What are outdated, legacy, or manual AP systems really costing you?
Money is kind of a big deal, so it’s really not out of the question to have multi-step review and approval processes to pay out money to vendors. Yet, too easily, Accounts Payable teams can wind up flooded with approvals and processes, particularly when facing influxes of invoices with outdated procedures, legacy systems, manual entry, or all three.
In other words, if your AP teams are spending a lot of time pushing paper, that could be costing you serious dollar bills in errors or delays. But how much are we talking here? Here are some fast facts to consider.
When clicks cost tick tocks and time is money
Manually processing invoices is both physically and financially draining because it consumes the most finite and valuable resource known to all creation — time. According to a research report by Ardent, the average processing time for a manually handled invoice is about 17 days, and costs approximately $12.88. Compare that with an automated invoice process that achieves straight-through processing, costing roughly $2.78 per invoice, and is completed nearly instantly.
Plus, during that almost three weeks of manual processing, you’re not only driving AP teams nuts in manual data entry and verification, but your finance teams are losing out on early pay discounts which can account for roughly $3 million in opportunity costs on every $1 billion spent.
Leave your legacy — don't live in it
A legacy system may sound like a positive thing, but we use it with a rather negative connotation. Maintaining legacy, outdated infrastructure can feel like the safer route because there’s no front-end spend, but it’s far from being cost-effective in the long term. According to a SurveyMonkey assessment citing 325 respondents, Organizations spend upwards of $39,000 per IT employee annually just to support outdated systems. And in regulated industries like energy or manufacturing, that cost rises to over $53,000.
Furthermore, when legacy systems can’t integrate with newer software, teams can end up spending even more time reconciling data. And like we said, time is money and clicks cost… you get the idea.
To err is human but also really costly
When teams are ill-equipped or overloaded, they can end up incorrectly reading an invoice, or the monotony and tedious nature of inputting data can lead to keying errors. The good news is that everyone makes mistakes. The bad news is that these seemingly minor inconveniences can, at the very least, create a lot more work, and at the very worst, cost a lot of money.
According to an IOFM AP benchmark, approximately 39% of manually processed invoices end up containing errors, including incorrect amounts, missing information, or the biggest offender, duplicate entries, which occur in roughly one-third of businesses. Each of these errors can add anywhere from 25% to 50% more to the original invoice cost due to extra labor for reconciliation and reprocessing.
Nearly half of all supplier invoices received are paper - and that's crazy
You’d think that with the pervasive nature of cloud, AI, and remotely-connected work and collaboration, we wouldn’t still have such a reliance on paper. And yet, according to further research, a staggering 49.7% of invoices are still received manually. Unless you’ve taken initiative to prioritize an automated mailroom, that’s all paper that needs to be manually scanned or input into a database by hand, and that’s exactly where errors can happen.
Beyond the fact that paper is slow (it isn’t called snail mail for nothing), it also requires significant capital investment, including costs for hard-copy paper, storage, storage space, printing costs, and more. Due to ongoing supply shortages and increasing input and shipping costs, the prices of paper and postal rates have continued to climb year-over-year. All that to say, cutting paper out of the equation can reduce invoice processing costs by as much as 80%.
Rethinking your AP strategy
At this point in time, AP automation for invoices is one of the most straightforward and achievable automation projects. Because just about every organization deals with invoices, intelligent capture algorithms like those running in KeyMark’s CloudCapture capture-as-a-service, and Hyland IDP have become incredibly sophisticated with AI to recognize the semi-structured nature of invoices and grab information regardless of layout for straight-through processing, including:
- General invoice info like due dates, purchase orders, terms, and notes
- Vendor/supplier information
- Line item details including descriptions, quantities, unit price, and discounts
- Subtotals, tax amounts, fees, and grand totals
- Banking information
AnMed AP wields invoice capture for improved gains
Healthcare system automation case study
The Problem
AnMed Medical Center’s AP department manually processed over 6,000 invoices per month, a considerable time investment prone to errors.
The Solution
KeyMark provided a customized intelligent capture solution to rapidly capture, classify, store, and index critical invoice data for fast retrieval with robust organization.
