Is your Accounts Payable department automated?
We ask finance professionals that question all of the time, and their answers usually vary. Most of the time, the honest answer is "sort of." True AP automation removes manual processes and tedious tasks altogether - not halfway.
This blog post defines AP automation and what it could mean for your business's bottom line.
Accounts Payable Automation takes your usual manual paper-based processes and converts them into a digital format for a more streamlined invoice approval and payment process. To paint a clearer picture of what it looks like in real life, imagine that emailed invoice you're using to enter data into your ERP manually, or that check that you just signed, digitized by a cloud-based AP solution.
Instead of manually scanning an invoice and entering the data or stuffing checks into envelopes and mailing them, your invoices are automatically entered into a digital workflow and approval process, and your check payments transition into much more cost-efficient digital ePayments.
Here's a further breakdown of how AP Automation works to streamline your processes:
Automating the payment of invoices, bill processing, etc. that are run through the accounts payable department is the most natural place to begin the Accounts Payable transformation. By automating payments first, you start reducing the paper that your department creates, resulting in:
- Much faster processes & reduced bottlenecks
- Electronic payment processing replaces paper-based payments
- Supplier onboarding to your new Epayments program
- A secure digital trail for tax and internal audit compliance
- Staff freed from hours wasted on manual tasks
- 90% cost reduction
- Your A/P department becomes a profit-generating machine
Payment Automation also has an immediate positive impact on your security. Checks remain the most natural target for fraud. By shifting your risky paper-based payments to digitally disbursed payment methods like ACH and virtual card transactions, you significantly reduce your chances of being the subject of a successful fraud attempt. Virtual cards also grant AP departments the ability to earn cash back on AP spend, turning what used to be a cost center into a profit center. Payment automation also enables remote AP functionality and grants access to No-Touch Payments from any location. There's never been a better time for businesses to transform their payment processes through automation.
Different forms of payment automation services may be provided by your bank, by your ERP, or by outside SaaS organizations that deal exclusively with Accounts Payable Automation. If you are a company that utilizes a diversified banking strategy, then enlisting a payment automation platform's support will allow you to maintain one process, regardless of the number of banks or bank accounts you use for disbursements. ERPs and some SaaS solutions do not support supplier on-boarding for your new electronic payment program and are not as valuable of a solution to your organization. Automating the accounts payable payments process should be able to be done in relatively short order - usually, in less than 30 days you will begin to see the shift from manual to digital processes.
Automating Accounts Payable invoice processing should be a massive priority for AP professionals. Invoice Automation grants AP departments the ability to eliminate paper invoices from their approval process, saving up to $12 per invoice on processing costs. A recent study we conducted in partnership with PYMNTS highlights some interesting facts about the toll associated with continued reliance on paper-based invoices.
"The U.S. alone is responsible for over 9 billion paper invoices every year. Businesses could save up to $150B a year by shifting to digital invoice processing and 19 hours a week on processing times." - PYMNTS.com
One of the primary reasons that paper invoices are still so prevalent today is because many businesses believe they are already automated. Many AP departments no longer receive paper invoices in the mail, leading them to think that they have effectively eradicated paper from their invoicing. However, businesses still need to manually scan their invoices enter into their system or for filing/ storage purposes. So, even though most invoices are received via email, they're still required to open the email and print the digital invoice, thereby restoring paper's integral role in their invoice process.
After fully adopting a dependable invoice automation solution, businesses can expect to leave paper in the shredder for good. Emailed invoices will be automatically scanned and entered into a digital workflow. In most cases, AP departments won't even be bothered with having to check the email box. Intelligent AI and workflow automation will automatically recognize where each invoice needs to be routed and alert the appropriate team member(s), leading them directly to the approval portal where the digital invoice is waiting to be approved. In the event that you have a vendor/supplier that continues to send paper invoices through the mail, you'll be able to choose whether you want to manually scan those invoices into the processing software or elect to partner with an AP solutions provider that handles that for you.
By automating invoices, you immediately reduce the time your team spends on manually entering data and the cost associated with paper invoices:
- Faster approval times and tracking
- Automated workflows and approvals
- Reduced footprint for the department
- Internal audit compliance and enhanced security
- Early-pay discounts and improved vendor relationships
- One centralized location for all invoice approvals
- Remote invoice processing functionality
Invoice Automation can be provided by a new module of your existing ERP system with scanning technology onsite or a service provided by SaaS companies that may handle your incoming invoices for you, allow you to forward them, or provide you with scanners to capture the invoices with your department. Transforming invoice automation the right way means carefully selected the appropriate invoice automation provider. Not all invoicing software is the same. Some solutions are better for AP departments that simply want a set it and forget it plug-in-play option. Other invoice solutions are designed for large and complex organizations that require enhanced customization.
We're happy to help you find the right AP solution for your business!
Where to start the transformation is up to you, but we typically recommend beginning your Accounts Payable Automation process by automating your payments first. It's easy to manage, makes a tremendous impact, and can turn your Accounts Payable cost center into a profit center that can pay for the invoice automation project.
Regardless of which automation process you choose first...we recommend that you get automated ASAP! Remote Accounts Payable functionality is critical for business continuity, and AP automation is the key to enabling it.
Learn more about how Accounts Payable Automation can reduce your administrative paper processes and increase your operational efficiencies.
Payment automation can even contribute PROFIT to your bottom line.
Read, Listen or Watch more about Accounts Payable Automation and Digital Transformation:
- How is Cloud-Based AP Technology Different than On-Premise Software?
- 3 Reasons Antiquated Invoices Create a Convoluted Payment Process
- How Invoice Automation Enables Remote Approval
- 3 Big Changes in B2B Payments After COVID-19
- High Tech, Low Touch Economy Webinar
Editors note: this blog was originally published in 2018. It was updated on July 10th, 2020 for quality and content.