Accounts payable (AP) automation software improves businesses by making it much faster and easier to managing invoice and payment processing through a single platform. It enables much better visibility and far greater control over financial processes and data.
In spite of these modern solutions, 55% of businesses still process their financial data manually, according to PayStream Advisors’ 2018 Payables Insight Report.
Backing this up, over 40% of SMEs (small to medium-size enterprise companies) say that they're 'somewhat likely' to adopt an AP automation solution in 2021.
Only 40% are somewhat likely to adopt AP automation? That's pretty low, considering all of the benefits that AP or invoice automation will bring. Speaking of benefits, here they are...
Table of Contents:
- Benefits of AP Automation Software
- My experiences with some AP automation software
- The problem with AP automation solutions
- Why the challenges of manual AP processing will only get worse
- A proven automation solution for AP documents
- 3 Simple steps to AP automation success
Benefits of Accounts Payable Automation Software
1. Time savings
Commonly, invoices would wait in email boxes or physical copies would sit on desks waiting for approval. Instead, AP automation streamlines the entire approval process and removes any common delays. It does this by rules in the software that make sure the correct invoice is sent to the correct person.
Additionally, user-friendly dashboards can present users with a helpful, real-time view of invoice processing workflows and how they are performing. Specific parameters can be altered in workflows to ensure that correct personnel receive invoices in the right location.
In fact, according to a study conducted by the Aberdeen Group, AP automation reduces about 18% of days payable outstanding (DPO), which saves around 5.55 days on average.
Get Our Free Cheat Sheet
on AP Invoice Automation
There are many things that make some AP automation software far more efficient than others. And more efficiency means more time and money saved.
This free cheat sheet gives you the 11 important factors to look for in AP automation software — including information that AP software companies don't want you to know!
2. Low-cost invoicing
Did you know that Ardent Partners assesses the average cost of processing one invoice to be $11.57? (This includes costs for manual labor, overhead costs and technology required.) To make things worse, this cost has increased by 4% from one year ago.
This leads to the belief that many companies are struggling to efficiently processes invoices and other AP documents. And believe it or not, but the same study also found that the most efficient companies typically use intelligent AP processing software, which helped them processes invoices for five times less than the average cost.
3. Improved accuracy
With traditional manual invoice processing, errors can certainly happen, especially when manually keying in invoice header or tedious line-item data. But with AP automation solutions like Grooper, errors are drastically reduced.
There's also no need to manually validate against enterprise resource planning (ERP) information, as AP automation can perform these tasks also. This makes catching duplicate payments easy as no painstaking manual work is required.
4. Enhanced insight
Invoice processing software enable comprehensive dashboards, making it easy to clearly identify where an invoice is sitting and who to contact in case of delays.
Reporting and analysis of invoice data is simple, through importing and exporting data in real-time access. This is an important feature — particularly at the end of business cycles.
5. Fraud protection
The AFP Payments Fraud and Control Survey recently found that an overwhelming 81% of companies were targets of payment fraud attempts in 2019. But AP automation software secures your business against fraud by enabling you to select the employees who can access to invoice approval and the release of payments.
By selecting different employees for different steps along the approval workflow, two benefits are gained:
- No single employee has access to the entire payment approval workflow, greatly reducing the chances of fraud
- More eyes on data is always a good thing, as this provides another layer of double checking for missing or incorrect data, in the rare instance that the processing software missed something
6. Increased transparency of data
We talked earlier about enhanced / comprehensive dashboards, but that's because they vastly improve the ability to track employee productivity. For example, managers can make employee reviews a snap, by analyzing an individual employee or a team's performance in as granular of detail as required.
7. Low-cost data preservation
The IRS recommends saving records for up to seven years, while other experts say six years is enough. Either way you approach it, paperwork storage costs can quickly add up.
How much? About $2,603.64 for a one-drawer file cabinet, according to North Dakota’s Information Technology Department.
Meanwhile, one terabyte of data storage can cost you as little as $6.99 per month. I know which one I would choose!
