Manual expense reporting and invoice processing are huge efficiency killers for both business travelers and corporate finance teams. By automating these processes through the implementation of expense and invoice management technology, organizations can save tens or even hundreds of thousands of dollars per year.
Related: How an Unfriendly Expense Process Can Negatively Impact Your Quarter-Close
However, the financial benefits of eliminating inefficient use of employees’ time can often just be a fraction of the overall financial benefits. The big-ticket improvements come from the visibility that automation delivers. Knowing where an expense item or invoice is in the approval/payment cycle can in and of itself lead to significant benefits by eliminating the negative impact of missed/late payments. In addition, the ability to effectively and quickly analyze huge volumes of data points stored within these solutions enables finance and travel teams to deliver a wide range of cost-control and value-creation opportunities. Having access to the data in a digestible format allows organizations to make strategic decisions based on actual data versus intuition.
Related: Top 10 Perils of a Manual Expense System
I recently moderated a webinar that we held in conjunction with Proformative and Morgan Lewis, an international law firm with 31 offices across 3 continents. The webinar discussed the topic of AP automation and how the insight that it delivers can benefit an organization both in terms of day-to-day operations, as well as smarter financial decision-making. As with many webinars, we asked a few questions of the audience, which comprised almost 200 senior financial decision-makers from across the country. It was notable that many in the audience still had very limited visibility into their AP and expense process, and they did not leverage their AP/expense data to make more informed spending decisions.
Related: Why the Manual Invoice Processing Model Is Broken (and How to Fix It)
We first asked how much visibility the audience members had into their organization’s AP process. Alarmingly, 12 percent said that they often have no idea that an invoice has even been received until it is submitted to the AP team for payment. A further 49 percent said that although they know when an invoice has been received and who should be approving it, they have no visibility into where it is in the approval process. In short, more than six in 10 AP teams aren’t able to locate an invoice until they finally receive it for payment. Not only could this mean that an invoice could get lost in the system, but it could also lead to late payment penalties, duplicate payments (if a vendor sends out a reminder invoice which is paid first), and eliminates the potential for benefiting from early payment discounts. In fact, only 30 percent of respondents answered that they know where an invoice was in the approval process.
We then asked how (if at all) organizations analyze the spend data. Nine percent responded that they didn’t analyze it at all, which leaves them exposed to huge financial exposure, and also gives senior management zero visibility into spend. Thirty-five percent said that while they do analyze data, it’s only for internal reporting and compliance. So, almost 45 percent of organizations don’t leverage their spend data to help drive down costs.
A further 30 percent analyze their data to identify areas of wasteful, inefficient or fraudulent spend, which can enable them to identify significant areas for cost control. Only 12 percent of those polled use the data collected from their expense and AP spend to track category/vendor spend and negotiate favorable rates with their suppliers. These organizations could be leaving millions of dollars on the table by failing to spot inefficient spend and not optimizing their vendor relationships.
Of course, this was an unscientific survey, and maybe the fact that many of them had such limited insight was why they were attending the webinar! However, it highlighted how many companies could seriously harm their bottom line as a result of limited spend visibility.
Watch the Recorded Webinar: Driving Insights with AP Automation
If you’d like to learn more about how your organization could benefit from deeper spend insight, the webinar contains an interesting case study from Morgan Lewis about how greater visibility benefited them. We have also developed a white paper, Insight, not Intuition: How Expense and Invoice Management Drives Smarter Business Decisions, which details ways that your organization could better use its spend data.
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.