Whether you call them liabilities, debits, or simply the money your business owes to vendors, they are Accounts Payable (AP) to your finance team, and the system that you use to pay vendors and record these transactions is key to your business. The traditional AP process involves lots of paper invoices and lots of people running around making copies of invoices, getting approvals, paying the vendors, recording the transactions, and analyzing the money that the company is spending.
The Institute of Finance & Management (IOFM) lists some of the issues with this traditional process, including risk of fraud, the potential of manual processing for errors and exceptions, and poor visibility into cash flow. With the added effects of the pandemic, companies are looking more broadly for ways to cut costs. It may seem impossible to maintain levels of revenue during supply chain disruptions, government-mandated closures, and the transition from staff in the office to staff working remotely.
A great option for improving your bottom line is to automate the AP process. The Gartner Group estimates that a 5% reduction in operating expense has the same impact on the company’s P&L statement as a 30% increase in sales. Automating AP means more than scanning paper invoices into digital format by using OCR – in fact, it can help support remote work by allowing staff to create and communicate approvals online without the need for numerous phone calls and email threads. For invoices submitted outside of Electronic Data Interchange (EDI) it is possible to implement almost 80% “no touch” AP Automation by using machine learning and the technologies it enables.
There are many benefits of AP Automation in addition to cost-cutting. There is data that suggests that automating the payment process can result in nearly 100% of invoices being paid without the need for human intervention. The automated process of straight-through processing (STP) for payments has proved to save money as well as reduce errors by providing a hands-off, reliable electronic process for payments. Within an automated system of electronic payments, there are fewer opportunities for fraud. With less manual data entry the error rate also goes down- saving time and money.
The AP process and your vendor relationships are very closely connected. Once you have moved your AP process online, you may find your vendor relationships improve as you can move more swiftly to implement improvements like early payment incentives. AP automation can improve vendor relationships as you ensure payments are made on time. Many AP Automation systems offer streamlined on-boarding of vendors, which can in turn benefit your business relationships.
The automated payables process can enable immediate benefits in optimizing cash flow and working capital at the same time you are monetizing your AP by maximizing interest and discounts and generating payment rebates. And automation of AP has another side-benefit: capturing up-to-the-minute metrics that provide insights into cash flow, liabilities, and corporate spending.
Is your company ready for AP automation? Here are some questions where a “yes” answer indicates that you are ready for AP Automation:
- ·Do you find that you are losing documents in your AP process? Or losing time tracking down documents that you need?
- ·Is a lot of time spent fixing errors and organizing paperwork as you work through the AP process and pay your vendors?
- Are any of your staff complaining about long time lags or other difficulties in the approval process?
- Is it difficult to find out what stage a particular invoice is in? You could be looking for a system with much better visibility and traceability.
The technology has progressed in almost every way from the early days of automating AP, and with the uncertainty of the pandemic and ever-present need to cut costs, now is the time to consider AP automation if you haven’t already – and to consider expanding your automation of the AP process if you’re not 100% there.
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Curious about AP Automation and how to choose what is right for your business?
Dynamic Communities is bringing together the top solutions and companies to present how each one can meet the needs of a mid-market company that is creating a short list of solutions and getting ready to make their AP Automation decision.
Join us for AP Automation Battleground at 11AM Eastern on March 10, 2021
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Related DAC Content:
Navigating the Accounts Payable Automation Landscape
Maximizing data security with AP automation
The Future of Finance Is Leaving Paper Checks in the Past
