Companies using manual accounts payable processes are struggling with limited visibility and control over their invoices. These challenges create a bottleneck in accounts payable workflow.
Transparent, streamlined AP operation is crucial to an organization’s financial management. Hence, it’s critical for companies to digitize their AP processes. This will significantly reduce the cost per document processed, save time, improve visibility and control, and eliminate potential human errors.
A study by Aberdeen Group found that automation can take invoice processing time in the accounts payable department down from 20.8 days to 3.8 days (on average). That’s a difference of 17 days!
Here’re 20 reasons why should you automate your accounts payable now!
1. Increases Productivity & Efficiency!
With accounts payable automation, you get more work done in less time. The work that used to take hours to finish will get done in split seconds. This will leave the accounting team with more time, and they can focus on vital tasks, thus increasing productivity & efficiency.
2. Faster Processing Time
Automating the AP process can greatly speed up the invoice processing time. As soon as an invoice is received, it’s automatically matched and routed to the appropriate team members for review and approval. This reduces paperwork, creates an efficient workflow, while also speeding up the process.
3. Saves Time & Cost
Time is money, and who understands this better than finance professionals. While, initially, the organization will have to invest in AP automation software, it saves money in the long run. The manual accounts payable process is time-consuming, error-prone, and resource-intensive. Accounting professionals spend hours of valuable time on tasks like copying data to searching for misplaced invoices etc. Automation software can do these tasks in just a few clicks, thus saving you time. And companies can reallocate headcount costs to areas that offer opportunities for greater strategic growth and success.
4. Improves Accuracy
With manual data entry, there’s always room for mistakes. From misfiling and losing documents to paying the wrong amount, process errors can occur at any time, resulting in lost revenue, or even fines. Automating accounts payable eliminates paper-based, manual data entry, and associated human errors. Problems like overpayment and duplicate payments are eliminated, and exceptions are automatically flagged for review. Automation significantly cuts down costs and improves the accuracy of reporting, budgeting, and auditing.
5. Environment Friendly
Manual invoice processing is a paper-intensive process. Invoices arrive in a variety of different forms – email, fax, or even postal mail, and all of them are printed on paper. However, once you automate invoice processing, paper is no longer required.
6. Increased Visibility & Control
In an antiquated manual process, it’s difficult & time-consuming to sift through stacks of paper receipts, and nearly impossible to see the entire process on a single paper. With automation, companies get a complete view of the end-to-end accounts payable process and can generate reports that provide insight into cash flow and process bottlenecks. Also, there’s better control as relevant data is visible to authorized personnel only.
7. Improved Workplace Collaboration
When the process is automated, & everyone has an access to the digital files, it smoothens the workload and improves workplace collaboration, resulting in serving customer needs with greater efficiency.
8. Increased Flexibility
Pandemic has proved how outdated paper-centric processes are. With courier services halting their operations, it has become increasingly difficult to send or receive invoices. However, with automation, electronic invoices can be sent through the mail and can be accessed from anywhere.
9. Data Security
Manual records are more susceptible to security breaches. Paper records and ledgers are easily stolen, which could have dire consequences for businesses. An automated system secures its data in the cloud, which offers greater security with minimal risks.
10. Avoid Late Payments
Automating your AP process will help you avoid late payments. You will receive reminders of upcoming due dates, enabling you to make payments in time.
11. Early Payment Discounts
Automating AP process will help you enjoy early payment discounts. Most vendors offer early-payment discounts when you settle invoices ahead of time. A study by IOFM found that most businesses receive less than 21% of these offers, while 12% don’t collect any early-payment discounts at all. However, according to PayStream Advisors’ AP & Working Capital Report, 31% of respondents said manual routing of invoices for payment and approval stood in the way of an early-payment discount. That’s another compelling reason to automate your AP to cash in on early-pay discounts.
12. Enhancing Supplier Satisfaction
Supplier dissatisfaction usually happens due to late payments caused by lost or misfiled invoices. These discrepancies are where an automated AP software can work its magic. With reminders of upcoming due dates, you can make payments in time, which will improve your relationship with vendors, improve company credit ratings, and optimize the entire supply chain process.
13. Prevents Frauds
With accounts payable workflow software, overpayment and duplicate payments become a thing of the past. In 2020, the AFP Payments Fraud and Control Survey suggested that about 81% of companies were targeted for payment fraud in 2019. Fortunately, AP automation software protects your business against fraud by ensuring no single employee is responsible for payment approval. The benefits of which are twofold – it reduces the chance of fraud while providing ample opportunity to double-check data.
14. Quick Insight and Analysis
In the manual AP process, the accounts team has to spend hours collecting data, re-entering it, and ensuring its quality. Due to this, there’s hardly any time for analysis, reporting, and other strategic recommendations. However, automation changes all of this. With automation, all the data and finances of each dimension of the business can be automatically connected to a single accounting system. This vastly simplifies reporting, planning, forecasting, and other analytical functions, and allows for a quick insight into your company’s overall finances.
15. Develop and Nurture New KPIs
Analysis of data influences many key decisions about business models and technological development. With automation, financial teams spend less time compiling and organizing their data and focus more on analysing that data to make better decisions that lead to the development of stronger KPIs.
16. Streamlining Audit & Compliance
Smooth audits are beneficial for companies. AP process is subject to multiple compliance and audit regulations. Monitoring compliance requirements manually is a cumbersome process. Accounts payable solution keeps a check on all the compliance requirements automatically and notifies the concerned parties in case of any discrepancies. The solution increases transparency & visibility and makes it easy for auditors to access all your records. Also, having records in an accessible digital format speeds up the audit process.
17. Competitive Edge
The financial benefits obtained from the process automation will help businesses have an upper hand over their competitors.
18. Expand Into International Business
Every organization likes to expand into international business. For this, they need innovative accounting software that has their finances in check with multi-national compliances. Automated accounts payable allow companies to comply with regulations in different countries, provide multi-language and multi-currency support, and automatically support accounts from local subsidiaries.
19. Integration with Existing Systems
Another benefit of AP automation is its ease of integration with your company’s financial systems. A comprehensive suite removes the need to log in and out of different applications or re-enter data into multiple systems, which causes errors.
20. Cloud-based Process – Instant Access – Anytime, Anywhere
With the cloud, users can access the AP system anytime from anywhere. The information is centralized and present on a single platform for all.