July 2006

Organization: API Outsourcing Inc.
Location: St. Paul, Minnesota, USA
Contact: J. Peter Donlon, Executive Vice President
Date: July 2006

Having reviewed over 300 technology companies around the world we see this solution and this company as having all the characteristics of an industry leader in a fragmented industry.

API Outsourcing is a high growth Business Process Outsourcing (BPO) provider (135% compounded annually) that offers billing and payables solutions. Yet, unlike other companies that compete on less expensive labor or standardized processes, API automates these functions through technology transforming a company’s existing payables and billing processes into an automated process.

This company has found a niche in providing a solution that changes companies from a reactive position to a proactive organization in a very short time. Of all the Accounting solutions we have seen, none have even come close to providing the value that API Outsourcing can provide – in as short of time and for the cost.

In short, this solution is a business transformation solution in the truest sense.

During our time visiting manufacturing and IT firms we identified duplicate billing as a major problem in the payables area. For example, an auto parts manufacturer we visited in Michigan purchased 30,000 USD in equipment and was invoiced twice by the supplier. The company paid the supplier twice. They were lucky to have found the error, but now they had to go through the processes of recovering the money. What would happen if they did not find the error? How many other duplicate payments have they made?

We also saw the value in API’s solution to automatically match the invoices from suppliers with the purchase orders and requisition documents to avoid duplicate payments. Aside from saving time & money this solution offers peace of mind to CEOs that cash flow is being managed to the highest degree. From an accounting perspective budgets usually do not account for mistakes, there is a real potential for serious harm to the organization if cash flow is not tracked and managed effectively.

API’s customers no longer have to review every transaction; their time is now spent on resolving the exceptions. This is a much better allocation of time for a company’s payable staff.

We see this as a process change using technology, which differs from some offshore companies that use lower labor costs to save companies money.

Below is our interview with API’s Executive Vice President, J. Peter Donlon.

Can you give our readers a typical customer profile in terms of size and type of company that will benefit the most from API’s solution?

Our clients range is size from mid-market to Fortune 1000 firms. Companies that benefit the most from our A/P services are those that want to streamline and instill controls to their A/P process. For example, if a company has many dispersed locations and there are multiple levels of approvers, we can automate and simplify the process. All bills can be sent centrally to our production facility to be scanned, archived and routed for approval. Our solution can include a two or three way match of bills to purchase orders and/or delivery receipts. Using workflow, bills get approved faster so that companies can take advantage of early pay discounts and avoid late fees. Those concerned with financial controls or Sarbanes Oxley compliance can rest assured that every step of the process is well documented – and only those who are authorized can approve the bills. Records of the approvals and notes are secured online for an easy audit trail.

What is the cost of processing one Accounts Payable transaction using API’s solution?

Research indicates that the internal cost to process a bill ranges anywhere from $6-$12, depending on the size of the company and the level of automation. Our solution saves companies a considerable amount in processing costs. Our fees are based on a low per-transaction basis with no need to invest in equipment or hardware. By utilizing best practices, economies of scale, and automated workflow, companies can typically see an ROI within 6-12 months.

What are your customer’s initial reactions to using API’s solution?

Clients are excited by the change in process. Not only do they reduce their costs, but they have built-in duplicate payment protection, a secured electronic invoice approval process, and improved cash flow. Clients tell us that it’s easier to view and approve online rather than routing paper documents.

API Outsourcing has done for Accounts Payable and billing what ADP has done for Payroll Solutions-standardization. When can see the solution rolled out to mid sized firms?

API’s Accounts Payable Solution is utilized by both Fortune 1000 and mid-sized companies. The size of the company is less important than the number of bills they pay per month. On average, clients should process at least 1000 bills per month in order for our solution to be valuable.

We understand that API can connect via an electronic feed to a company’s suppliers, when does this type of solution make sense for a client?

Clients’ suppliers can view bills online and check payment status through our client portal. This feature proves invaluable for both our clients and their suppliers. Suppliers become self-reliant. Clients receive fewer phone calls – and billing and payment disputes are reduced.

Some of our readers already use document systems to store and retrieve their documents online. Would these companies need to replace their Document Management Systems to use API’s solution?

Many companies chose to use our document management system due to its superior search and reporting capabilities, as well as security at the line item level. If clients prefer to use their own document management system, they can maintain a duplicate copy on their system or link back to images on our system.

For those companies that do not use document management systems does API offer training and implementation services to these companies?

Our implementation process is very thorough. Every step of the process is well-defined and documented up front so there are no surprises. The system itself is intuitive and easy to use. Initial training is provided and typically takes under two hours to complete.

What has been the feedback of API’s customers with the AP and billing solution from initial implementation and a year after use?

Initially, clients see the value of the process transformation. A year or more after use, many of our clients seek to improve other processes within their organizations; encompassing different business units that are managed separately. The relationships with our clients have grown over the years and our clients have attained strengthen business processes throughout their organizations.