The digital evolution has helped a lot of organizations during the Covid-19 outbreak, as technology has allowed operations to continue to function remotely.
However, for occupations that still remain entrenched in time-honored methods, such as accountants, manual methods have left them scrambling to adapt. The evidence that mounts in favor of automating Accounts Payable, now more than ever, has become too hard to ignore.
Automation makes the transition from office desk to kitchen table a simple task that doesn’t compromise your deadlines or IT resources. It also speeds up processing, eradicates out-dated manual data entry, increases accuracy, and removes the need to physically “touch” invoices, so 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 remote working should make you embrace Accounts Payable automation.
1. Financial Gain
In the current climate, companies are looking at ways to cut costs long-term, as no one knows when we will be able to return to normal, and what the impact of the current pandemic will have on profits. 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 your company is 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, the pressure is on your cash flow, so you need to ensure you have strategic methods in place to utilize it. One of these is capturing 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. In automation, you have full visibility to strategically capture early discounts from certain suppliers, which in turn can have a positive effect on your cash flow.
2. Optimize time
Time is of the essence in this lockdown. Companies are looking to move as quickly as they can to stabilize their positions during such a volatile economic period. This could explain why NordVPN has reported that employees are now working two or three hours more a day since working remotely has become the new norm.
The cracks begin to show when you’re trying to optimize time in a manual process. Levvel research has shown that manual routing of invoices for approval is the biggest challenge reported in the AP process. Remote working has only drawn more attention to how inefficient this process is. Departments have become even busier due to the coronavirus and trying to get approval in this environment will prove even harder, if not impossible if paper invoices are still being sent to your office.
However, an automated system would allow your AP team to pick up where they left off, even if that is from their kitchen table. Moreover, after implementation, companies saw improvements in the reduction in paper invoice volume, quicker approval times, and improved visibility into unpaid invoices, according to Levvel. This means that companies who adopted automation aren’t only in the position to continue their processes, they’re also optimizing the department’s time whilst doing it.
3. Real Reliability
Human error is bound to occur at one stage or another with manual entry. As businesses attempt to scale back and prioritize the payment of only essentials, the last problem they need is a costly mistake. Mistakes can rack up big bills 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
Vendors and supply chains are regularly being assessed as organizations attempt to get a handle on their cash flow. It’s often perceived that Procurement has a bigger role when it comes to vendor management. However, Accounts Payable are just as important.
Conversations surrounding deferments or the reorganization of payment dates might be taking place. It’s down to AP to make sure these are honored. AP are also responsible for maintaining a strong relationship with vendors, to ensure when normal operations resume, the commercial connections you have built over time will still be intact.
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 also really fracture your relationship with vendors, particularly if you have agreed to deferment dates and they’re struggling.
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 allow 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 spikes in fraud. 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
Every organization is keen to gain full visibility into their operations in light of the unease and uncertainty that Covid-19 has caused. Automation gives greater visibility into the Accounts Payable process so management can assess the company’s spending and health. Companies that use automation have 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 on vendor performance, cash flow, and working capital by having automation, which is of significant importance given the current climate. They also have visibility into their employees’ day-to-day even if they’re working remotely, which reduces the need to set tasks and follow up with individual employees to gain an insight into their projects. It mightn’t come as a surprise that 34% saw an increase in employee productivity post automation.
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. A word of caution, make sure you chose a system that seamlessly integrates with all major financial systems, databases and Enterprise Resource Planning (ERP) systems. To learn more about integrations, click here.
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. It means that the new norm of remote working doesn’t impact your approval routes and operations continue as normal.
Automation allows you to 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 your staff 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, you need to realize that in the current climate when you are struggling with adapting your manual processes, your competition are already up and running thanks to automation. Additionally, you should weigh up the expense of compliance failure, the cost of your invoice processes, and the opportunity cost from lack of productivity to see how you compare to those who use automation.
Give your employees the chance to upskill and develop their talents to help your company navigate through this pandemic, instead of them being engulfed with manual-entry tasks. Maintain a strong relationship with vendors, so when everything bounces back, you can negotiate better deals and focus on profit once again. 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.