Accounts payable is often the stepchild of a company’s accounting and finance department. After all, its main function (perceived function, at least) is to send money out of the company. At best, unfailing scrutiny of invoices can prevent duplicate charges or overbilling by vendors, but on the whole CFOs and controllers tend to have one mission for the A/P staff: wait as long as possible to pay.
One solution is the automation of the A/P system. The average costs of paying an invoice, and the potential savings that can be realized, is a topic for another day. But while most agree that automation is desirable, the cost of conversion can be steep. However, there is another challenge that is likely to grow ever more significant in the future: the need for higher-skilled employees to manage automated systems.
A study by The Hackett Group revealed that organizations defined as “world-class” significantly outperformed their industry groups in terms of A/P full-time equivalents (FTEs) per $1 billion in revenue, invoices per FTE and purchase orders processed per FTE. The differences are noteworthy: Per $1 billion in revenue 4.4 FTEs for world-class companies compared to 13.2 FTEs, 23,236 invoices processed per FTE compared to 10,563, and 12,776 purchase orders processed per FTE compared to 4,653.
This staggering increase in productivity, however, was accomplished with higher-paid, higher-skilled staff members. Smaller organizations may be hard-pressed to offer total compensation packages (salary plus benefits) capable of competing with large companies. Moreover, higher-skilled individuals will only become harder to find as labor forces continue to shrink across most of the industrialized world.
One solution is to automate through an outsourced provider. This brings the benefits of A/P automation without the conversion costs or the need to maintain the necessary staff. For some organizations, this may be the most logical answer at their current size. ProcessOne not only provides an A/P solution but can also evaluate your organization and its needs to determine what approach is right for you.
Do you face similar problems? Do you wish you had the time to focus on more important things than manual AP processing? We at ProcessOne are happy to help you identify your potential and to solve it.