Optimizing Accounts Payable is Critical to Improving Cash Management,
Experts Say Invoice Management Solutions Deliver Rapid Payback, Boost
WATERLOO, ON, April 1 /CNW/ - Between declining revenues and uncertain
access to credit, today's economy is making cash critically important to
business. When cash is king, say experts at Open Text(TM) (NASDAQ: OTEX, TSX:
OTC), a global leader in Enterprise Content Management (ECM), companies need
to make sure they have complete control over where their cash is going in
order to reduce costs. That means it's vital to take a closer look at accounts
payable and the strategic value it can bring to an organization.
While most large companies have powerful financial systems such as SAP,
the majority of invoice processing - as much as 90 percent - is still done
using paper-based processes. Historically, says Tom Walker, Open Text's
portfolio manager for accounts payable solutions, companies grew up around
paper-based processing of invoices. Since cash was plentiful, they never got
around to enhancing these functions because invoice processing wasn't viewed
as core to the business.
But in today's economy, the value of moving to electronic invoice
management has never been greater since it gives management a lot more control
over cash flow and opens up new money-saving opportunities.
"Given the critical importance of generating adequate cash flow,
corporations are now looking beyond the traditional avenues of increasing
sales or decreasing costs. Invoice management is one of the places they are
looking," says Walker. In a podcast released today (http://cli.gs/qT76ND),
Walker discusses invoice management issues with Henry Ijams, CEO of PayStream
Advisors, a technology research and consulting firm that reviews financial and
accounts payable applications, and Bernhard Fischer, Vice President of
Solution Management for SAP.
"Paper is the antithesis of control since we don't know where a paper
invoice is in the process," Ijams says. "With a solution like invoice
management, we can centralize information and get visibility to invoices as
soon as they are received. This visibility provides a new empowerment for
managing outbound cash."
One opportunity is the ability to negotiate favorable payment terms,
according to Walker. With paper-based systems, typical invoice processing time
is about three weeks. In contrast, the typical processing time with an invoice
management solution is just one-to-two days. This means that the company now
has the option of negotiating lower rates in exchange for rapid payment. For a
$5 billion corporation, a 2 percent discount could translate into several
million dollars in cash savings over the course of a year and could help
compensate for an even more substantial revenue decline.
Since it has become increasingly difficult to borrow funds, visibility
into cash requirements is critical to ensuring that vendor obligations are met
in a timely way. Invoice management solutions also help the company finalize
financial reports quickly and accurately, boosting the confidence of lenders
Another way that invoice management systems help companies is in lowering
operating costs. "Companies need to look at their complete financial supply
chain and see where they can squeeze out the inefficiencies," says Fischer.
"Cost savings in the 60 percent range are possible by eliminating manual data
entry and moving to optical character recognition. Even greater savings are
possible when companies move to a shared-services model for consistent,
error-free payments across all vendors."
Beyond taking care of the immediate problem - the high costs and lengthy
time involved in processing invoices - invoice management also gives the
organization the basis for continual process improvement. "With an invoice
management system you get key performance indicators to help find ways to
improve efficiency so you have fewer and fewer touches, or improve business
rules to minimize exceptions," says Walker. "With rapid payback, potential to
generate revenue through discount-taking and long-term efficiency gain,
invoice management systems make more sense than ever."
Walker will be discussing invoice management issues at the International
Accounts Payable Professionals conference, IAPP Forum 2009, April 19-23. For
more information, go to: http://cli.gs/GsDyy8.
Business and IT managers in retail organizations can learn more about how
"Cash is King" and how to optimize accounts payable by attending a webinar
April 21 titled "Cash is King: Efficient Cash Management and Accurate
Liabilities in Retail." For more information and to register, go to:
Open Text is a market leader in accounts payable solutions for use with
SAP and Oracle that are offered as part of the Open Text ECM Suite. Open
Text's solutions help customers significantly lower cost-per-invoice
processing, reduce invoice processing time, and slash invoice resolution time,
thus freeing finance department personnel to pursue more strategic activities.
For more information on Open Text's accounts payable solutions go to:
About Open Text
Open Text, an enterprise software company and leader in enterprise
content management, helps organizations manage and gain the true value of
their business content. Open Text brings two decades of expertise supporting
50 million users in 114 countries. Working with our customers and partners, we
bring together leading Content Experts(TM) to help organizations capture and
preserve corporate memory, increase brand equity, automate processes, mitigate
risk, manage compliance and improve competitiveness. For more information,
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