Improving the AP department and its processes is something many businesses work hard to achieve. With the promise of faster invoice turnaround, better visibility, and cost reduction, companies are spending a lot of time and money trying to streamline their accounts payable. Your company should be no exception, but streamlining AP processes can be as easy as adopting an automation solution. There are many problems automation can solve, including the ease with which your staff can receive, route, and process invoices. You can even integrate your automation solution with other workflows to allow easier access and approval processes.
By automating your invoice payment process, you can increase staff productivity and reduce errors, increase payment turnaround times to receive early pay discounts, and lower outgoing costs. Consider invoice automation to be a necessary tool to improve your AP department. In this article, we will explore each of these areas and describe how your business will benefit by automating invoice payments.
Raise Staff Productivity and Prevent Errors
If your AP department has ever accidentally paid an invoice twice or sent a payment from an account with insufficient funds, you understand how time-consuming AP errors can be. A mistake as simple as transposing a number while entering data can create large financial issues that result in overpayments, inaccurate cash management, and damaged vendor relationships. Maintaining paper invoices can cause problems as well, as papers can be misplaced or lost entirely, which can bring the entire process to a halt. Paper filing systems are not as efficient as digital systems and are often less organized. By automating your invoice payments, you are also automating the entire process: when you receive an invoice, your automation solution can verify, file, and process the payment digitally.
Without worrying about manually handling invoice paperwork, your staff no longer needs to track invoices from person to person for approval or spend an afternoon searching for the invoice record in a filing room. Your AP team is free to work on other more complex aspects of their job and leave the tedious data entry to your automation software. Digitally captured invoice information integrates directly into your company’s existing ERP/Account software, further reducing data entry time. This increased productivity and error reduction will result in better AP department operations.
Eliminate Payment Delays and Take Advantage of Discounts
In a hectic workplace where your staff performs many manual and tedious tasks throughout the day, missed deadlines are not unusual. Sometimes these mistakes can be resolved quickly, but more often these mistakes can halt workflows and waste additional time and resources to fix. For late invoice payments, this can cost your company more than you might realize. Not only are you incurring late fees from the vendors who own the invoices, but you might also be missing early payment discounts. Whether you process a few invoices a month or dozens a week, these costs really add up. By automating your invoice payments, you can eliminate the possibility of missing payments and reap the benefits of early pay vendor discounts.
Speed is an important aspect of invoice payment that you should not ignore. Paper-based systems often take longer to navigate, leaving your vendors waiting longer for their invoices to process than necessary. An invoice might end up on the desk of a busy employee for days before it is approved and sent back, creating an unnecessary delay. On the business side of this problem, the longer an invoice sits, the higher the risk of errors related to your company’s fund availability. If you have a lot of outstanding invoices, you may not have a firm grasp on your company’s financial standing.
Processing invoices quickly allows you to have a continually updated account balance, prevent the possibility of bounced payments, and catch fraudulent charges much faster. Additionally, the increased visibility and routing options available with automation lets staff digitally route documents for approval and check the status from an integrated platform.
Reduce Costs with Invoice Automation
In < internal link to “The True Cost of AP Automation”> a previous article on AP Automation</link>, we discussed the average true cost of manually processing invoices. But exactly goes into that cost? According to a 2015 AP Process Cost study by the American Productivity and Quality Center (APQC), labor costs account for nearly 62% of all AP costs. This labor includes everything from manually receiving, routing, and filing invoices to issuing payments to vendors and rectifying payment errors. Much of that labor cost is directly tied to manual intervention to resolve problems with invoices, including data entry errors and missed payments.
Your business is spending an unreasonable amount of time and money within your AP department rectifying errors and manually handling paper invoices. Automation can help on both fronts: by automating tedious tasks your staff spends less time manually entering data, which is where many errors occur, and by using a digital automation solution, your company can reduce or entirely eliminate the need for paper invoices.
Improve Enterprise-Wide Visibility
We have already touched on the downside of having multiple invoices floating around the office traveling from desk to desk. But what is happening to your financial records while invoices are waiting for approval? At any moment, your AP department may be trying to track dozens of invoices while trying to manage outgoing expenses. Delays or errors during this time can result in bounced checks, insufficient fund fees, and missed payments.
By automating your invoice routing, your company will improve enterprise-wide visibility for better cash management. It is easy to check on invoice statuses, digitally verify payment information, and have a clear picture of your company’s financial state with improved access. This visibility boost accountability, since your AP staff can see where an invoice is stalled and the staff member responsible. Intelligent workflows within AP automation solutions help route invoices with each step, so staff can complete approvals much faster.
Ditch The Paper and Digitize Invoices
Paper-based processes, particularly when it comes to financial systems, are outdated and fraught with errors. In addition to the labor costs associated with paper, there are the costs of paper itself. Your staff needs to store paper invoices and associated documents somewhere, and large filing cabinets take up a lot of space. Based on paper costs, each of those four drawer cabinets costs about $25,000 to fill – factoring in labor costs, your company may be spending an additional $2,000 each year just maintaining those files. Paper invoices may be misfiled, lost, or destroyed, and every few years your staff may need to spend time purging old documents. If your company is trying to be environmentally conscious, that is an awful lot of paper going to waste.
For a lower-cost and environmentally-friendly fix, ACOM automation solutions offers a capture layer component to their AP solution. By capturing information from invoices and digitizing it, your company can ditch the paper while improving its data storage process at the same time. This data capture ability extends beyond paper: you can digitize invoice data from emails, flat files, and EDI files and integrate it into one system. ACOM also works with your vendors and can transition 75% or more of your vendors to paperless solutions for invoices. Forget spreadsheets and cluttered file rooms; with automation, your company can get swift access to information and feel good about eliminating paper from the office.
Make the Smart Business Choice by Automating Invoices
Helping your AP department run more efficiently helps every facet of your business operations. Paying your vendors on time is essential in maintaining positive relationships, and processing invoices quickly keeps your financial records in order. With automation solutions, your business no longer needs to rely on paper trails, manually routing invoices between staff, or running the risk of misplacing or even losing invoice documents. Your business will see an increase in staff productivity, a decrease in errors, and even cost savings by automating your invoice processing and payment systems.