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The Outperformer’s Approach to Financial Process Automation
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January 11, 2021 Blog

 

Authored by: Zakir Ahmed, Senior Vice President & GM – Asia Pacific & Japan at Kofax

Achieving more with less is the mantra of our times. C-suite leaders demand greater efficiency. CFOs are looking to reduce costs. Customers and employees expect stellar experiences. The ability to outperform these expectations hinges on your financial operations, a vital area impacting every facet of your business.

Financial process automation is the key to operational efficiency and the overall success of your business. Even small- and medium-sized businesses are investing in process automation to optimise the financial processes within enterprise resource planning (ERP) systems, such as SAP.

For many, accounts payable is the first financial process to be automated. Like many other financial areas, Accounts Payable (AP) is mired in paper and consumed by highly manual tasks. For these reasons, once AP is automated, the benefits become quickly apparent, leading firms to immediately consider which other financial processes they can optimise. However, outperformers know the approach that yields the greatest return is the automation of the entire purchase-to-pay process chain.

 

Why a high-level of automation is an advantage

According to research by Shared Services Link and Kofax, just 12% of organisations with high levels of automation manually process their invoices compared to 74% of those with low levels of automation. In addition, only 41% of highly automated companies experience problems with purchase orders, 24% have poor visibility into spend, and 8% fail to capture early payment discounts. By comparison, those with low-level automation report these same problems significantly more often: 68%, 23% and 24% respectively.

Comparing “best-in-class” organisations to others illustrates the sharp differences. According to Ardent Partners, a “best-in-class” organisation processes 57.1% of all invoices “straight-through,” in just 3.9 days at an all-inclusive cost of $2.87 per invoice. By contrast, the gap with other organisations – those with low levels of automation – is wide: Only 16.1% of invoices are processed straight-through, and a single invoice takes 17.1 days to close and costs $15.38. Further, “best-in-class” organisations experience 81% lower invoice processing costs and 77% faster invoice processing cycle times.

 

Why ERP optimisation?

Another reason to follow the outperformers’ approach is to increase the return on investment of Enterprise Resource Planning (ERP) software. Many organisations haven’t fully leveraged their investments in ERP software, like SAP, giving them plenty of hidden opportunities to exploit.

Meeting the high bar for raw numbers of invoices and payments processed is exceedingly difficult without automation. Every time the process is interrupted because the PO number is wrong, there’s an invoice exception or an early pay discount is missed, the process slows appreciably – or breaks down entirely.

One option is to use a certified add-on solution providing a single software platform to automate a series of processes directly within the ERP system. For SAP users, this type of solution offers more than integration with the ERP system; it provides the exact same look and feels like any other SAP transaction. It can be presented inside of the SAP GUI, providing non-SAP users with an intuitive interface and offering a real-time view of workloads, pending tasks, document inflow, ongoing transactions and up-to-the-moment validation against SAP data. Solutions like this are proven to help users become more cost-efficient, improve control over financial processes and shorten total processing times.

 

How to dominate your financial process

As the examples above show, expanding process improvement from AP to the entire purchase-to-pay process chain allows you to dominate your financial processes in SAP, realise maximum efficiency and take your current ROI to the next level. Whether you’re just starting your automation journey or want to expand past AP, a full-scale strategy for end-to-end financial process automation will enable you to begin working like tomorrow, today.

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