Study Shows Cost Cutting is the No. 1 Reason For Switching to Purchase Order Automation

Study Shows Cost Cutting is the No. 1 Reason For Switching to Purchase Order Automation


Purchase order automation is becoming standard among organizations across all industries and business sectors. The Institute of Financial Operations (IFO) publishes its AP Automation Study each year to report emerging technologies and best practices in the purchase order and accounts payable arena. Not surprising, the 2013 report indicates that organizations are continuing to reduce the amount of paper and manual invoicing from the accounts payable process. However, simply creating an efficient process may not be convincing enough to some businesses. They want to know how AP automation will affect their bottom line.

No. 1 Reason to Switch: Cost Savings

The study revealed that cutting the cost of purchase order processing was the No. 1 reason companies switched to an automated process. Backing up that reason, another study by the Aberdeen Group found that “Best in Class” organizations experienced 60 percent shorter purchase order processing times, a 60 percent reduction in cost per invoice, and automation allowed them to use more than 50 percent of their available early payment discounts.

No. 1 Obstacle: Competing Initiatives 

The IFO report found that competing initiatives within an organization was the biggest obstacle to purchase order automation. This is where it becomes important to have an effective automation strategy in place. All employees, not just the finance department, need to understand the importance and benefit of automation to the organization as a whole. Accomplish this by including the process in employee handbooks. Talk about it at staff meetings and include a discussion about automation at all new employee orientation sessions. It’s critical to train management on the new automated process. It’s not unusual for the PO process to not be a priority for managers who are juggling numerous responsibilities. Help get their buy-in by implementing a strategy that’s easy to follow. For example, only require purchase orders to have one level of approval up to a certain amount. Additionally, schedule “PO approval” time blocks on manager calendars to ensure this important part of the pr ocess does not get overlooked. It seems overwhelming, but a simple, straightforward strategy can ensure your purchase order automation process goes smoothly and benefits the entire organization.

Let SourceDay help your organization take advantage of the many benefits of purchase order automation. Contact us to discuss your company’s automation strategy.