The process of ensuring your business pays suppliers the appropriate amounts on time falls to the accounts payable team, and this critical process never stops. However, because the process can often be opaque, it's not uncommon for some to ask, "What is the importance of accounts payable?" That's the question of the hour until an AP bottleneck costs the business money because of late fees or duplicate payments issued in error, at least.
Without a good AP team, a business can't satisfy its suppliers, and it can quickly find itself cut off from vital goods and services. However, the manual processes often taught to AP clerks can no longer stand up to the volume encountered by most businesses today. That leads to another important question: What are the benefits of accounts payable automation?
When properly configured, appropriately deployed and well-maintained over time, an investment in AP automation software can pay dividends for many years to come. We'll look specifically at 10 of the most prominent accounts payable automation benefits to demonstrate why that is. We'll look at the following topics:
The Benefits of AP Automation, Explained
Why automate AP? It's an important question with a complex answer. Exploring that answer is essential to determine how much of an investment your business should make in these new processes. A quick look reveals nearly two dozen advantages you can tap into—benefits that yield real-world results and visible bottom-line changes. Let's consider each of them.
- Improved Accuracy
Human error is one of the costliest problems associated with processing invoices manually. When you have clerks opening envelopes and typing invoice information into computer systems by hand, errors are inevitable. These errors can come from outside your business or within other departments, too. Automating your process with tools that intelligently capture the information presented on invoices not only speeds up the initial phase of AP processing but also reduces errors that cost you money at the same time.
- Recognizable Cost Savings
Cost per invoice processed is a critical KPI for your business. With manual processes, each invoice could cost $10 or more to process, especially when there are errors or exceptions to resolve. It could make AP a drain on the business's finances rather than a boon for the bottom line.
By automating more of the process, the cost per invoice can drop dramatically. Many invoices could undergo processing and approval with very few human touches, lowering the cost to process each item by an amount that yields noticeable financial benefits for the business. Conducting a cost-benefit analysis on automation may reveal it's a "no brainer" choice for AP departments struggling with high volume.
- Improvements in Time Efficiency
Invoice cycle time is often also a casualty of manual processes. Your business needs to pay invoices appropriately to keep its cash flow as liquid as possible without violating vendor invoice terms. Reconciling the appropriate timing of these events can be very difficult, if not impossible when your AP processes are mostly manual.
An automated system can not only balance these concerns for you, but it creates an overall reduction in the amount of time each invoice remains pending on your books. From intake to the approval process, fewer touches translate into faster handling. You can configure such an automated system to hold invoices for payment until the ideal moment.
- Easier Compliance and Monitoring
An audit trail that is easy to follow for any transaction is an essential feature of a successful AP department. Ensuring that your team follows the correct approval process and pays only legitimate invoices is a critical task. Otherwise, you put yourself at risk for fraud from both inside and outside the company.
Automated systems generate immutable records of every action taken on an invoice, including who handled it, when each part of the process occurred and more. Having this data at your fingertips turns compliance and monitoring from a headache into a solution.
- Better Data Visibility and Insight
At the same time that automation simplifies the compliance process, it also unlocks fresh insights for the business. When you leave manual processing behind, you can use systems that generate data-rich reports about how your AP team performs.
When assessing KPIs is easy, you can see what works, what doesn't, and where additional training or technical assistance may be necessary. Better data analysis also leads to creating cash flow and purchasing insights that may prove useful for management teams.
- Improved Vendor Satisfaction
The benefits of using accounts payable automation aren't only internal. It's essential to consider the impact on your vendors, too. When you spend less time on manual data entry and matching invoices, you're able to capture vendor-provided early payment discounts.
Consistently on-time payments that always arrive smoothly can mark your business as a preferred partner for many vendors. When you need assistance in a pinch, that good reputation can be beneficial.
- More Cooperative Teamwork
When tensions run high in the office because of too much work and too few hands to do it all, morale suffers and productivity drops. Automation can put the spark of life back into your department by eliminating the most troublesome, time-consuming and tedious tasks.
If clerks don't need to waste hours on portions of the job they strongly dislike, they can focus their efforts on the most critical parts of the process instead. Automation enables teams to work together more effectively by consolidating many workflows into one.
- The Opportunity to Standardize and Streamline Your Process
Consolidating workflows does more than improve opportunities for excellent teamwork. Automation also gives you the flexibility to design and implement workflows that align with the specific needs of your industry. The customizable nature of many automation tools, , means you can design processes that conform to your institutional requirements. One of the critical benefits of AP automation is its flexibility for today and adaptability for tomorrow.
- The Chance to Grow, Plan and Monitor
Automation can seem like a "set it and forget it" investment, but the reality is different. Automation tools can grow with your business while letting you monitor the effectiveness of your efforts. As time goes on and technology improves, you can automate additional elements of the process.
The data provided to you also offers insights that make planning for the business's next growth phase easier. Instead of introducing new struggles into the department during growth, automation keeps your output steady.
- Integrations With the Rest of the Business
AP has traditionally been a highly siloed environment, with information passing to it from other departments, but rarely the other way around. Integration with SAP, Netsuite, Microsoft Dynamics and enterprise resource management software generally makes the AP process visible to the key decision makers and players within the company. As a result, AP becomes a value creator, not just another cog in the machine.
How do you tap into all these benefits for your business? Overhauling your AP processes with automation is within easier reach than you might expect. AI-powered tools, such as Kofax ReadSoft® and Kofax AP Agility®, open the door to automation that scales effortlessly to meet the needs of your business.
The ReadSoft product is highly customizable and integrated with other popular enterprise solutions such as SAP, Netsuite, Microsoft Dynamics, offering value across the board. Learn more about this opportunity today.
From boosted accuracy and speed of processing to an enhanced reputation for your business, the benefits of AP automation are clear. When appropriately implemented, these solutions offer a way to transform workflows that have previously remained mired in manual processes for decades. By providing the business with a more visible AP process, you both avoid common problems and increase your teams' positive outcomes.
Start an assessment of how automating your accounts payable process could transform the way you do business today.