Critical finance benchmarks you need in 2014

Christmas is more than a month away, but any Finance department looking to prune paper from its A/P process has just been handed a major gift to help in that quest.

Recently released benchmarks from Iron Mountain give you an idea of the true savings potential from shifting to a more “electrified” payables process.

And the savings are significant.

Take a look at what the survey uncovered so you can not only benchmark your existing costs against what your peers spend, but see what how much you stand to save by making a change.

Paper vs. Electronic, by the numbers

Hopefully you have a good idea of just what it’s currently costing you to process an invoice, no matter how you’re doing it. Compare your numbers against these:

Of companies that process paper invoices:

• 12.2% spend less than $2 per invoice
• 22.9% spend $2 to $5 per invoice
• 14.6% spend $6 to $10 per invoice
• 5.4% spend $11 to $15 per invoice
• 7.3% spend $16 to $25 per invoice
• 1% spend more than $25 per invoice, and
• 36.6% aren’t sure.

Contrast that with your peers who have decided to save some trees (and plenty of money along with it).

Of companies that process electronic invoices:

• 31.1% spend less than $2 per invoice
• 15.5% spend $2 to $5 per invoice
• 6.3% spend $6 to $10 per invoice
• 3.9% spend $11 to $15 per invoice
• 0.5% spend $16 to $25 per invoice
• 0.5% spend more than $25 per invoice, and
• 42.2% aren’t sure.

Depending on how your numbers compare, you can calculate how much you stand to save by making a switch – even if it’s only with some vendors.

In fact, many companies find they have better success with a phase-in approach rather than making all their suppliers jump in with both feet.

But no matter what, you certainly don’t want to be one of those companies in the last company that isn’t tracking their invoice processing costs. Impossible to track the progress you’re making when you don’t know what you’re spendng now.

Keep the momentum going

Of course, you can attack this on many fronts, even if your company chooses not to jump on an end-to-end automated system. Think about all the different parts of the process where you could remove the paper. Each of those presents an opportunity to streamline and cut costs:

• Purchase orders/requests. Starting the process paperless gets you off on the right foot. By teaming with purchasers you can make up an electronic form that may even be more comprehensive than the paper one of the past.
• Invoices. You have plenty of options here, whether you have vendors simply email you a pdf of your bill or have them submit invoices via a secure portal on your website. Depends on how much technology resources you have access to.
• Approvals. This may be one of the easier parts of the process because it’s strictly internal. There’s no need to pull vendors along on your paperless plans.
• Payments. Again, your company has many different routes it can go when it comes to paying your vendors electronically. But no matter what method — or methods —  you embrace, be sure to watch security. While definitely more secure than paper checks, electronic payments are vulnerable to payment fraud. You you’ll want the proper safeguards in place to protect everyone.

Info: To download the 2013 A/P Automation Survey, click.