I have been thinking about some of our clients who are currently buying other businesses and consolidating their back-office functions with their own, and thus relying on ITESOFT to assist them with a scalable accounts payable process.
This led me to ask the questions: “What is a scalable process?”, “Why is it important that they are scalable?” and “What can companies do to ensure a scalable accounts payable process?”.
What is a scalable process?
A scalable process is defined by the ability to increase in process volume, whilst the input of effort is less than proportionate.
In other words, an accounts payable process involves processing supplier invoices into an ERP or payment system.
A scalable accounts payable process might mean that the team could double their volume of invoices to process without doubling the size of their team.
Why is it important to have a scalable accounts payable process?
In the example in the introduction, a company is buying another business to diversify their portfolio, scalability is important.
This is because scalability will ensure the seamless transition from two companies processing their invoices separately, to one company doing them all with little extra help.
Another example might be that a business is expanding into new territories and want a centralised accounts payable process.
This company will not want to spend the resources in opening a new office in the new territory when they already have a perfectly good team back in the head office.
Instead of hiring a new team, they can simply send invoices through the existing automation system by simply increasing their subscription with their automation supplier.
Since ITESOFT will guarantee 85% throughput, this means that if a company went from processing 50,000 invoices a year to 100,000, they would only have to go from manually dealing with 7,500 invoices to 15,000.
Remember, this is the minimum throughput, so in reality it is likely to be a lower percentage that needs to be dealt with by accounts payable.
Since in a completely manual environment, paper and all, the average AP clerk processes 10,000 invoices per year, the likely outcome of this increase would be that the team could remain the same, or go from 1 person to 2 people, as opposed to going from 5 to 10 people.
What can companies do to ensure a scalable accounts payable process?
Okay, maybe not paperless, but as paper-free as you can get.
Paper slows down processes since the information on the paper is only available in physical form, on that sheet of paper.
Once the invoice is digitalised, either by scanning the paper invoice or by convincing suppliers to issue electronic invoices, then all the data on the invoice is available to other systems to search through and analyse.
Now, as digital documents, invoices can be automatically entered into workflows, matched with purchase order numbers and be ready to pay whilst remaining untouched by human intervention.
Ensure technology will work across your systems
When a company purchases another business, they will almost definitely have different systems that require different styles of integration.
Making sure that your technology is agnostic (inter-operable among various systems) will mean you can centralise the process as soon as possible, and start reaping the rewards.
This is another scalability attribute, since you won’t need to kick of a new project to start taking on the work load from the new acquisition.
Analyse current technology – is it fit for purpose? Can it support multiple languages?
What do you have currently in place that might fall through if you need to expand your process?
This could be as simple as upgrading a single page scanner to a batch scanner to enable you to set it and forget it to scan your documents into the system.
If you are likely to be opening up in a new territory, then you might start getting invoices in different languages and currencies.
Can your current systems handle that?
How about exchange rates?
These are things you will need to consider when deciding if your accounts payable processes are scalable.
Scalability is all about future proofing your process.
If you are confident that as your business grows, your technology (and team) can handle it, then you have yourself a scalable process.
If not, then maybe it’s time to scour the market for something that can cover all bases should it need to.
The worst place to be is unready. Of course, you will be forewarned when your company is about to grow, but not having to kick off a project in every department to accommodate for growth is going to take a lot off your mind and that will equate to productivity.
Sharedserviceslink recently wrote a white paper which covers the topic of scalability, amongst others, when cracking on with digital transformation.