Accounts Payable Automation Business Case Justification
There’s a lot of talk in the accounts payable automation industry about putting together a business case to justify a potential project. While some use qualitative, anecdotal evidence and others use industry average data, we thought it might be interesting to use three recent real-life examples of business cases we built with clients based solely on data from the clients themselves.
As background, one of the clients was evaluating insourcing and automating a previously outsourced AP process, while the other two were looking at moving from manual to automated processes. In each of these examples, the solution included intelligent OCR capture, automated invoice workflow for processing PO-based and non-PO invoices, and real-time integration with the client’s ERP system.
Here is a summary of the average data for these three business cases:
- 80,000 invoices per year were being processed
- Cost per invoice before moving to the new AP automation solution was $7.03 per invoice
- Cost per invoice after moving to the new AP automation solution was $4.53 per invoice
- Project discount rate was 9%
- 3-year project ROI was 223%
- Project IRR was 72%
- Project NPV was just over $310,000
Two of the three clients had project payback periods of less than 1 year, while the third had a project payback period of less than 3 years. The two clients with project payback periods of less than 1 year included increased early payment discount capture in their business cases while one of these two also included late payment fee avoidance. The client with a project payback period of less than 3 years included neither increased early payment discount capture nor late payment fee avoidance in their business case.
We’re pleased to work with clients to put together real business cases based on their data. If you could use assistance putting together a business case for your accounts payable automation project, we’d love to help.