The Automated Advantage: Unlocking Business Benefits Through AP Automation with TCG Consulting

Only 10% of businesses have fully automated their accounts payable (AP) processes, which means most businesses aren’t fully taking advantage of the visibility, control, and savings that AP automation affords. And while it’s not uncommon for most AP processes to be heavily manual, it’s certainly a major organizational disadvantage. Between better visibility into spend, more time back in the workday, fewer errors and costly mistakes, and empowered employees, the benefits of AP automation far outweigh the time and monetary costs to automate processes and effectively drive change across your organization.

In this episode of the SAP Concur Conversations podcast, Grace Swain, Senior Consultant at TCG Consulting, shares how, where, and why to start automating your AP processes, what the journey to full automation entails, tips for driving change across your organization, and the benefits AP automation brings to your business.

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Read the transcript from this episode of the SAP Concur Conversations podcast below:

Jeanne Dion:

Welcome to the SAP Concur Conversations podcast. Each episode we sit down with industry experts, visionaries, and leaders as they share what it takes to build forward-thinking spend programs. Our goal is to get you thinking differently about how your organization spends money. I'm your host Jeanne Dion. I'm the Vice President of the Value Experience Team here at SAP Concur, and my team works with our customers to bring about positive business outcomes based on data-driven insights. Today I'm joined by Grace Swain of TCG Consulting, and we're going to talk about all things AP automation, breaking down how to get it started, what the journey to full automation entails, and what it takes to drive and manage this caliber of change across an organization. So Grace, I'm really excited to talk to you today. So to start, could you please take a moment and introduce yourself to our audience?

Grace Swain:

Sure. Thanks, Jean. I'm Grace Swain. I'm located out of Oklahoma. I work with TCG. I'm a senior consultant, and I've been in AP for about 10 years. So very excited to talk to you today.

Jeanne Dion:

Grace, it's such a pleasure to have you here today. So as we talk about AP automation, in a previous life I lived some of what we were talking about, and I know you've lived it as well, 10 years in the business, so I understand the benefits, but since there are still some of those who are in the dark, and since it's changed since the dark ages in which I worked in it, there's still 70% of companies that aren't automated across their financial processes, and especially in accounts payable, and they're estimating that it takes somewhere up to nine and a half hours to process an invoice manually when you're not using automation. So I think people still don't understand what this is. So would you mind explaining exactly what AP Automation is and why it's important to an organization or what are the benefits that they can gain from AP automation?

Grace Swain:

Yeah, absolutely. So AP automation is using tools like e-invoicing, OCR technology and automated travel and expense and payment solutions to really take control of your accounts payable process. And a few of the main benefits that I've seen from it, which I'm sure we'll get into, are things like reducing risk, both internally and externally, lowering costs and increasing your visibility into your cash spend.

Jeanne Dion:

So why don't companies do this? There's so much benefit to it, just clearly from what you just stated. What are the barriers to companies not really choosing to automate anything?

Grace Swain:

Yeah, so in particular, I think companies are most intimidated by the cost of automation. It's a bigger upfront cost, but in the end you end up reaping those costs back as you go. Another area that companies seem to be intimidated by is the sheer volume of AP. It's a huge thing to automate. If you're processing hundreds of invoices per month, companies are intimidated to touch a process that large and they don't want to fix it if it's not broken, not realizing that just not being automated is kind of a form of being broken. And then the change management aspect. So there's going to be pushback internally and externally when you go to automate. So internally, your employees are always scared of the change that they're going to experience in their jobs and their processes, and externally it's hard to get suppliers who don't really owe you anything to help you along your journey to automation.

Jeanne Dion:

So you mentioned a really big point there as it regards to change and the volume of what's happening and the idea that just because it's working now doesn't mean it's not broken, it just means that it's working. We recently had somebody who talked to us about the idea that the pain of change, once it gets to be less than the pain of staying the same, then becomes a motivator. So when I think about the different pieces of AP automation, there's processing, there's integration, there's digitization, there's supplier portals, there's payment automation, there's a lot of different pieces there that anybody can tackle. Is there a rule of thumb that you have or some sort of idea or recommendation for companies, whether they're big or small or whether they have large processing volumes? Is there something that you could recommend that they tackle first or in order that you think they should go in as they're looking at this to kind of alleviate some of that change concern?