8. Easy auditing
The best AP automation software include another massive time-saver with document management capabilities. This is a big boost to auditing processes.
These automation solutions accomplish this by linking all documents and messages involved with each transaction while matching invoices with purchase orders and receipts.
There are two big audit benefits from this technology:
- This creates a simple audit trail that reduces the possibility of losing paperwork
- It makes regulatory compliance for quarterly or annual filings much easier to maintain
9. Integration with Existing Systems
AP automation systems can easily integrate with your business's ERP, government agency database, or other major financial system.
What does this mean? It means there's no need to log in and out of different applications or manually re-enter data into several disparate systems, which can multiply the chance of error.
10. Early-payment discounts
Most vendors offer early payment discounts. You probably already know this. But did you also know that most businesses take advantage of less than 21% of all early-payment discounts?
This study, conducted by the IOFM, also found that 12% of companies don't collect any early-payment discounts at all.
There are numerous reasons for missing discounts, but 31% of respondents said that manual invoice routing and approval were roadblocks to capturing early-payment discounts. This is according to PayStream Advisors’ AP & Working Capital Report.
11. Not losing your most valuable AP employees when you need them the most
One of my co-workers has told me many stories of how his father, who worked in an AP department for his entire career, retired early due to massive stress. He believed he would die early due to workplace stress.
The reason? Trying to meet AP deadlines while relying on manual data processes. The point is that no one wants to perform massive loads of painstaking, tedious data entry work day after day.
Especially when there are modern invoice automation systems that can perform this work ten times more efficiently than humans. These systems also allow the same employees to focus on more gratifying, higher-value work that software will never be able to perform.
My Experiences with Some AP Automation Software
I've been talking about AP (accounts payable) automation for two decades now. That's a long time.
So why are many still struggling with this technology? Shouldn't this have all been done and over by now?
Shouldn't every company be able to digitally exchange their data and information quickly and seamlessly by now?
Here's the Problem with Most AP Automation Solutions
Oh, wait. I think I found the problem — it's in how companies interact with each other. There are relatively few data standards being used, and the ones that are out there very expensive to install and maintain (think EDI).
Plus, for most companies, if you want to do business with a specific company, you are bound by their rules of payment and process. Software vendors won't conform to your rules unless you have a lot of clout and can bully your vendors into doing business your way.
This all being said, we're seeing more and more companies be able to stand up vendor portals and force vendors into submitting invoices electronically in order to get paid.
But the amount of companies still manually processing invoices and AP documents tells me that there are many more companies who are not that fortunate.
Why The Challenges of Manual AP Processing Will Only Get Worse
We know that you're tired of feeling overwhelmed by the slow manual processes that keep you and your team from getting to higher-value tasks.
But, did you know that the problems are only going to get worse?
Yeah, not to make a bad situation worse, but the Bureau of Labor Statistics predicts negative job growth for AP clerks over the next ten years. That means it will be harder and harder to hire replacements for your existing staff or hire more staff as your AP volume grows.
This means AP Automation is at a critical point.
We empathize with you and understand the frustration you're going through. We all need to be cheaper, faster, and better — and that's difficult when you're having to stop processing to find a missing invoice for an auditor or a vendor looking for their payment, or... you get the idea.
A Proven Automation Solution for AP Documents
Why did we build Grooper that way? Because you deserve automation that works. You deserve to be in control of your AP process and feel comfortable that you're not missing discounts and payment deadlines.
Your vendors will love you. Your boss will love you! Your employees will love you since you will have made their job more enjoyable by eliminating the daily headaches.
AP and Invoice Automation Success in 3 Simple Steps
It's easy to automate your AP Department. Here's how we do it:
- We analyze your documents and identify the best opportunities for automation.
- We build your Grooper system in collaboration with your accounting experts.
- We help you save time, so your team can get their 40-hour work week back.
Get a Free Quote and See How Much Time & Money Grooper AP Automation Will Save You: