The Art of Automating Invoices: Knowing When to Make the Switch

Over the past decade, the landscape of financial software has undergone significant transformation. Although more than 70% of accounts payable (AP) departments have embraced invoice automation software, only 9% have fully automated their accounts payable process. Deciding whether automating invoices is right for your business involves careful consideration. This guide aims to assist you in understanding when to make the switch to invoice automation software and the most important factors to consider during this crucial decision-making process.

Top Reasons Invoice Automation May Not Be for You

Almost, if not, everyone has heard of invoice workflow or automation. In fact, 71% of people believe increased automation will be the biggest e-invoicing trend of 2023. But how can you figure out if it’s right for your business? While it has many benefits, there are several reasons why a company may delay implementing invoice automation software or not do so at all.

Invoice Volumes

Perhaps the easiest way to measure the impact of automating invoices on your business. And the tipping point is around 500. If you typically process fewer than 500 invoices per month, with no expectation of a significant increase in the near future, it is difficult to justify implementing an invoice automation solution. However, it is important to consider the potential benefits and efficiencies that automation could bring even with low invoice volumes before coming to a definite decision. Take, for example, high human error rates or consistently poor supplier relations due to lost or misplaced invoices.

Cost Concerns

Some businesses find themselves in a situation where they lack the tools to accurately calculate the costs associated with their existing AP process. In fact, according to Gartner, 33% of organisations are unable to determine the cost of their invoice process, largely due to a lack of visibility. Additionally, concerns about return on investment (ROI) arise, prompting a need to thoroughly analyse potential costs related to automating invoices. Balancing these costs against the long-term benefits becomes a critical aspect in the decision-making process.

Low Priority

Despite having the necessary funding, organisations may face competing priorities in different departments, diverting attention and resources away from invoice automation. While recognising the significance of streamlining invoice processes, there may be more pressing concerns in other areas that take precedence. Striking a balance between competing priorities becomes essential to ensure comprehensive organisational growth.

Resistance to Change

In the rapidly evolving landscape of technology, resistance to change is common. 80% of CIOs said that resistance, not a lack of technical skills or resources, was the main reason why technology projects failed. The fear of embracing unfamiliar new solutions, like invoice automation software, can hinder progress. It is important to underscore that reluctance to change should not unduly influence decisions regarding the implementation of invoice automation software. Ensuring that end users are involved in the early stages of any vendor selection process limits resistance and makes sure you choose the right invoice automation providers for your business needs.

Limited IT Resources

Many individuals lacking in-depth knowledge of AP software are understandably wary of implementing a new software for such a vital process with a perceived absence of the right resources, especially in terms of IT expertise. It is important to note that the IT resources required will be provided by the vendor. Your organisation will not be expected to have specialised IT or other resources. Overcoming this challenge involves providing adequate support and training to bridge the knowledge gap and empower users to embrace and leverage the new technology, which can take up time that your organisation may not have.

Security & Reliability Doubts

In an era where cyber threats (the rate of cybercrime has increased by 600% in the past three years!) are becoming increasingly sophisticated, concerns about the security and reliability of unfamiliar software in the accounting process are valid. Businesses are rightfully cautious about potential vulnerabilities and risks associated with adopting new technologies. Addressing these concerns involves thorough vetting of software solutions, implementing robust security measures, and providing assurances that the chosen invoice automation providers adhere to industry standards (Cyber Security Essentials, MFA) and your specific security policies.

Adoption Time & Training

Resistance to change can significantly delay adoption of a new product or system. Overcoming this resistance requires assurances from vendors regarding the reliability and ease of use of invoice automation solutions. Providers will typically have extensive experience onboarding even the most technophobic with comprehensive training. Of course, it is crucial to evaluate the time required for system adoption and training to ensure the organisation is prepared for potential disruptions during the training phase to minimise any negative impact on business as usual.

Top Change Events that Lead to Automating Invoices

Change events are catalysts that prompt action within a company to alleviate pain points. In Kefron’s experience, these are the most common change events that lead a company to implementing invoice automation software.

Technological Advancements

Staying up to date with technological advancements is vital for businesses aiming to maintain a competitive edge in their field(s). The rapid evolution of technology means companies must keep current with industry trends to better prepare for innovation. Embracing these advancements allows organisations to enhance efficiency, deliver superior products, and ultimately gain a strategic advantage over competitors.

