Accounts payable automation benefits

When it comes to accounts payable automation, it’s all about saving time and money. Just like all software-as-a-service (SaaS) solutions, there are a host of accounts payable automation benefits. Not only can you reduce the manual labor of your staff to focus on more value-added tasks, but you can also easily manage relationships with suppliers, customers, and much more. 

Here is an in-depth guide demonstrating the advantage of implementing AP automation for your enterprise, so let’s take a look.

Before diving into the benefits of accounts payable automation, it’s important to understand how the processes are implemented. Accounts payable automation, in the simplest sense, entails the digitizing of your records (i.e., invoices, payments, vendor contacts, etc.) and then using software to process those digital items.

AP automation software first scans all your paper records and invoices, capturing all the key information, then cross-references them to ensure there are no errors. If there are any issues, like repeat invoices or other things, the proper party will be notified and then forwarded to the necessary team members responsible for their correction. 

Lastly, all this info will be integrated into your software and converted into a searchable digitized format housed in one place, making it much easier to track and search for information when necessary. 

One of the most time-consuming tasks in the accounts payable department is manual data input. But automation can relieve some of the stress from your AP department by streamlining manual processes. Doing so will also:

• Reduce duplicate payments: Although it may not happen often, with manual AP data entry, duplicate payments occur occasionally, and depending on how large they are, they can be costly. For example, if a staff member accidentally enters a payment twice for a vendor that costs $100,000 and it somehow goes unnoticed, you’ll lose a big chunk of your bottom line. These occasional mistakes can quickly add up and affect your company’s cash flow.
• Reducing human error from data entry tasks: Piggybacking off the point above, automation of the AP process can drastically reduce or even eliminate human error from data entry tasks. This is because invoices can be digitized, collated, and processed automatically without the need for any human intervention, giving you greater control and minimizing the human element of data entry. This will often eliminate issues such as late payments, oversights, and duplicate payments, as mentioned previously.
• Reduced paperwork: Paperwork can not only be costly due to printing and storage but also make it much more difficult to find and track invoices when needed. However, with accounts payable automation, you can digitize all invoices and vendor information, and it can be easily stored under one umbrella. When needed, you simply search for these things with a simple click of a button.
• Automated approval processes: One of the leading AP automation benefits is that it takes most of the human element out of the approval process. You can schedule payments and automate approvals, so managers and administrators no longer need to review paper invoices manually, saving valuable staff time and reducing errors.

Part of the importance of managing an efficient accounts payable department is maintaining strong relationships with clients and vendors, as well as keeping your company’s cash flow under control. Automating the AP process offers a variety of benefits when it comes to cash flow and vendor relationships, including:

• Automated payments to optimize cash flow: Cash flow issues can be a problem for businesses of any size since they can impact payroll, petty cash payments, and more. However, via payment process automation, you can optimize cash flow processes and ensure that when you need to make unexpected payments or pay team members, there’s always enough money in the bank to do so.
• Avoiding late payment fees and penalties: Late payment fees and penalties can add up from month to month. Sometimes, it’s easy to overlook or miss a payment, but with automated software, this will never happen. This is because all the necessary payment due dates are stored in your AP automation platform and issued automatically before they’re due, saving you both time and money.

As briefly mentioned above, automation tools can help you streamline tasks and improve processes. However, they also provide a variety of cost-saving measures so you can boost your capital. Not only will you be able to decrease labor costs by eliminating time-consuming manual tasks, but automation also helps reduce invoice processing costs. This is because team members no longer need to track, analyze, and input invoices; automation tools capture all the important information and digitize it, then process invoices automatically without the need for human intervention.

• Decreased labor costs due to the elimination of manual tasks: Most of the cost of processing invoices is labor costs. As companies look to tighten their belts due to recession fears, automation provides a great opportunity. AP software can reduce up to 85% of the manual effort to process invoices by eliminating the manual steps of data entry, reviewing, searching, and storing invoices.
• Reducing invoice processing costs: By reducing many of the manual tasks and eliminating data entry errors, AP departments can drastically reduce the cost per invoice. But reducing time spent on other activities related to invoices also occurs. For example, AP teams can spend less time dealing with supplier disputes and direct their time to processing more invoices faster.

In addition to integrating with your AP systems, AP automation software can also benefit your financial team via ERP integration. Doing so helps you not only keep track of bookkeeping and invoicing procedures but also monitors input from everything from your human resources department to your marketing department. And it can save valuable time, preventing staff in other departments from having to send invoices via email and manually data entering them into other company systems.

When it comes to implementing AP automation solutions, your financial team will play a key role and should keep some important considerations at the forefront. Their role should always include: 

• Preventing financial fraud within your organization
• Monitoring late payments and internal controls
• Generating financial reports
• Maintaining cash flow reimbursements and requirements
• Handling the petty cash fund
• Issuing purchase orders
• Keeping track of vendors
• Processing & reviewing AP reports
• Increasing cash flow via streamlined approval workflows
• Aligning payment cycles with supplier agreements

Accounts payable automation brings numerous benefits to business organizations. By streamlining processes, you eliminate human error, reduce duplicate payments, shrink paperwork, and approve invoices faster. With smoother, faster processes comes happier vendors, improved relationships, and better-managed cash flow management. Costs can be reduced, both in terms of labor savings and in terms of avoiding late payment fees and penalties.