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AP Automation: Where to Start — Payments or Invoices?

A goal of every AP department is to drive down costs, right? Automation is key...But, where do you start? 

Now, that being said, which should come first… Automating invoices or automating payments

ap automation 

AP Automation should start with automating payments, not automating invoices. 

Here’s why …

Changing the front end of Accounts Payable means front-end imaging, back end imaging, data capture/OCR, ERP integration, workflow creation; that’s if you do it in-house.  

If you choose to outsource, all of this is taken care of for you BUT you then have the onerous task of getting vendors to change their processes requiring them to mail paper invoices to a new address, or electronically send their invoices to a new location – that’s a nightmare as well.  

Start the electronic shift in Accounts Payable with eliminating the paper your department CREATES not what it RECEIVES!  

Facts: 

  • According to the latest survey from the IOFM, 60% of all B2B payments are made via paper check.  (2015 Survey - AP Technology)
  • 62% say they will have a p-card program in place within the next 3 years.  That’s good but we think V-Cards are better.  
  • The Aberdeen Group says that 35% of CFOs want to reduce the costs associated with payments.
  • Ardent Partners found in 2015 that 53% of AP Organizations want to automate more AP processes
  • Ardent Partners also found that 63% want to reduce processing costs

Using electronic payments will reduce costs and generate profits for the accounts payable department. The CFO will love the new Monthly Recurring Revenue (MRR) the AP department creates for the company. 

For the AP department, using electronic payments like ACH, wire and virtual cards results in payments that are faster, more efficient and less costly and mitigate fraud better than paper checks!   

Here’s a checklist of what to look for when automating accounts payable payments:

  • Electronic payments (ePayments) that can be directly integrated with the bank of your choosing not forced into using a non-bank or service provider bank.
  • ePayments that pay cash-back monthly
  • Integration that doesn’t require programming and a lot of IT management
  • Reconciliation reports that can easily be ingested in your accounting or ERP
  • A vendor relationship tool that allows vendors to enroll in the ePayment program and download their remittance when payments are issued

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