Cost-cutting with accounts payable automation.

• Author: Bohn, Tom
• Position: Technology

Automation is a tricky word when it comes to accounts payable operations. For some departments--those just starting the journey toward becoming fully automated--it means introducing imaging technology that streamlines the way they handle invoices. For departments that have embraced the latest advancements in accounts payable technology, it means taking advantage of dynamic discounting through portal software that lets vendors service their own accounts.

One thing is clear: Technology holds the key to transitioning accounts payable from a cost center into a profit center and making the AP professional's job strategic and even more relevant. The problem, say industry watchers, is that there's no "one size fits all" solution and each department is left to cobble together its own set of tools to fit its individual needs.

So should an AP department automate or not? It's a tough call. Some aren't sure where to begin, how much to automate or what technology to use. But there is good news.

The number of tools is growing as innovative companies work to solve the AP automation dilemma. And users are largely satisfied with AP automation technologies, once they implement them.

As the AP profession gains new stature, capturing the attention of controllers, chief financial officers and even chief executive officers looking to cut costs and preserve precious dollars in an economy hit hard by recession, companies that offer solutions in AP technology are racing to come up with ways to improve speed and accuracy in processing payables.

The Challenge

How much is the AP profession using technology? Not much yet, according to the 2009 AP Automation Study, which was conducted by International Accounts Payable Professionals (IAPP) land Software Inc. and IAPP's sister organizations, International Accounts Receivable Professionals and The Association for Work Process Improvement (TAWPI).

Based on the survey participants, 95 percent of AP departments are still receiving their invoices via paper/mail. More than half of respondents (54 percent) still use a manual process to capture data and facilitate the approval process. In addition, 62 percent of the respondents indicate a minimal amount of automated invoice data capture, with manual entry of invoices.

It's important to note that the manual capture and approval process impedes the AP operation for many reasons. Among them: The mail process is not 100-percent reliable; processors are handling piles of paper in many...