The digital evolution has rapidly altered the financial landscape. For occupations that are entrenched in time-honored methods, such as accountants, changes in their processes can be met with some resistance. However, as the evidence mounts in favor of automating Accounts Payable, it has become too hard to ignore.
From speeding up processing to eradicating out-dated manual data entry, and increasing accuracy, it’s no wonder that so many companies have made the switch. PYMNTS predicts the AP automation sector will jump from $1.9 billion in 2019 to over $3 billion by 2024, as automation goes mainstream.
If you are still on the fence, here are nine reasons why you should embrace automating Accounts Payable.
Benefits of Automating Accounts Payable
1. Financial Gain
Companies can often overlook just how much their historic methods are costing their business every year. If you’re still using manual processing, get ready to recoil when you learn companies with automation are, on average, paying 80% less than you per invoice.
According to the Institute of Finance and Management, the manual processing of a single invoice can amount to $10 or more. If you’re processing thousands of invoices annually, you can imagine just how much you’re losing out.
In addition, automation provides a superior process to capture early payment discounts. Using manual methods, you might be surprised to learn just how many early payment opportunities slip by. Levvel research shows that the majority of companies (51%) only occasionally take advantage of early payment discounts. Automation gives Accounts Payable the advantage of having complete visibility. Using these types of automation tools in AP can also have a positive impact on your Working Capital. To learn more about improving your Working Capital, read this blog.
2. Optimize time
Levvel research has shown that manual routing of invoices for approval is the biggest challenge reported in the AP process. However, it only took the top spot by a fraction as manual data entry and inefficient processes were a close second with 23% of companies reporting it as a struggle.
After implementation, companies saw improvements in the reduction in paper invoice volume, quicker approval times and improved visibility into unpaid invoices, according to Levvel. Automation handles invoice matching. This means that most invoices go straight through and there is only a minor proportion of exceptions that will need AP’s attention. Moreover, automating Accounts Payable provides everyone with one platform, so if you need to query anything or seek approval, the process is efficient, saving your staff precious time.
3. Real Reliability
Human error is bound to occur at one stage or another with manual entry. Although mistakes happen, they can be extremely costly for companies, as one Atlanta school discovered. The charter school lost $2.3 million over a data-entry error.
Automating Accounts Payable decreases the risk of human mistakes and increases accuracy. Invoice matching uses clever machine learning, meaning with every invoice, it is always improving. It detects information on the invoice, matches two or three ways and if any exceptions come up, it will route it to the correct folder for inspection. It provides real reliability by eliminating human error. Find out more about invoice matching through this blog.
4. Stronger Business Relationships
It’s often perceived that Procurement has a bigger role when it comes to vendor management. However, Accounts Payable’s role is just as important. Paying vendors on time, utilizing early payment discounts and maintaining a strong relationship falls to AP.
AP teams have reported in a Levvel survey that lost or missing invoices is a big problem for the department, as well as failing to capture discounts because of slow invoice approval processes. Late payments can really fracture your relationship with vendors.
Automating this process will mean that vendor invoices don’t go missing, purchase orders are always raised as manual entry will be a process of the past. Better relationships with vendors allows more room for negotiating future contracts and payment terms. Even within your own company, if AP have an efficient process in place to maintain the standard set by Procurement, the two departments work as one united entity, leading to stronger trust and communication between AP and Procurement. Read our blog about the importance of AP and Procurement alignment.
5. Complete Compliance
Compliance has never been more important for organizations with recent increases in privacy and data regulations. Manual processes are really running the risk of data breaches as there is limited control over access, storage, and sharing of private information.
Automating Accounts Payable allows users to restrict access to sensitive information and store documents, invoices, and contracts safely in accordance with data regulations. A survey conducted by Strategic Treasurer said 90% felt Accounts Payable was the most susceptible department to fraudulent attacks. Automation provides control to prevent fraud and maverick spend within an organization. We’ve written recently about fraud detection and prevention, read it here.
6. Full Visibility
Achieve greater visibility into the Accounts Payable process and benefit from keen insights into company spend and health. Automating Accounts Payable will give you the advantage of having everything on one platform, providing an overview of costs, unpaid invoices, and outstanding liabilities. A Levvel report explained that 40% of respondents saw improved visibility into their outstanding invoices with AP automation.
Management also benefits from high-level reports and visibility into their employees’ work. It mightn’t come as a surprise that 34% saw an increase in employee productivity post automation. A clear look into the AP department can also have positive impacts on working capital and cash flow. Learn more about AP and working capital in this blog.
7. Seamless Integration
If you’re currently switching between different applications and manually entering the same data into multiple systems, there is another way. Automation takes those dull and unproductive tasks to free-up staff to focus on high-value responsibilities. It seamlessly integrates with all major financial systems, databases and Enterprise Resource Planning (ERP) systems.
8. Approval Workflows
Automation puts the control back in your hands with approval workflows. Customize the routes to best suit your organization’s needs. It ensures that the right people with the correct authorization oversee approvals.
Create approval timers, alerts and clearly see where an invoice is sitting. No one knows your requirements better than you do, and a powerful platform allows you to keep it that way.
9. Tap into Talent
Contrary to popular belief, automation isn’t replacing human workers. Even though the myth has been dispelled for many years, the doubt still lingers. Automation actually does the complete opposite than the fear-mongering headlines would have you believe. It enables accountants to upskill and embrace their talents to focus on high-value tasks and allows automation to complete the mundane and manual routines.
In fact, automation is a popular choice amongst employees, according to Gartner research. The study showed 52% of workers would rather work with AI as a “proactive assistant”.
If you’re still undecided about automating Accounts Payable, weigh up the benefits of compliance, cost and time savings compared to your current process. Give your employees the chance to upskill and develop their talents instead of doing repetitive low-value tasks. Develop a strong relationship with vendors by aligning Procurement and Accounts Payable with automation. Although it is hard to part with a historic method, the digital age has arrived and it’s here to stay. Those who don’t embrace it will ultimately be behind their competitors who have adopted the tech.