Top 7 reasons to add AP Automation to the mix
Every organisation, regardless of size, industry, or service, should be looking to streamline their internal processes. AP Automation is an excellent example of organisations investing in digital transformations by replacing manual-intensive back-office operations. Up to now, the manual nature of AP processing meant adding staff as the business grew. Large AP departments with endless rows of people taking calls from suppliers and punching information into computer systems are not a modern option anymore. With growing staff shortages and the cost of doing business increasing year on year, it’s time to invest in solutions that retain your staff and allow you to scale at lower costs. It’s time to transform AP from a cost burden into a cost-cutting department.
Let’s look at the top 7 reasons why AP automation is the best place to start for a ‘digital first” business strategy.
1. Manual invoice processing is expensive.
After doing lots of research, the price range I found for processing invoices manually ranges from $15-$40 depending on the complexity of the invoice, whereas the price to process an invoice with automation takes it down to around $3.50, again more or less depending on the setup. Regardless of the exact figure, it doesn’t take much data to realise that manually processing invoices adds up. To manually process 10,000 invoices a month, you have to pay many people to work long hours. And, you aren’t guaranteed perfection; humans make mistakes. Using automation and getting even a 29% reduction in invoice processing costs can save $300,000 per year. Not to mention, the cost of operations will continue to rise as you open new sites, add vendors, and process more invoices.
Other pitfalls of manual invoice processing include late payment penalties, missed discount opportunities, duplicate invoices, overpayments, and overlooking or forgetting credit due dates. Taking advantage of prompt payment discounts offers an implicit high rate of return. For example, 2%/10 translates to a 37% annualised return. In fact, AP automation solutions can often be fully funded by taking better advantage of prompt payment discounts. Where else can you get that rate of return with absolutely no risk? What about some of the other hidden costs of paper invoices? More staff = more office space. More invoices = more storage needs. Imagine if you could take all those filing cabinets and bulky storage systems and make them disappear. What would you do with all of that space? You can free up valuable space for more productive purposes by eliminating your paper burden.
You might want to know: Switching from Manual to Accounts Payable Automation
2. AP automation reduces errors.
AP errors are costly. From lost productivity to lost revenues, AP errors can significantly impact your business. Furthermore, providing fast and accurate services to your customers and vendors is essential in fostering strong relationships and a positive company image. With an automated AP department, you can better understand where and why errors happen, and with this information, you can improve the quality of your processes. Additionally, you will be armed with the right technology to provide superior customer and vendor services through fastmoving, well-organised, and easily accessible system.
Understand why False Billings Costing Australian Businesses Millions
3. AP automation let’s human work come first.
Employees expect their company to embrace solutions that will make their jobs more rewarding. Jobs with many repetitive tasks give rise to boredom, poor on-the-job performance, and eventually turnover. AP automation allows employees to focus their efforts on human work of problem-solving and innovating, not rote data entry. Imagine if your staff had more time to participate in trend analysis projects and develop better internal stakeholder relationships and vendor management.
4. AP automation gives transparent processes through workflows.
With the new norm of hybrid working and flexible schedules, the last thing you want is for invoices to get stuck in bottlenecks. Advanced AP automation solutions have an embedded workflow process that automatically routes invoices for approval based on thresholds set by the AP staff and can, over time, even become touchless. Many are configurable and re-route approvals when individuals are out of the office or on holiday. The best solutions provide mobile applications so approver scan review invoices from a smartphone.
5. AP automation helps staff guard against fraud, duplicate payments, and losing business-critical documents.
There is nothing worse than discovering employees are finding loopholes in an overburdened manual AP department and using them to commit fraud. Actually, I lie; learning your staff have been scammed by hackers pretending to be your trusted suppliers is worse. The sick feeling that money was stolen when AP fraud engines could have prevented it is something I don’t wish upon any company.
What about protection against data loss disasters? Ensuring the backup and confidentiality of your business-critical documents should be a no-brainer for any organisation. A proper document management system will help keep your records safe and support any document retention requirements your company may have. Additionally, you can safeguard company information with strict control over your staff’s access to files.
6. AP automation gives you the visibility and confidence to know your finances are on track.
When you can process payables faster and more accurately, you free up time to accurately project accruals and close the books with greater confidence. Automation will enable you to monitor invoices and payments with detailed audit trails and live information. Whether you are tracking purchases, checking approvals, or matching invoices/payments to purchase orders, you will gain real-time access to the current status of your AP processes.
7. AP automation more than pays for itself.
The ROI for some types of digital transformations can sometimes be at best 50%, but with AP Automation, it can be over 1000%!