Automation solutions empower organizations to replace inefficient manual processes. Among the more time-consuming and costly of these are approval processes. These include tasks that are common across industries like invoicing and purchase orders, as well as any organization specific approval process.Not only are these approval process workflows inefficient but they carry extensive hidden costs. In this blog post we will explore some of the costs of manual approval processes in more detail. We will then look at important elements of an automated process workflow, how to create them, and provide some tips for choosing approval process software.
The true (and hidden) costs of a manual approval process
The true costs of manual approval processes consist of three different types of expenses: direct, indirect, and hidden. Direct expenses are hard costs like office supplies (i.e., pens, toner), shipping costs, and even storage costs for securing voluminous records. Indirect expenses are the intangible expenses of the approval process. These include things like administrative support for stuffing envelops and data entry.And then there are the hidden costs of an approval process. For instance, it is not uncommon for customers to pay manual invoices late or for purchase orders to be held up for days or weeks at a time absent a supervisor’s approval. In the meantime, organizations can experience cashflow issues and be unable to pay other bills. Or a project can be held up because accounting could not get an approval to pay a vendor.Many organizations lack an understanding of the true costs of their approval processes. The reason being that it can be difficult to nail down even the hard costs. For example, consider an office worker that performs multiple tasks. To calculate the costs, we would need to know the percentage of his or her time that is spent on a specific approval process.We can get a general idea of the average costs of specific approval processes by looking at some statistics. Consider that:
- According to data from the APQC, themedian accounts payable cost per invoice processed is $7.75, a number skewed significantly by the top performing organizations. The bottom performers spend an average of $12.44 per invoice processed.