Legacy Systems

Assessing the limits of existing legacy systems becomes essential, especially as contracts approach their end. Legacy systems, while once reliable, may impede progress and hinder adaptability. Considering replacing your legacy systems with more updated solutions offers opportunities to modernise, improve efficiency, and better align with current business needs.

Changing Enterprise Resource Planning (ERP) Systems

Changing ERP systems presents an organisation with the opportunity to revaluate the other financial software in place to optimise invoice workflow and processes. Choosing an invoice automation solution that seamlessly integrates with the new ERP system from the outset ensures a smoother implementation process and facilitates a cohesive and efficient financial ecosystem.

Growth / Acquisition

The dynamics of growth or acquisition can introduce considerable challenges and opportunities within a company. The need for restructuring teams, standardising processes, managing a larger workload, and coping with increased invoice volumes are common pain points. Addressing these challenges strategically is vital to maintaining operational efficiency, ensuring compliance, and managing the heightened demands on the back-office functions. Implementing an invoice automation system standardises your accounts payable process across your organisation and allows your AP team to dedicate their time and talents to more value-adding tasks rather than manually handling invoices. Find out how Kefron AP helped this global cybersecurity company that has been achieving compound growth.

Global Change

Global events, such as pandemics or geopolitical conflict, necessitate a paradigm shift in the way companies operate. Adapting to necessary changes, such as a widespread need for remote work, becomes imperative for business continuity. Embracing such changes with technological improvements not only better allows organisations to adapt to unexpected challenges, but also promotes a more diverse and adaptable workforce by facilitating flexible work. A good invoice automation solution will ensure complete security and easier access to information from anywhere.

Change to Legislation

Evolving legislation demands proactive adjustments from businesses to ensure better compliance and alignment with environmental targets, for example. The shift towards e-invoicing, for instance, underscores the importance of having digital invoicing systems in place before regulatory changes take effect. Implementing an invoice automation system means companies are better prepared, ensuring a seamless transition and adherence to emergent legal requirements.

Staff Challenges

Staff challenges arising from paper-heavy processes, tedious manual tasks, and under-stimulated employees can impede productivity and contribute to high turnover rates. Recognising the impact of these challenges is crucial in addressing issues with staff retention and employee satisfaction. Introducing AP automation to alleviate manual burdens can not only enhance operational efficiency, but also contribute to a more engaging and fulfilling work environment as AP teams are able to dedicate themselves to more fulfilling, valuable work. According to our own research, here is how AP teams’ time is typically spent

AP Process – Time Spent

• 40% on manual invoice data entry
• 15% on answering queries
• 15% on resolving disputes
• 10% on chasing approvals
• 5% on finding documents

What to Consider When Selecting an Invoice Automation Partner

In adherence to the insightful advice that suggests initiating automating invoices when monthly invoice processing surpasses the 500 mark, the importance of thorough consideration becomes paramount. In the vast landscape of over 70 invoice automation providers, making an informed decision necessitates diligent research, ensuring alignment with your unique business needs. As a seasoned partner in guiding companies through the initiation of their accounts payable process automation journey, Kefron emphasises the significance of evaluating solutions based on your organisation’s individual needs. This careful consideration ensures that the chosen invoice automation solution seamlessly integrates with your workflows, maximises efficiency, and aligns with your long-term business objectives.

• Your Company’s Needs

  Recognising and understanding your company’s needs is pivotal in the automating invoices journey; it is imperative to engage relevant stakeholders at the outset. By doing so, a comprehensive exploration of specific requirements can be conducted, laying the groundwork for a tailored and effective solution. Involving key stakeholders ensures that diverse perspectives are considered, promoting a holistic understanding of the intricate workflows and processes unique to your organisation. Early involvement ensures that the chosen solution seamlessly aligns with your business objectives, fostering a transformative and efficient accounts payable process.

• Return on Investment (ROI)

  It’s important to understand the effects that any potential new software will have on your organisation. Figuring out how to calculate the potential ROI to justify the investment in invoice automation software is vital. Manually processing invoices involves several direct and indirect costs. Gartner has calculated that the average price to manually process an invoice is between £4 and £25. This is lowered significantly with an invoice automation solution. In fact, our own clients have gained ROI within months of implementing Kefron AP Automation.

  

  To calculate your ROI for such a solution, you need to understand the cost of manually processing invoices. A quick formula to calculate this is:

  Labour Cost Savings = Time Saved per Invoice x Number of Invoices Annually x Hourly Labour Cost.