Grace Swain:

Yeah, definitely. So I think it all depends on the company and what they do. So for a sales company who's traveling all the time, maybe the biggest cost for them is in travel and expense. And that might be the first thing they look at, is automating their travel and expense system. If you're a huge manufacturing company, you're going to want to look at invoicing because that's your biggest area. So it all depends on the type of company.

But I think, again, starting small can be just as helpful as anything. So if today your invoices are being sent in old school, they're mailing them in for you, you can start with a supplier portal where the suppliers are sending invoices digitalized to your AP team. If you're doing that now, maybe you transition to more of an OCR technology where the invoice is read for you and matched to a purchase order. If you're doing that, maybe then you look at integrating into your ERP system. So it's quite the building process and it's a little bit like a set of Legos where you can keep adding on over time.

So I would say start small and prioritize where you see your resources spending the most amount of time. If they're spending the most amount of time on the T&E side, start there. Get people off of Excel and into more of an automated tool. If you're spending a lot of time on the invoice side or you're seeing a high risk of fraud, especially on the invoice side, you want to make sure you're automating there because maybe your employees are overloaded and they're not catching that kind of thing. So really just looking at your organization as a whole and taking all those things into account.

Jeanne Dion:

So when I listen to you say that, I can't help but think of AP automation is truly just tied to procurement strategy, right? Because for a lot of companies, even if 100% of their spend isn't on purchase orders, they still have a lot of invoices that are coming through, to your point, that are overwhelming staffs and causing them to not be able to pay as close attention to what's happening. And so can you talk a little bit about AP automation as it relates to a procurement strategy, that ability to manage your tail spend in a really effective and efficient way?

Grace Swain:

Yeah, absolutely. So a lot of the times those tools are giving you the benefit of reporting, and so you have a higher visibility into your spend, how often you are paying certain suppliers, if you need to recontract with those suppliers and really taking advantage of some early payment discounts. So it can really benefit you in forecasting in your cash flow. So very, very important to get that reporting visibility for your decision making at your company.

Jeanne Dion:

I think about that, that true visibility into the spend and the spend categories and the vendor usage because then you can have better negotiation skills. Maybe we got people who are spending with this vendor and we just didn't know that spend was happening. I love the idea about that, not missing your discounts or overspending or making duplicate payments. The other piece that it ties, to me at least anyway, that kind of automation can align with signature authority matrices because you can actually control that workflow and it doesn't just sit in somebody's head. In so many places, it's like, well, it goes to the cost center owner and then it goes to their manager and then it goes to a VP, unless it's a Tuesday and there's a full moon, and then it goes to the vice president of overlap. But whatever it happens to be, but it all sits in an AP person's head versus has an automated flow with exception processing built in. Is that a benefit that you could see happening with AP automation?

Grace Swain:

Absolutely. So there's a few risks with just having the workflow in that one person's head, like you said. So the risk is that you're not even following the correct workflow. So an internal auditor might come in and say, "You haven't been sending these invoices to the right person," or even worse, people haven't been approving them. There's some risk also of fraud if you don't have your workflows automated because the person in AP might be generating an invoice, sending it to a friend, and then going and having another friend approve it. There's a huge risk of fraud when workflows aren't automated.

And then, also when you have your workflow automated, it's reducing that time. You can take advantage of those early payment discounts because you're getting an invoice from point A to point B very, very quickly, where when you're doing it manually, like you said, Jean, it can take a very long time, even if somebody's keying in the invoice. Maybe it got stuck in somebody's desk drawer for six months and then you have late fees. So huge, huge benefits in automating that workflow.

