Accounts Payable Automation for Cost Saving and Improved Efficiency
Are paper and people-based processes leading to higher costs and missed business opportunities in your AP department? You’re not alone. In April 2020, OnPay Solutions (now owned by Medius) collaborated with PYMNTS.com in a study that showed:
- 75% of all U.S. invoices are paper-based
- 80% of U.S. firms use paper checks to pay their suppliers
- Businesses that automated AP & AR processes resulted in a 60% reduction in missing invoices
Many organizations have bottlenecks in accounts payable that come from manual data entry, inefficient processes, and manual routing of invoices for review and approval. Accounts payable automation can save on costs and improve efficiency by streamlining many convoluted processes in 2 key areas: invoice processing and payments.
1) Invoice Processing Automation
Compared to manual data entry and paper-based solutions, using the right software to process your invoices reduces cost, time, human-prone errors, and risk of fraud.
Cost
In the 2022 State of ePayables report from Ardent Partners, the average processing cost for companies surveyed stood at $10.18 per invoice. Some of the costs that can be reduced or eliminated by automation include manual labor, mailing services, office supplies (paper, printers, toner, etc), and maintenance. Going paperless and minimizing manual tasks by adopting a digital workflow can reduce the cost per unit processed, resulting in immense savings for large companies.
Time
Time is valuable, wouldn’t you love to have more? AP invoice automation means no more 12 hours days going through stacks of never-ending paper. No more slow, hard to keep up with paper-based systems. No more manual processes soaking up time & resources. Invoices are automatically pushed into your customized workflow, routed to the correct individuals for approval, and approved by those individuals remotely. When invoices are approved, information is routed directly to your ERP to finalize, giving your AP department time to focus on more important things.
Errors
If you’re human, you’re prone to error. Sometimes those mistakes can be costly. Fortunately, when it comes to processing invoices, there’s a way around it. Errors can be eliminated by replacing manual data entry with intelligent data extraction software that reads data from your vendor invoices, regardless of format. The right solution will even handle the coding and approval routing for you, leaving no room for errors that derive from typos or misplaced documents.
Fraud
Invoice fraud can be prevented by detecting anomalies in invoices, matching them to purchase orders or goods receipts, and tracking invoice activity. Attempting to do this manually will result in higher costs and reduced effectiveness. Invoice processing automation secures your workflow to reduce the risk of fraud through features that include:
- Real-time alerts for duplicate invoices extreme amount variations
- Auto-flagged changes in vendor payment information
- Alerts for sudden increases in the volume of invoices
- Warnings for invoiced amounts close to approval thresholds
There are many reasons why it’s time to adopt invoice automation.
2) Payment Automation
Does your AP department still rely on manual payment processes and paper checks? AP Payment Automation could seriously cut payment costs by digitally transforming paper checks and manual processes into a seamless payment workflow while boosting visibility, increasing control, enabling remote payment functionality, improving vendor relationships, and even generating revenue.
Visibility & Control
A high degree of visibility brings substantial advantages including low transaction costs, shorter processing cycle times, decreased risk, shorter response times, improved forecasting and management, and a greater ability to manage cash flow and critical accounting processes. Audit controls ensure that AP transactions are processed in a way that complies with policies, procedures, and regulations. Automated reports provide real-time, 24/7 access to payment and vendor information, leaving more time for staff to focus on strategic needs and important tasks while allowing full payment visibility to those who need it.
Remote Access
The recent shift to working remotely has made it increasingly difficult for many companies to process payments manually, especially if checks must be printed from the office and signed by multiple people. Cloud-based payment solutions can offer remote access from anywhere while increasing security with bank-level protection and enabling no-touch payments from anywhere.
Vendor Relationships
Digital payment automation reduces vendor late payment fees, captures negotiated discounts and early payment discounts, eliminates duplicate invoice payments, and prevents fraudulent payments. Most vendors prefer digital payments over paper checks because they are easier to process, take less time to get paid and are more secure. Payments methods preferred by vendors include:
- ACH
- Same-Day ACH
- Purchasing Cards (P-Cards)
- Virtual Cards(V-Cards)
- Real-Time Payments
- Wire Transfers
Worried about making the switch to digital payments? Don’t be. Change is inevitable and companies must adapt to new B2B payment methods or risk getting left behind. Vendor management can be overwhelming for companies, but the best B2B payment solutions provide vendor onboarding and support. They will help your vendors enroll in the program, select their preferred payment method, and manage payments so your finance department can focus on more important things.
Integration
Choose a flexible payment solution that is capable of integrating with any ERP, accounting system or in-house solution. This level of adaptability is vital for making automation work for you. Organizations that have developed a collaborative framework provided by an automated integrated AP system process more than twice the number of payments than others, resulting in significant savings of time and money.
Virtual Cards
Many businesses today issue digital payments within accounts payable to streamline processes, cut costs, and reduce risk. One of the newest forms of electronic payments is Virtual Cards (v-cards), which will make your processes inexpensive, fast, and convenient, all while providing a higher level of security to your company. In addition to saving money and being more secure, your AP department can earn cashback on monthly spend for every transaction made through virtual cards, effectively turning AP spend into profit.
Summary
Automation is a critical foundation to lowering costs and streamlining invoice receipt, validation, inquiries, approvals, reconciliation, settlements, and payments. By implementing invoice processing and payment automation, your AP department will certainly save money and improve efficiency.
Learn more by checking out our Ultimate Guide for AP Automation or by downloading our free eBooks:
