timeframes from days to minutes.

Payment workflow improvements

• Pay vendors electronically, so you can securely pay your invoices directly and on time through a virtual credit card, EFT/ACH, wire or automated cheque, with a single click.

Are you ready to automate?

Quadient AP can help you improve your AP workflows end-to-end. Need help building your business case? Book a demo today with an AP specialist to see how we can help you!