Integrating Your A/P Department into Your Telecom Expense Management (TEM) System

Let’s face it—who wants to be bogged down with the responsibility of paying your company’s telecom invoices? It’s a daunting and time consuming task, one that’s riddled with errors; it’s hard to get things right when there’s not a clear understanding around the services being paid!

We all know that effective management of working capital (current assets minus current liabilities) is one of the most basic corporate accounting practices. We strongly believe that a well-managed telecom ecosystem includes the Accounts Payable (A/P) department of a company as an integrated part of the technology management suite. At Network Control our goal is to help our customers lower the risks of operating and the costs of financing through the inclusion of our integrated bill pay service as part of the TEM solution.

Unfortunately, even today with all the technological advances, enterprise A/P departments are still weighed down with manual processes for processing invoices and paying telecom vendors, despite the costs, risks and delays of those inefficient activities. There have been many accounting studies that have diagnosed the cost to pay a bill manually. Many of these studies indicate that over 70% of enterprises today are still processing a paper invoice. From a payments perspective, 70% of disbursements by enterprises are still paid by check! The average processing cost of anywhere from $4.98 to $12.44 per transaction. (see figure 1)

Metric of the Month: Accounts Payable Process Cost

The typical questions we receive around this topic is how do we approach the paper challenge and stay competitive while not adding to their FTEs? Or, how do we automate the invoice, presentation and payment process? What will this change achieve and how will it benefit us?

We understand that many enterprises still use ACH payments, to process large volumes of transaction in batches electronically with their treasury institution in order to save money and time. At the time, this process did solve some of the problems with manual payments, but ACH is no longer the most cost effective or streamlined approach. A big “gotcha” for some vendors is that the ACH process requires them to give out their bank information, which many see perceived risks that could be posed to both privacy and security perspectives.

Another issue for the enterprise that is often overlooked is that the vendors often change their bank accounts without notification, which leads to additional management of the vendor database, which in turn is time consuming and costly.  An example is when ACH payments are returned and late fees occur. The headache with sorting this out and fighting for credits is exhausting and a waste of valuable employee time not to mention the additional and unnecessary cost to the business.

There are also a couple other sneaky “cost sucking” categories that many enterprises often choose to ignore or put to the side, namely late fees and misapplied payments.  Ah, late fees. These are those little irritating fees that we ignore when we make payment for a variety of reasons. However, these little fees can add up over time and even lead to disconnection of service. For an example, if an enterprise spends $1M per month in telecom spend that has late fees associated that is on average around 1.2% of the total which comes out to be over $100K. That’s a lot of money to ignore—and your supplier won’t!

Another category is the misapplied payments debacle.  If your A/P team applies a payment to the wrong account this creates the needle is the haystack hunt.  Many man-hours are wasted trying to track down what exactly happened and how to rectify this mistake.  This again can also lead to disconnection of service if an account is not paid based on the misapplied payment to another account.

Although there is not a cure all fix that guarantees every bill is correct and paid on time, our bill pay solution enables us to work together to determine which payment method and business practices work best to optimize each vendor partnership. A holistic approach to optimizing payments across different payment strategies is what we can offer to the enterprise which gives you the ability to save costs and free up A/P’s time so they can focus on core tasks.

We at Network Control strive to make A/P automation and electronic payments a part of our technology expense management ecosystem bringing more visibility and transparency to vendor payments easier! Our goal is to drive business value through integration.