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The ROI of Automating Financial Workflows: What CFOs Should Expect
As companies decide to invest their tech budgets, one of the key questions to answer is what the return on investment will be for different options. Automating financial workflows with Business Process Automation (BPA) software is often described as a way to cut costs and improve efficiency. But what kind of ROI can you reasonably expect?
Break Even in Less Than A Year
People often ask what BPA software will cost, but a better question is how much will automation save. Most companies will see significant cost savings with automation compared to manual processes, especially paper-based ones. In accounts payable, for example, multiple studies show an average organization can save $10-15 per invoice after switching from a manual to an automated process.
The exact savings that your company will see with automating financial workflows varies depending on a variety of factors. How many departments you automate, whether you keep some paper processes, and the complexity of company processes all play a role. That said, we can make some general observations.
Across the board, our clients typically break even in 9-12 months. Implementing cloud-based Software-as-a-Service (SaaS) BPA is relatively simple and cost-effective. There is some upfront cost, but it’s much less than the implementation costs for on-premises software. Cost savings, efficiency gains, and reduced compliance risk are a few of the perks of BPA software that help keep costs down. Our clients also see additional reductions in processing costs over time.
Quantifiable Benefits
It doesn’t take long for the benefits of BPA software to add up and provide your company with a return on their investment. Quantifiable benefits include faster month-end close cycles, fewer invoice processing hours, more accurate and useful financial data, improved audit readiness, and better control over financial processes.
Faster Processing
Automation software speeds up processing by taking over manual tasks like data entry, purchase order generation, and matching POs to invoices. Streamlining processing can have several cost-saving effects.
For example, automation can reduce the average time to process a vendor payment from 8.6 days down to 5.4 days. Invoices that match a PO can be processed and paid within 12 hours or less. This makes it possible for your company to avoid late payment fees, and possibly even negotiate early payment discounts. You’ll also save money in terms of labor costs, optimizing employee time so they’re not bogged down with manual, repetitive tasks.
Improved Data
Automation provides improved data and better cash flow insight. You might not immediately think this will contribute to ROI, but accurate data entry and automated error checking minimize costly errors. Better data also makes for easier audits and more accurate budgets, helping save money long-term.
Across the board, BPA software logs data automatically, creating easy-to-understand and regulation-compliant audit trails. The financial data is also easy to access and run reports on, providing clear insight into the current and past state of company finances. Accurate, timely, accessible data empowers financial teams to make better financial forecasts, manage financial processes effectively, and make data-driven decisions.
Greater Control
Automation also provides greater control over financial processes, which helps your company take steps to save money. Exactly what this looks like will vary by department, but it can play a big role in saving money.
In the procurement department, automation provides the tools to reduce or eliminate maverick spending and enforce purchasing controls. For expense reports, automation lets your company streamline reimbursement while reducing fraudulent charges. For capital project management, CapEx software provides robust budgeting tools and real-time insight into where the money is going while enabling improved collaboration and communication.
Tracking KPIs
Following BPA software implementation, your company needs a way to report on how well the new software matches expectations and delivers ROI. CFOs will need to decide on the most important BPA success metrics and Key Performance Indicators (KPIs) to track.
To measure how well BPA software works, you should first identify your top goals for BPA software. Then, choose metrics you’ll track to measure how the software is meeting those goals. Some general suggestions for metrics to track are:
- Cost of each business process (e.g. invoice processing, purchase order generation) before and after software implementation.
- Efficiency and turnaround times of the before and after automating the processes (e.g. time to process expense reports).
- Reliability and consistency of the new software (e.g. consistent processing, few exceptions requiring human intervention).
- Level of accuracy and compliance (e.g. instances of data entry errors or non-compliance with company regulations) before and after implementation.
- Employee satisfaction with the new software compared to the previous process, including quantitative data (e.g. usage rates, time spent working in the software) and qualitative data (e.g. written or verbal feedback on the software).
BPA software makes it easier to track KPIs because it provides access to accurate, real-time data related to financial processes. In accounts payable, for example, you can check on KPIs like the total number of invoices received, percentage of exception invoices, number of invoices processed per day, and average time to process invoices with just a few mouse clicks. Then, you’ll be able to compare these KPIs with the ones you were tracking before automation and see how much of an improvement there’s been.
The NextProcess Solution
One of the best ways to realize the potential benefits and cost savings that come along with automating business processes is to create an end-to-end software solution for the procure-to-pay cycle. Making your budgeting, capital expense (CapEx) management, procurement, and payments systems work together gives you far more control over the entire process. Only a few BPA software platforms can offer this type of solution and even fewer also integrate seamlessly with your company’s existing ERP system.
NextProcess offers the only end-to-end suite of software with modules to power and simplify your capital project management, procurement & purchase orders, accounts payable, travel & expense, and payment disbursements. Our software is highly customizable, allowing your company to personalize the financial workflow, integrate seamlessly with ERP software, and streamline regulation compliance. Contact us to learn more or set up a free demo so you can see our software in action.
