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 that automate manual tasks, a recent survey shows that AP dept. employees are spending around 30% of their time manually collecting data in purchase orders and invoices.
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 the benefits that AP or invoice automation will bring.
Speaking of AP automation benefits, here they are...
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.
Commonly, invoices would wait in email boxes or physical copies would sit on desks waiting for approval, wasting valuable time. Instead, AP automation streamlines the entire approval process and drastically reduces the amount of time it takes to approve invoices.
It does this by applying specific rules to the workflow, so the correct person receives the invoice at the right time. Payables are routed according to pre-set business processes that you determine.
Additionally, user-friendly dashboards present users with a helpful, real-time view of invoice processing workflows and how they are performing. Through rules, it will take much less time to hunt down an invoice in the approvals process.
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.
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! Download Now:
Did you know that processing invoices manually costs around $15 per invoice? Compare that to $5 or less with AP automation systems, and a return on investment can quickly be achieved.
In fact, AP automation helps save labor costs by decreasing data entry by 83%.
AP automation solutions also help save costs in other areas, such as:
Are people necessary to your AP tasks working from home, in the office, or somewhere remote?
With AP automation solutions, working together and sharing common invoice-related documents has never been easier. These solutions allow everyone involved to collaborate in real-time on accounts payable tasks as they can have simultaneous access to:
With traditional manual invoice processing, human errors can certainly happen, especially when keying in invoice header or tedious line-item data by hand. But with AP automation solutions like Grooper, errors are drastically reduced.
There's also no need to manually validate invoice data against enterprise resource planning (ERP) information, as AP automation can perform these tasks also. This makes it easy to catch duplicate payments, as no painstaking manual work is required.
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.
Analyzing and reporting the 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.
An AFP Payments Fraud and Control Survey recently found that an overwhelming 81% of companies were targets of payment fraud attempts in 2019. But cloud-based 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:
Another great benefit of AP automation systems is the ability to customize an accounts payable automation workflow to meet your company's unique needs.
This means you automate workflows with features such as: routing only invoices that are above a certain amount to specific employees for their approvals, setting up approval timers, including other employees for certain workflows and not others, and many other settings that will help balance AP staff workloads.
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 finance team's performance in as granular of detail as required.
The IRS recommends saving records for up to seven years, while other experts say six years is enough. Either way you approach it, costs from storing paper invoices 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!
The best AP automation software include another massive time-saver with document management capabilities. This is a boost to auditing processes.
These automated systems 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:
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.
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.
With automation, companies and government agencies can submit invoices, manage approvals, and process payments — electronically through a single platform. Organizations use AP automation solutions to minimize or eliminate manual intervention and speed up operations like approvals, which usually take much longer without proper controls.
AP automation is most commonly used to:
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? (Discover What is OCR for Accounts Payable)
Shouldn't every company be able to digitally exchange their data and information quickly and seamlessly by now?
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.
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 you need the benefits of accounts payable automation.
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.
It's easy to automate your AP Department. Here's how to automate invoice processing: