Accounts Payable (AP) automation gives companies, large and small, an easily implementable business advantage. Some of the key benefits include time saved through faster invoice processing and cycle time approval as well as error reductions, money saved through on-time payments and elimination of duplicate payments, along with the ability to capitalize on volume rebates and opportunities for savings through early payment discounts.
Yet, despite this dramatic return on investment, many companies are hesitant to make the switch to an AP automation software platform. Here, we’ll address five key misconceptions that may be holding your company back from applying a service that could deliver significant cost savings and efficiencies.
1. We can’t afford to automate the AP process
Many companies assume making the switch to an AP automation solution will be too costly. But, the truth is, you save money when you automate your AP process using cloud-based services that require no upfront software or infrastructure purchases or recurring license maintenance.
AP automation can help you save money in multiple ways, such as:
- Ensuring vendors are paid on-time—eliminating costly late payment fees
- Using e-invoicing to pay accounts immediately, which can generate early payment discounts from many vendors
- Helping control the procurement process to manage cash flows
- Providing accessible information on supplies and inventory to ensure consistency between all departments
- Using analytics to uncover ways to consolidate orders or improve vendor rates and comparing real-time spending to the company’s budget
Overall, these automated, operational changes can often save thousands of dollars.
You’ll also want to consider all the direct costs you’ll be saving money on. If you’re still using paper checks for payments there are tangible costs that can add up quickly such as the purchase of paper, envelopes, printer ink cartridges, mailing labels, and stamps. You’ll also need to consider other hidden direct costs such as investments in cabinets to store paper invoices, scanners, and monthly estimates on the cost of printers and printer maintenance. All of these costs can be significantly reduced when you switch to a digital platform.
The more companies can lower operations costs and improve efficiencies, the higher their profit margins. Freeing up cash allows companies to pay down corporate debt, make capital investments, increase research and development, or support other growth initiatives.
2. We’re too small or too big for automation
Some companies believe they are too small or too big for AP automation. The beauty of cloud-based solutions is they are built with a multi-tenant approach, meaning they are created to serve a wide variety of customers and the software can be tailored to meet these diverse needs. When delivered as a service, AP automation can be easily scaled to handle small or large volumes of transactions.
For organizations that are often struggling to keep abreast of their work, an automated solution can cut processing time by up to 50%. This improves workflows and helps small teams implement a process that ensures better control. For larger companies, automation can help you reduce errors, improve efficiency, as well as track and analyze large volumes of data.
Cloud-based solutions make sense for businesses of all sizes due to their overarching benefits such as e-invoicing, automatic data entry and capture, 2- and 3-way purchase orders and receipt matching, and automated approval processes that flow seamlessly through the system.
3. Automation is not really any better or more efficient
We said it once, but we’ll say it again. Did you know accounts payable automation can cut invoice processing time by 50%?
Simplifying your AP workflow by automating your invoice collection, sorting, categorizing, and data input upon arrival can save tedious hours of invoice processing time. Asking your vendors to submit e-invoices eliminates paper and allows you to completely automate your workflow from the beginning—this means you won’t get stuck scanning documents or manually inputting information.
Automation processes help simplify the routing process and speed up approval times. AP automation software also stores all necessary and supporting documents as well as captures and digitizes invoice data so information such as GL codes, line item information, terms, and amounts can be intelligently extracted and verified according to your pre-determined workflow rules. Automatically matching invoices removes bottlenecks, improves accuracy, and frees up your staff’s time. This time saved allows you to refocus manpower to more strategic projects and optimize performance.
Overall, teams can speed up invoice payment and approval processes with an automated accounts payable system while eliminating mistakes, ensuring on-time payments, and reducing the need for discrepancy resolution. AP automation not only saves hours of time previously spent on manual data input, but a cloud-based platform also allows for greater department and company-wide collaboration.
4. We’d lose control over our process
For those who believe you lose control over the AP process when automated, we’re here to debunk this myth. In fact, the opposite is true—automation gives you increased control over your process and allows for greater transparency and accountability. A smooth process that connects the greater accounting, accounts payable, and accounts receivable teams is the key for success.
Rather than juggling a slew of messy email chains, automation transforms the accounts payable process into one centralized online workflow. Data is automatically extracted from invoices that are routed to approvers or automatically approved, depending on your preferences and business needs—workflows are customizable. Teams can instantly track and can monitor an invoice in the system and vendor communications are made easy with full transparency into invoice status. Centralized AP processes also help with month-end closes. Eliminating invoice errors and duplicate payments mean no more re-balancing of the books when you find last-minute errors.
5. Automation isn’t as reliable as paper
First, when hundreds of payments are being authorized on a monthly basis, it’s easy to misfile or lose paper invoices. Completing, filing, organizing, and keeping track of paperwork also creates a strain on time. When staff gets overwhelmed or invoice approval processes fall behind, it’s easy to miss payment deadlines—a costly and unnecessary issue in many accounts payable departments. Paper-based systems also require manual data entry, which is often rife with human error. AP automation addresses all these issues by providing invoice entry, scanning, receipt and purchase order matching, coding, correcting errors, and data migration. Companies and employees can stay better organized and focus their time and energy on managing true exceptions.
Second, when it comes to fraud, the Association for Financial Professionals reports paper checks continue to lead as the payment type most susceptible to fraudulent attacks. With a digital platform, numerous safeguards, encryption, and banking-level security measures work together to protect your documents and keep your company safe from phishing scams.
Automation also makes complying simple and minimizes audit risk. Secure, permission-based access with audit trail make complying with accounting and industry regulations easier. You can track invoice history and approvals, assure a chain of custody, apply controls for PCI, HIPPA, and other rules and regulations, and prevent documents from being destroyed or discarded ahead of deadlines.
It’s time to make the switch
Automation brings undisputable efficiencies to AP teams and processes while also supporting business growth. An automated Accounts Payable system provides a sense of control that is impossible to achieve with paper-based invoice management. Decreased clutter, seamless access to data, increased security, and reduced busywork all make for a more peaceful and joyful work environment.
While change is hard and the leap to AP automation may feel overwhelming at first, automation is an opportunity to enhance productivity and help AP teams work smarter, not harder.