When it comes to your company's finances, good cash flow is key. Without enough cash coming in, you'll struggle to pay bills or make payroll. Without cash flowing out on time, you'll face angry vendors and a poor reputation in the marketplace.
Optimizing cash flow is every organization's goal, but it's easier said than done. In this blog post, we'll explore how AP automation provides a game-changing solution to efficiently and reliably handle invoices, purchase orders, and digital payments to ensure your cash flow is robust and healthy.
Why cash flow matters
Cash flow is a strong indicator of organizational health. We can break it down into two categories:
Good cash flow: When a company effectively manages its cash inflows and outflows, ensuring that there is enough liquidity to cover its AP obligations while maintaining a healthy financial position. This involves efficient and timely payables management, and effective cash management. Good cash flow allows the company to meet its financial obligations, invest in growth opportunities, and weather economic downturns without relying on excessive borrowing or facing cash shortages.
Bad cash flow: When a company struggles to manage its cash flow effectively, leading to liquidity problems and difficulties meeting AP obligations. This is often a result of inefficient AP processes, including a lack of visibility that leads to excessive spending, or payment errors from manual keying entries. Bad cash flow can lead to missed payments to vendors, late fees or penalties, and ultimately, financial instability.
AP automation enables good cash flow
Quadient AP's end-to-end automation solution enhances AP workflows, helping businesses navigate the complexities of healthy cash flow. The top five benefits are:
- Efficient payment processing
- Enhanced accuracy
- Informed decision-making
- Strengthened vendor relationships
- Optimized time management
Let's explore the impact each one has on cash flow.
Efficient payment processing
Invoice automation enables your team to process invoices 9 times faster while maintaining a consistent and balanced release of funds. Customizable approval matrices route invoices automatically to the correct person in the workflow, sending regular reminders and ensuring a smooth transition from invoice receipt to payment completion. Not only does this eliminate unexpected spikes in cash flow; it also provides you with significant cost and time savings: On average, AP automation reduces invoice processing costs from $15 to less than $5 per invoice.
Enhanced accuracy
AP automation quickly, accurately, and automatically matches purchase orders to invoices, reducing the chance of errors by up to 99% while accelerating reconciliation with an automated 2 or 3-way match. This enhanced accuracy means you avoid late payments, overpayments, and duplicate payments – all of which have a negative impact on cash flow and are damaging to your client-vendor relationship.
Informed decision-making
End-to-end workflow visibility is key to tracking your committed spend and managing spending limits by department, project, or vendor. AP automation provides detailed reporting and real-time analytics, presenting you with a comprehensive understanding of your cash flow patterns. It enables you to make informed decisions about budgeting, expense prioritization, and resource allocation.
Strengthened vendor relationships
Strengthening your vendor relationships is another way to optimize cash flow. By consistently meeting payment deadlines, vendors will see you as reliable and trustworthy and will offer you favorable terms and discounts. These discounts, in turn, will help you conserve cash and improve your month-to-month expenses.
Optimized time management
With AP automation handling the bulk of manual tasks, your team can redirect their focus toward value-added activities including business growth initiatives, innovation, and customer satisfaction tactics. They'll even have time left over for strategic and forward-thinking initiatives, like finding more ways to optimize your organization's cash flow.
Quadient AP improves your liquidity
Quadient AP is the AP automation solution you need to improve your liquidity and set your organization up for success. Thanks to time savings, improved accuracy, end-to-end visibility, and the elimination of manual processes, AP automation helps your organization improve cash flow while safeguarding overall financial health and longevity.
Book a demo with us today!
