The ROI of autonomous invoice processing with Vic.ai
VP of Marketing
October 24, 2023
10 min read
In today's fast-paced business environment, companies are continually seeking innovative solutions to streamline operations and enhance efficiency. One area where automation is making a significant impact is invoice processing. With the rise of artificial intelligence (AI) and machine learning, tools like Vic.ai are pushing beyond automation to autonomous accounting, leading to substantial returns on investment (ROI).
The challenge of manual invoice processing
Traditional invoice processing is often a time-consuming and error-prone task. Finance teams grapple with mountains of paper invoices, complex data entry, and the risk of human errors that can result in costly mistakes. These inefficiencies not only hinder productivity but also lead to delayed payments, missed discounts, and strained vendor relationships.
The promise of autonomous invoice processing
Vic.ai, an AI-powered platform designed for finance professionals, offers a transformative solution to these challenges. By automating the entire invoice processing workflow, from invoice capture to payment approval, Vic.ai enables AP departments to:
Increase efficiency: With Vic.ai, the need for manual data entry and paper handling is eliminated. Invoices are automatically scanned, extracted, and processed, reducing the time and effort required for invoice management.
Reduce errors: Human errors in AP data entry are virtually eliminated, leading to more accurate and error-free financial records. This ensures compliance with financial regulations and prevents costly mistakes.
Accelerate approval workflows: Vic.ai streamlines approval workflows, enabling faster processing and payment of invoices. This, in turn, can lead to early payment discounts and improved vendor relationships.
Enhance visibility: The platform provides real-time visibility into the invoice processing pipeline, allowing finance teams to track the status of invoices, monitor spending, and make data-driven decisions.
Optimize resource allocation: By automating routine tasks, Vic.ai frees up finance professionals to focus on strategic activities such as financial analysis, forecasting, and vendor negotiation.
Calculating the ROI of Vic.ai
Now, let's delve into how organizations can calculate the ROI of implementing Vic.ai for autonomous invoice processing:
1. Labor costs: Start by estimating the time spent by your AP team on manual invoice processing. Consider factors like salaries and benefits. With Vic.ai automating much of the process, you can calculate the labor cost savings.
2. Error reduction: Calculate the cost of errors in your manual process. This may include the cost of resolving disputes, late payment penalties, and duplicated payments. Vic.ai's accuracy can significantly reduce these costs.
3. Early payment discounts: Determine how many early payment discounts you miss due to slow processing. Vic.ai's efficiency can help you capture these discounts, resulting in direct savings.
4. Time reallocation: Consider the additional strategic tasks your finance team can now focus on instead of data entry. Estimate the value of these activities in terms of potential revenue generation or cost reduction.
5. Faster decision-making: Calculate the financial benefits of having real-time insights into your invoice processing pipeline, enabling quicker decision-making and resource allocation.
6. Vendor discounts: Factor in the increased likelihood of receiving vendor discounts for early payment, thanks to faster invoice processing. Calculate the value of these discounts over time.
7. Improved vendor relations: Consider the indirect benefits of improved vendor relationships. This could result in better terms, lower prices, and even preferential treatment in the future.
Real-life ROI example
Let's illustrate the ROI calculation with a real-life customer example with the following starting point:
Number of invoices annually: 250,000
Expected invoice volume increase: 10%
% Time spent on invoice processing: 75%
Average cost per FTE in AP: $55,000
Existing annual software cost, Vic.ai would replace: 50,000
With the current provider, the labor cost per invoice amounts to $3.30, and $0.53 with Vic.ai by lowering the time spent per invoice by 84%. Looking at labor costs and total number of invoices, the projected operational savings for the next five years looks as follows:
By replacing the current system with Vic.ai and having these almost immediate operational savings, the yearly savings start in year 1 with close to $250,000 and up to $600,000 in year five for the customer in the example. And that doesn't even include the indirect savings.
The indirect savings from autonomous invoice processing
Let's take another example with a smaller client, where the AP team is processing 1,000 invoices per month. The indirect costs of manual processing are inaccuracy and limited ability to work proactively with real-time insights. The error reduction could save this smaller company $10,000 per month and an additional $5,000 per month in early payment discounts.
In addition to these "indirect direct cost" savings, the company will benefit from:
Time reallocation: The finance team can now spend more time on strategic tasks, potentially generating an additional $15,000 in revenue.
Vendor discounts: By capturing early payment discounts, the company saves an extra $2,000 per month.
Improved vendor relations: Better terms and negotiations result in $3,000 in annual savings.
Compliance costs: A reduction of $8,000 per year in compliance-related expenses.
Risk mitigation: Preventing fraudulent activities results in $5,000 in annual savings.
The total annual ROI of implementing Vic.ai for autonomous invoice processing adds up! As organizations strive for greater efficiency and cost savings, autonomous invoice processing with Vic.ai emerges as a powerful tool to achieve these objectives. By automating manual tasks, reducing errors, accelerating approval workflows, and enhancing visibility, Vic.ai pays for itself and delivers significant ROI. To stay competitive in today's business landscape, harnessing the power of AI in finance is not just an option; it's a strategic imperative.
Companies continually seek innovative solutions to streamline operations and enhance efficiency in today's fast-paced business environment. One area where automation is making a significant impact is invoice processing. With the rise of artificial intelligence (AI) and machine learning, tools like Vic.ai are revolutionizing how organizations handle invoices, leading to substantial ROI.