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5 Benefits of Automating Your Accounts Payable Process

Accounts Payable Automation Benefits

The global pandemic brought about significant changes to various aspects of our daily lives, including our work arrangements. However, most office settings—be they virtual, hybrid, or in-office—have not been able to adapt their business processes accordingly.

One area in this new normal that has proven to be challenging for most organizations is the accounts payable process. Manual invoice processing can pose various problems, such as misplaced invoices, overlooked approval requests, and the risk of paying vendors twice (or not at all). Streamlining invoice processing can positively impact a business’s finances and operations, particularly in a remote work setting.

Common challenges of manual AP processes

From routing invoices and capturing data to resolving discrepancies and managing operations, AP processes have many moving parts—manual steps for the most part.

Some of the challenges AP departments may face include:

  • Scanning invoices, then mistakenly placing them in the wrong digital folder or accidentally deleting them.
  • Lack of efficient data entry, leading to missed or lost paperwork, inaccurate information, and more time spent by staff in correcting mistakes.
  • Difficulty collecting and processing hard-copy invoices arriving daily by mail.
  • The storage and security of confidential paper invoices on an employee’s home desk.
  • Manually uploading invoices into systems—causing extremely long processing times and late/missed payments.

According to Esker, the visibility of cash and working capital for companies is now more critical than ever. “Delays in access to that information have helped illuminate the flaws in their current AP processes as well as those in the rest of the cash conversion cycle.”

Accounts payable automation benefits

The smoother and more efficient your accounts payable process is, the better you can do business. Workflow automation solutions enable AP departments to streamline business operations, even when staff works on the go or remotely.

Here are five ways that automation solutions help streamline AP processes:

1) Touchless processing

Accounts payable workflow automation eliminates the paper process and manual data entry—allowing your AP staff to focus on more productive tasks.

Smart data extraction technology built into AP workflow automation solutions extracts and validates data from paper and digital invoices. All invoices are captured and visible in the system within hours of receipt.

This visibility gives you complete control over your cash flow. Cash management becomes more efficient with reduced data entry errors and accelerated cycle times. Additionally, automated cash management allows you to take advantage of early-pay discounts offered by your suppliers and the opportunity to negotiate new discounts.

2) Real-time visibility

Optimized accounts payable solutions offer real-time insights into the metrics that financial leaders need to grow their organizations.

Real-time dashboards display the status of invoices and other critical information within hours of receipt. Current and historical invoice information can be accessed quickly and remotely, and users can run ad hoc reports efficiently and export critical data for key stakeholders.

Machine learning capabilities in automated workflow solutions also enable the delivery of more accurate data over time. Data extracted from invoices are paired against information residing in a computing system. Then the data is automatically routed digitally based on your preset workflows.

3) Reduced processing times and costs

One of the biggest hurdles in invoice processing—and one of the most obvious impacts an AP department has on a business’s operations—is high costs.

According to a 2020 report by the Institute of Finance and Management (IOFM), the average expense per invoice for organizations working to process up to 100,000 invoices per year is about $6.10 when they process each invoice manually. For growing organizations that process 20,000 or fewer invoices, the cost is $15.97 per invoice.

Without a sophisticated and automated approach to AP processes, error rates are bound to rise—driving up costs. Each invoice adds up, which could very well cost tens of thousands of dollars (or more). Consider how much of a positive difference in cash flow your organization can record across an entire fiscal year by automating your AP workflow. High costs driven by rising error rates can seriously impact growth potential.

4) Reduced labor

Labor is a major component of a company’s operating expenses in multiple departments, including supply chain, sales, and accounting.

Strategies to address labor efficiencies include optimizing workflows, implementing automation for improved productivity, shifting some operations offshore to capitalize on lower-cost labor, and possibly outsourcing non-strategic functions like accounts payable.

These techniques often provide savings of 20% to 30% even for large, “lean” companies.

5) Easy deployment and integration

Unlike on-premises AP systems, cloud-based automation software can be deployed without significant upfront capital costs that require ongoing IT support. A modern user interface allows remote users to get up and running with the software quickly, no matter where they are located.

The majority of cloud-based AP solutions integrate seamlessly with various ERP and financial systems.

Overall, enterprises can deploy a cloud-based AP document software solution in a fraction of the time it takes to implement an on-premises solution.

Capture, process, and manage invoices with ease

Efficient automation of processes and streamlined information management can not only cut down on operational waste but also enable companies to achieve more with fewer resources. This could potentially lead to cost savings of up to 30%.

Our VitalScan solution includes digital mailroom and AP workflow automation services with business software integration that eliminates paper-heavy processes and brings efficiency to your accounting processes.

Do you need a way to capture, process, and manage invoices for your company? You can use our workflow automation service to improve your bottom line. Learn more about how we helped one healthcare provider optimize AP processes.

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