Making a business case for AP automation
While there are lots of practical reasons to make the shift from manual to automated accounts payable (AP) processes — such as greater fraud protection and real-time expense management — there are always a few objections in the way, including:
- Cost (budget)
- Time to implement (teams stretched thin)
- “If it ain’t broke…”
The good news is that building a robust argument for AP automation is easier than you might think. Whether you need to help your stakeholders understand why the cost to implement an AP solution will be far outweighed by the cost saved with automation, or if you need to start from the beginning and explain why in fact your current processes are broken, you’ve come to the right place.
In this blog, we’ll help you identify some key, high-level points to think through as you start to define your own business case for AP automation. We’ll also provide you with a ton of helpful resources, including our step-by-step business creation guide, a webinar that explains how to overcome objections and the estimated savings in greater detail, case studies in many different industries that you can use to help your proposed solution hit close to home, and a link to Quadient’s return on investment (ROI) calculator that will help provide tangible numbers to support your argument.
Manual costs more than you think
According to Goldman Sachs, businesses in North America spend an estimated $187 billion annually on AP processing. That number skyrockets to a staggering $510 billion when factoring indirect costs like short-term credit and fees for cross-border transactions. Much of that, states the investment banking firm, is tied to manual, paper-based processes that cost a lot when it comes to time, money, and impact on operations.
The good news is that implementing an AP automation solution can reduce these overall costs by approximately 75%. A simple demonstration of this can be seen when looking at processing costs. You can also use an ROI calculator to see how these costs would translate to your organization.
While a difference of $10-$12 may seem insubstantial at first glance, the numbers quickly add up. Assuming 500 invoices a month, a company would spend around $90,000 each year without automation. Given an estimated rate of $4 per invoice with AP automation, the annual savings amount to $66,000 — or roughly a 74% reduction in costs.
How is your team spending their time?
When you take a look at the financial impact of your AP operations, it’s important to consider both hard costs AND time investment. Considerations like how long your team is taking to complete their manual workflows, as well as the time that these manual processes take away from more strategic work.
A helpful way to explore this time investment is through case studies. Here are two examples of how companies have revolutionized their entire AP workflows with Quadient AP.
Quadient AP's centralized solution empowers Homepoint staff
Homepoint is a national, multi-channel mortgage originator and servicer in the United States, with corporate headquarters in Ann Arbor, Michigan.
The company was concerned about the integration of an AP automation software with its existing accounting system, Sage Intacct. They wanted a centralized AP solution and company-wide user adoption to standardize operations. Bill Fischer, Controller of Homepoint, explains their decision: "We needed to look into an AP automation solution to standardize our processes, to add some more structure, to track outstanding items and report on it to give the business a standard way of operating, rather than invoices coming to them directly from a vendor or customer".
The solution: Quadient AP provides end-to-end AP automation for Sage Intacct, the general ledger system where Homepoint records all of its general ledger activity. Invoices processed through Quadient AP automatically create journal entries in Sage, whether entering the invoice or the payment, as both systems are seamlessly integrated for a consolidated AP system. Homepoint’s AP staff can go into Quadient for paid invoices in the network, pull the payment and see everything that was paid, screenshot the payments and send them back to inquirers.
Thanks to Quadient, the Homepoint team now has a clear view of accounts payable at all times. "I can see who on the team needs help because they were off or sick, or which vendor to follow up on outstanding invoices. I no longer wonder what is missing in the email or did something get deleted. I’m able to have confidence on AP statuses, easily send out follow-up emails to approvers and we save about between three and five minutes per invoice in processing." - Sarah Rehbein, AP Manager, Homepoint.
Radisson Blu serves up AP enhancements through Quadient AP
Radisson Blu Hotels in North America were struggling with a time-consuming paper-based process in their accounts payable department. The AP team was spending 40% of their time on data entry and keying in invoices. A paper-based approval process was eating up even more time, and with a significant amount of the team working remotely, it was vital that they developed a method of moving invoices through the system that could be accessed from any location. They also wanted to find ways to reduce the cost of AP, giving them greater fiscal security.
“Managers would get the paper invoices, give them codes and then sign them off,” explained Director of Finance, Dean Olevson. “They would go to the AP clerk who would then manually add the data into the system. Then they would come to me, to check the codes and approve them in batches.”
The solution: Quadient AP. Radisson Blu now saves more than 50% of their time in AP, and has gone 85-90% paperless. “Before Quadient AP, our AP clerk was spending 30-40% of their time doing data entry and keying in invoices. The whole process was time consuming and Quadient AP has eliminated a lot of that. We’re saving at least 50% of our time in accounts payable.” - Dean Olevson, Director of Finance, Radisson Blu Minneapolis Downtown.
Are you ready to automate?
Are you ready to start building your step-by-step business case for AP automation? Are you looking for more information about how automation can help improve your organization’s AP workflows? Are you ready to jump with both feet into automation?
No matter what you need, we’re here to help. Book a demo today with an AP specialist to see how we can help you!
