Understanding AP Automation
The marketplace is competitive, and companies feel constant pressure to improve operations at minimal cost while maintaining a high level of customer service. Accounts payable automation (AP Automation) cuts invoice processing time by 50%, refocuses manpower and time previously spent on manual data input, eliminates mistakes, ensures on-time payments, improves working capital management, and optimizes performance.
A cloud-based platform also allows for greater collaboration and accountability as well as improved security and reporting, all of which results in improved efficiency, time savings, and a dramatic increase in ROI. If you’d like to a better understanding of AP automation, keep reading. These resources can provide you with the context needed to decide if automated accounts payable is right for you.
What is accounts payable automation?
AP Automation allows companies to automate various invoice and payment processing tasks that are typically done manually.
AP automation platforms begin by capturing digital or scanned invoice information through technology known as optical character recognition (OCR). Information from the invoice is then automatically input and stored in the AP software system, removing the need to enter information by hand. The data is validated with a second layer of technology and a team of experts, then the invoice is coded and routed to approvers through a digital workflow specifically tailored to your company’s needs.
AP automation platforms are integrated with your company’s enterprise resource planning (ERP) system(s) and provide several invaluable tools such as payment processing, reporting capabilities, vendor portal access, and audit and search views. Accounts payable automation also significantly reduces the risk of fraud through numerous safeguards, encryption, and banking-level security measures work together to protect your documents and keep your company safe from phishing scams.
Why automate accounts payable?
Save Time, Save Money, Make Money
Businesses are increasingly recognizing the need to automate their accounts payable departments; 74% of companies that haven't automated their accounts payable processes yet plan to do so within 3 years. Organizations want to create a future where accounts payable is no longer just a tactical, back-office function. Positive business outcomes of AP Automation include:
- Reduced effort & expense: Cut time and cost per invoice by up to 50%
- Supercharged performance: Reallocate time previously spent on manual processing
- Elimination of mistakes: Identify errors on invoices & spikes in consumption
- Late fees avoided: Ensure on-time payment with more efficient workflows
- Actionable opportunities: Turn early capture of invoices into early payment discounts
- Improved relationships: Eliminate late payments and provide more transparency for suppliers
Who benefits from AP automation?
AP Automation provides financial and operational benefits across your entire organization, but your finance employees will really feel the love. The main 3 people that will benefit from AP Automation are CFOs, Controllers, and AP Managers.
- Greater security, reduced risk
- Peak performance
- Reliable reporting
- Improved processes
- Future-forward mindset
- Approver empowerment
- Greater collaboration
- Reduced errors
- Searchable database & history
- Better vendor relationships
How do I automate accounts payable?
The most critical tool you’ll need for your automating your accounts payable is a software solution that can handle your current and future AP needs. A cloud-based platform also allows for greater collaboration and accountability as well as improved security and reporting, all of which results in a dramatic increase in ROI. Cloud-based automation also cuts invoice processing time in half, refocuses manpower and time previously spent on manual data input, eliminates mistakes, ensures on-time payments, improves working capital management, and optimizes performance.
Where do I start?
Identifying and understanding your current process is the critical first step you must take when you’re beginning any implementation project; after all, if you don’t know where you are, how can you figure out where you want to go and what you need to get there? Some of the questions you’ll want to answer before implementing an AP Automation solution include “How many invoices do we process per month?”, “What formats are bills that we receive?”, “Where do our invoices come from?”, and many others.
Articulating your goals and defining the ideal outcomes of implementing your automation solution is another important step to take very early in the process. Part of this step involves quantifying key metrics in your current processes; these include values such as the actual cost of processing a single invoice, the amount of time your team spends performing manual, repetitive tasks, the amount of late fees you accumulate each reporting period, and the number of early payment discount opportunities you’ve missed along with the reasons why they weren’t collected.
Where do I go from here?
After you’ve implemented your automation solution, and even during the implementation process, there are still additional opportunities available to make your process improvements even more efficient and increase your returns. Here are a few additional resources to help you continue to optimize and streamline your workflows, increase your efficiency, and take your AP department to the next level.
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