What is accounts payable automation?
Automation of the accounts payable process, also known as trade payables, is a technique for reducing human involvement and getting rid of processes that are prone to error. This is accomplished by utilizing accounts payable automation software connected with a digital supplier-partner network.
As a CFO or finance controller, you’re constantly looking for methods to maximize the effectiveness of your accounts payable tools and (AP) department. However, it might be difficult to determine the kind of return on investment (RoI) you can anticipate from new investments. To help with this endeavor, we have created an AP automation ROI calculator that provides you with specific information about the possible savings across your accounts payable activities, especially invoice processing. But before you start looking at successful AP Automation ROIs, The Institute of Finance and Management (IOFM) suggests financial leaders to understand some nuances before you or your organization is in the process of proposing or implementing an automated solution.
The Zycus AP ROI calculator processes five customer inputs on their existing accounts payable softwares/ operations using the e-invoice maturity model. The e-invoicing maturity model evaluates where an organization stands in terms of process optimization and is based on a standard methodology for AP efficiency.
Unravelling the e-invoicing maturity model
The e-invoicing maturity model reflects the current stage of maturity of an organization’s accounts payable software, especially invoicing process. It has four stages: Nascent, Evolving, Mainstream, and Best in Class.
- The Nascent stage is where all invoices are received and stored in the form of papers. AP software sub-processes/steps, including invoice capture, invoice matching, invoice workflow and approval, exception handling, payment, discount management, and supplier management are disconnected and completely manual.
- The Evolving stage is where invoice capture is through OCR engines. The paper invoices are scanned and converted to a pdf format. Data is extracted using OCR engines and fed to an ERP system.
- The Mainstream stage is where there exists an integrated ap automation software product working in tandem or a single software product covering invoice capture, workflow management, invoice matching, and payment integrated tightly with ERP systems.
- The ”Best in Class” stage is where AP processes are automated and efficient. Suppliers are active participants in the process and most of the invoices submitted are in an electronic format. Data across procurement, suppliers, and account payables is tightly integrated and centralized enabling insightful reporting that helps in strategic decisioning for capturing financial gains.
This e-invoicing maturity model helps CFOs and finance controllers make informed decisions about how they want to approach AP automation tools and get real-time feedback on expected RoI.
For more on the e-invoice maturity model, read: e-invoicing Maturity Model for AP Process Improvement
Step 1: Inputs to Zycus AP ROI calculator
The calculator requires five inputs from the users:
- The number of invoices processed per year, which is the total number of invoices processed in an organization on an annual basis
- The number of AP FTEs per month, which is the total number of full-time equivalent employees required for AP processing at present
- Percentage split of Invoice processing: the percentage of paper and PDF invoices, the percentage of scanned image invoices, and the percentage of electronic invoices (XML/EDI).
With these five inputs provided to the calculator, organizations can get a clear picture of their current maturity level as well as the possible accounts payable roi that can be realized via zycus’ AP automation software.
Step 2: Output from the Zycus AP ROI calculator
The users will receive 3 types of outputs from the calculator, the first of which is the current maturity model classification of the organization (i.e., where the user organization stands in terms of the e-invoice maturity model.
The second output is the expected percentage split of invoice processing in 3 years after implementation of Zycus AP automation solution. The chart provides the current split vs. the split in the next 3 years, with Zycus implementation.
The third and final type of output will provide the users with an estimated increase in average invoice processed per FTE per year, the process and FTE savings, and the total savings over a 3-year period that can be achieved with Zycus’ accounts payable automation software.
To understand how AP automation can help organizations reduce costs, read: Three ways AP automation helps organizations reduce costs
The Zycus Accounts Payable ROI Calculator makes it easy for CFOs and finance controllers to quickly assess their current level of performance across AP operations and determine how much money could be saved by automating with Zycus AP automation solution. This powerful and interactive tool provides users with actionable insights into their savings potential by using just five inputs regarding their current AP operations. Explore and discover the benefits of Zycus’ AI-led AP Automation in your organization with a free Accounts payable automation ROI calculator.