Jeanne Dion:

Grace, I think I might have outed you at this point. I believe you were an auditor in a past life, and so that's why you're so good at this. But I wanted to talk a little bit about this because you having been an auditor in a past life is really important when we start to talk about risk because I think AP automation is really clearly all about risk. So when we think about this, I saw a few weeks back, and while this is an outside audit perspective, but the Public Company Accounting Oversight Board, or the PCAOB for those of us in the know, have a proposal in front of them that are lowering the guidelines for completion of audit documentation from 45 days to 15 days. And the reason for this that was stated specifically is because there is an automation of audit tools and other software, so it should make it much easier for everybody to complete their documentation earlier.

But if I think about a company that still hasn't automated their AP, that's a really critical miss when it comes to, especially if they're a public company. So can you talk a little bit about that pressure on auditors to get things done in a very timely fashion?

Grace Swain:

Yeah. So I think that that's going to be really heavily weighing on the AP resources that are at the same time juggling their day-to-day responsibilities and having to get all that documentation over to the auditors in an even shorter amount of time. So like you said, when everything's automated, they're pulling down a few things from their computers, printing it off, and here you go. When it's manual, first there's a much higher risk that during the process something went wrong, you know, overpaid a supplier, you entered something in incorrectly, so you already have that risk that the auditors are going to find something wrong, and when they find something wrong, they just ask you to pull more stuff.

Jeanne Dion:

Right.

Grace Swain:

So not only are you delaying the process when you have manual procedures and invoicing, but you also could be adding to your workload because they’re going to ask you to increase your sample size if you've entered something in incorrectly.

Jeanne Dion:

Yeah. So I think about automation as a journey. There's a beginning, a middle, and an end. So thinking about where does a company start? We just recently talked to Chris Elmore from Avid Exchange and he talked about setting some priorities, setting up the reason, the mission of why you're doing this. So now you have the mission. So where do we go from there if we're going to look at a full automation? Do we start in high risk areas? Do we start in areas that are just easy to tackle first? Where do you think we should start in that journey? How do we prioritize where to start?

Grace Swain:

Well, I always would recommend starting in high risk areas because automation is the perfect tool to lower that risk. And once you've identified that, then, again, you just have to look at your company as a whole and see where can I lower cost? Where are my resources spending all that time? So how you can go about that, you can start with simple softwares, like I said, e-invoicing tools. You can move into more advanced softwares, like Concur for example, that can do a full process from beginning to end for both invoicing and travel and expense. And then the more complex automations that I like to see done upfront, but aren't always is the integration into your ERP system and getting those journal entries automated because all of those areas carry its own risk. You want to lower the manual touches as much as possible, and some of those can be at the end of the process, even after you've entered in the invoice, it's been approved. Now you're entering it into your actual accounting system and paying the provider. There's a lot of risk there as well.

Jeanne Dion:

Sure. A lot of chance to fat finger in wrong or to put it under the wrong spend category, so yeah. Okay, those are great pieces of advice. And then I do want to just circle back one more time into something that you mentioned earlier around change management and driving this kind of caliber of change across an organization. Are there a couple of areas that you think that people should really focus on as they're embarking on this journey of automation around accounts payable and payables platforms?

Grace Swain:

Yeah, definitely. I think that change management all starts with a very strong executive sponsor. So someone who's really going to pioneer the change within your company, and they're not going to stop even when people say, "Hey, I like how things are." They just persevere through it. So very strong executive sponsor to kind of drive that change and then making the team feel like they're a part of it. The scariest thing for the people who are in the day-to-day is not knowing what their job looks like in three, four months. So having them be a part of it, showing them that their job may not be actually going away, it might actually be changing into a higher level of expertise. They could even be providing more benefit to their company and kind of guiding them through that whole process. They're going to be the ones who are a part of the project at the highest level because they're going to be touching the project every day, providing details, making all those decisions with the executive sponsor. So it's really important to make them feel involved.

