Automation is the way of the future, allowing companies to focus on running their business rather than spending time with manual processes. Most modern companies have turned toward automation services to streamline their finances, invoice processing, and other management systems to save time and money.
You might be wondering why you should invest in automated accounts payable services when your financial office is keeping everything running smoothly. Maybe your business is small and doesn’t process many payments, or maybe you have full-time staff dedicated to managing those accounts. AP automation, however, does more than just track payments: it reduces the number of human errors and can drastically cut down on the time employees are required to spend tracking AP accounts.
Why Automate AP?
There are many common arguments against using AP automation due to its perceived high cost or effort, but the reality is that automation frees you quite a bit of frustration by helping you streamline the process. Using an accounts payable software or partnering with a company offering automation solutions will save you from late payments, offer a controlled but hands-off approach to debit payments, and allow your staff to direct their time and attention elsewhere.
Save Money by Reducing Labor Costs
If you are concerned that you will end up spending more on an automation solution, consider the information presented by the American Productivity and Quality Center: According to an accounts payable survey, the APQC concluded that your labor cost per invoice might be elevated far higher than the current invoice cost standard offered by automation. Also, the level of skill and expertise of your workers comes into play: you may be spending as much as 2.5 times more for lower-performing employees to process invoices. That is a lot to be paying per invoice, especially if your business handles dozens of invoices every week.
So how can you reduce that labor cost? Switching to an electronic payables processing can reduce that cost to approximately $2.00 per invoice. That incredible reduction in labor cost alone can drastically lower the amount of money your company spends on accounts payable processing.
Fewer Errors and Better Audit Trails
Besides cost, there are many other compelling reasons to switch to an automated accounts payable solution. Automatic electronic processing reduces human error by digitally verifying information within seconds and flagging payments that appear fraudulent or are missing vital details. Most automation software provides reporting tools for you to track payments and immediately access your AP records, meaning you can find vendor information quickly without searching through historical paperwork.
You might not realize how much time your staff spends verifying payments or fielding vendor phone calls checking on their payment status. If your staff tracks invoices and payments manually, that information is most likely not easily accessible. Keeping paper records means your staff is wasting valuable time tracking, filing, and searching for payment information. Paper documents can be lost or misplaced, causing even more wasted time searching or replicating data and possible security issues. Digital audit trails lead to better financial records, so you never have to worry about lost data and can provide vendor information quickly.
Increased Visibility and Accessibility
Payment authorization creates additional delays, as it often requires physical signatures; invoices are moved from desk to desk. This type of physical routing is inefficient; if authorizing a payment is not a top priority for the staff member – it is always difficult to prioritize tasks throughout the day – then the invoice untouched may sit for several days. Delay in payments can lead to incurring late fees, insufficient fund fees, and can hurt relationships with vendors.
AP automation tools offer client portals that would allow vendors to check on payment statuses directly and management to verify information without going through the AP chain of commands. More access leads to less wasted time and frustration. These same types of portals allow for digital payment authorization, which drastically cuts down the amount of time it takes to authorize and issue a payment. No more delayed payments or last minute scrambling to sign a check; AP automation lets you take care of the entire AP process online.
Reduce Your Risk of Payment Fraud
From routing physical invoices, manually tracking data in spreadsheets, and issuing paper checks, we have discussed the ways in which manual AP processing can really slow your business down. We have touched on security, but payment fraud is an additional concern for businesses. Often it is difficult to get a complete view of your company’s financial situation when you need to check paperwork in filing cabinets or wait for your AP staff to track down the necessary receipts. The problem with this is that you might be opening yourself up to payment fraud that could go unnoticed for days, weeks, or even months.
Digital audit trails, which AP automation offers, can help resolve this unknown. Any staff with access can quickly run payment reports to check on the entire life-cycle of an invoice, including the payment amount, date, and reason. This information can provide details that could alert you to a mistake or even internal fraud. Additionally, with check fraud on the rise, you can regularly monitor your outgoing checks to prevent fraudulent charges or account theft.
In terms of security, your automation software digitally verifies invoice information and payment data, notifying you of fraud or inconsistent charges immediately. You can completely eliminate the risk of an overworked accountant missing an incorrect payment or a fraudulent charge, saving your company time and money.
Do you have any questions about automating your accounts payable? Let us know and we’ll get back to you ASAP!