  At Kefron, we utilise the following metrics to calculate the cost of the manual process to then calculate the ROI
  

  An easy way to work out your ROI is to calculate your total annual benefits (labour cost savings, material savings, error reduction, etc.) and use them in the following formula to calculate ROI as a percentage:

  ROI (%) = [(Total Annual Benefits – Total Annual Costs of Solution) / Total Annual Costs of Solution] x 100.

  Below are some metrics Kefron utilises to calculate ROI for our clients through our ROI Dashboard.



• Integration Capabilities

  When considering an invoice automation solution, it is critical to prioritise its integration capabilities. It is important to ensure your chosen solution seamlessly integrates with your existing systems. This proactive measure not only avoids potential disruptions in your invoice workflow but also streamlines the implementation process. By opting for a solution that harmonises with your current technological landscape, you enhance the overall efficiency of your accounts payable process, creating a seamless and interconnected business environment.

• Security & Reliability

  Security and reliability are cornerstones in choosing an invoice automation solution. It is important to prioritise solutions that comprehensively address your security concerns, especially in an era of increasing cyber threats. The chosen solution should not only uphold robust security measures but also facilitate secure remote work, aligning with the evolving work landscape. Compliance with data protection and relevant legislation is non-negotiable. By placing emphasis on security and reliability, businesses can trust their financial processes and safeguard sensitive information with diligence.

• Experience & Support

  In the realm of automating invoices, the vendor’s experience and level of support play pivotal roles in ensuring a successful implementation. Opting for vendors with a proven track record, particularly in projects aligning with your specific requirements, provides a solid foundation for success. Thoroughly vetting a vendor’s experience ensures that they possess the expertise needed to address unique challenges. Equally important is the availability of comprehensive training and support for all users. A reputable vendor should offer a comprehensive demo and requirements gathering session prior to any project, setting the stage for a collaborative and well-supported implementation journey.

Making the switch to automating invoices is a strategic decision that requires a thorough understanding of your organisation’s unique needs and challenges. By carefully evaluating the considerations outlined in this guide, you can embark on your invoice automation journey with confidence and choose a solution that aligns with your business objectives. To gain detailed insight into whether automating invoices is for your company, talk to an expert invoice automation specialist today.

FAQ about automating invoices

What is automating invoices, and why is it important for my business?

Automating invoices involves using invoice automation software to streamline the accounts payable process. This approach replaces the traditional, manual methods of processing invoices with digital, automated workflows. By reducing manual data entry and minimising errors, automating invoices speeds up the entire process, ensuring that invoices are processed more quickly and accurately. This leads to greater efficiency, enhanced compliance, improved vendor relationships, and significant cost savings, ultimately helping businesses align with their long-term objectives.

How do I know if my business is ready for automating invoices?

Your business may be ready for automating invoices if you process more than 500 invoices per month, spend considerable time manually handling invoices, or experience frequent errors and inconsistencies in invoice data. Other signs include slow processing times, missed payment deadlines, and an overall desire to improve efficiency, accuracy, and compliance within your accounts payable process. If these pain points sound familiar, implementing an invoice automation solution could be the strategic step your business needs.

How can invoice automation help address staff challenges?

Invoice automation software can help address staff challenges by reducing the burden of manual data entry and tedious tasks. By automating repetitive tasks, staff can focus on more value-adding activities, improving productivity and reducing errors. This shift allows AP teams to work on strategic tasks that provide greater job satisfaction, ultimately reducing turnover rates and fostering a more engaging and fulfilling work environment. According to our research, AP teams typically spend a significant amount of time on non-productive tasks that automation can easily handle.

How can I ensure a successful implementation of invoice automation?

Ensuring a successful implementation of invoice automation starts with engaging relevant stakeholders early in the decision-making process. Involving all departments affected by the change helps identify unique requirements and tailor the solution accordingly. Selecting the right vendor with experience in similar projects and offering comprehensive support is critical. Providing thorough training for all users and developing a clear transition plan can minimise disruptions during implementation. Setting measurable goals and KPIs will help track progress and demonstrate the ROI of the solution.

What are the key benefits of automating invoices with Kefron AP?

Kefron AP offers several key benefits for automating invoices. Improved efficiency and accuracy in the accounts payable process are achieved through seamless integration with existing ERP and financial systems. This helps clients realise quick ROI, typically within months. The solution adheres to comprehensive security measures aligned with industry standards and enhances visibility, compliance, and vendor relationships. Furthermore, Kefron AP provides tailored solutions and expert support throughout the implementation journey, ensuring your business’s unique needs are met effectively.