Jeanne Dion:

Yeah, it's interesting you mentioned that in the customers that I've worked with implementing invoice, and even in the past groups that I've worked in, anytime we've automated a process, the actual amount of work has never really lessened. The manual effort has lessened, but it's opened up entire opportunities and horizons for all of us because now we were able to see things we didn't have time to see before, or we were able to spend the time in fixing the problems that really mattered instead of getting caught up in things that really didn't need our attention. It's that idea of looking for the needle in the haystack. If you can automate something to bring the needles to you, imagine the amount of time that you can spend analyzing all the needles instead of just a small percentage of the needles that you happen to find while you were tripping through the haystack. So I think you're exactly right about that. It doesn't reduce the workload, it just changes how you do it.

Grace Swain:

It does. And another benefit of AP automation is increasing those guardrails to your policies and procedures. So you can have a tool where you build in your policy rules and of course the workflow, and so then you can actually build in what the AP team needs to see on a day-to-day basis. Instead of them focusing so much on treading water and getting those invoices into your system, it could be more about analyzing high risk invoices, high cost invoices, things like that, that maybe the company in the long run is more interested in evaluating.

Jeanne Dion:

So if I were to think about the three key points that we would take away from this conversation, I think the idea that the evolution of your AP process, bringing it into a more automated, less manual, more strategic focus, is really an exercise in risk reduction across multiple areas. It's not just one piece that you reduce risk on. It reduces risks in every single area of the organization, whether it is related to processing, integration, digitization, supplier management, or payments. Every single one of those has a risk, and automation can reduce risk in every single one of those places. Would that be correct?

Grace Swain:

Absolutely. And when you lower your risk, you're also lowering your cost because you're reducing those duplicate payments, you're capturing those early payment discounts. So I think that those two go hand in hand as well.

Jeanne Dion:

And then the second piece that I think is that change management is going to go well beyond your immediate team. It's going to expand to your entire organization and even outside of your organization, but that is not a reason to avoid doing it. It needs to be done, it just needs to be managed, and with strong executive sponsorship, you may be able to drive your change management in a positive direction. Is that correct?

Grace Swain:

Absolutely, yep. And like you said, internally, not only with the AP team, but with end users training them up and making sure that they're on board with the new tools, because AP touches a lot more than just the finance team, so you're going to have a lot of people using something that they might not be familiar with. So making sure that not just the AP team feels like they're a part of it, but everybody feels well-trained and educated and ready to help the AP team get automated.

Jeanne Dion:

Yep. That's good. So I've got my final takeaway. Hopefully you agree with this one. There's so many areas of automation to choose from, right? We just listed off at least five of them, but it doesn't mean that it just, because there's a lot of areas it doesn't apply to you. Whether you're big or small regardless of the industry, you just kind of need to pick the areas that make the most sense for you and do it. It's kind of like selecting a menu. Some people are going to select the appetizer, the main entree, and two desserts, and others are just going to have a glass of wine and an entree. Whatever works best for you is what you should pick, but you should just pick it and do it. Would that be correct?

Grace Swain:

Absolutely. Yep. Move forward. Like I said, it's a building block, so start small if you feel like you need to and then grow your practice up to fully automated.

Jeanne Dion:

I think I heard you say once, Grace, that you just have to rip off the Band-Aid, and I think that that's the right thing, right? That's the way to think about it. It's a Band-Aid that needs to come off, so let's just rip it off and see what happens.

Grace Swain:

Yep, absolutely. There's so many benefits. It encompasses more than if you left the Band-Aid on, right? You have to do it.

Jeanne Dion:

At a certain point in time it heals. You have to move on.

Grace Swain:

Yep.

Jeanne Dion:

You don't want those Band-Aid tan lines. So I want to thank you, Grace. Thank you for spending time with me today. I really appreciate it. And I want to thank everybody for listening to this episode of the SAP Concur Conversations podcast. To hear more exclusive insights and interviews from the world of business travel, expense and invoice processing, be sure to subscribe and listen wherever you find your podcasts. And please join us again for our next SAP Concur conversation.

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