10 Essential Accounts Payable Automation Benefits
Missing payments on your vendor accounts can freeze essential services, cost you additional fees, and bottleneck the growth of your business. At the same time, managing your accounts payable can be more time-consuming as your business grows. So, how do you keep up? It's simple: Streamline your accounts payable processes with automation.
Still, investing in new systems can be risky.
First, there's the cost. Not just for the software (whether custom or turnkey), but for planning, testing, and deploying new systems. Second, you need to train your team. Plus, you have to be ready for potential disruptions to your business. Finally, you have your reputation to consider if you're spearheading any major change in systems.
That's a lot of pressure.
To put your mind at ease, let's explore the 10 essential benefits of Accounts Payable automation, and discover how to bypass your invoicing problems with a simple, affordable solution.
1. More Time
Accounts payable automation helps you save time by speeding up the process. If you have unapproved invoices sitting on your desk or waiting in your inboxes, you'll know exactly what we're talking about here.
Instead of manually going through each invoice, reviewing it, and filing it, you can streamline the whole process. You can set up systems and guardrails so that the right people get the right paperwork at the right time. On top of that, you can even create reminders to ensure that nothing falls through the cracks.
As a result, you can reduce the time it takes you to process your invoices by 18% or roughly five and a half days.
What's more, you'll cut out a lot of unnecessary menial tasks. Things like searching for lost documents, manual data transfers between spreadsheets, manually hunting down the right team member to sign off on a purchase will become a distant memory. Instead, you'll have more time to focus on more meaningful tasks.
2. More Savings
Many vendors provide early-payment discounts. They like getting paid early because it gives them the cash they need to keep their business running. The problem is that manual invoices tend to take a lot longer to process. Often, you'll end up missing early payment discounts.
In fact, you may find yourself paying late fees on invoices instead...
Accounts payable automation software streamlines invoice processing. This means you'll get your vendors paid faster and potentially cash in on those early payment discounts.
3. Reduced Invoicing Costs
AP automation is more precise without being more hands-on. Once you set up the automation, your data will move within that system. This means that the chance for human error is greatly reduced. (Afterall, every human touchpoint increases risk.)
As a result, you won't need to worry as much about delays, missed payments, or other forms of friction caused by data entry errors when processing invoices.
AP automation can also process more invoices without needing more employees. So, you can keep your back office staff small and have more money to invest in other systems.
Invoice automation can reduce invoice costs by 50% to 80%, depending on how efficient your system is currently. In some cases, automation helps businesses reduce the cost of invoicing by a factor of five.
There is also a range of alerts you can use as well to lower your costs. Alerts for duplicate invoices, payment reminders, and unauthorized spending can help you avoid additional costs.
And if your organization is looking for ways to stay green while cutting costs, you can eliminate printing, paper, and storage costs for physical copies. With AP automation, all your documents will be digital.
4. Increased Supply Chain Transparency
With AP automation, your data stays within the system, and you can track everything using dashboards. This means you can review employee and vendor productivity, compare performance over time, and ensure that everyone's fulfilling their roles or contracts.
Managers can use AP software to analyze the performance of a single employee or an entire team in a snapshot. With complete access to performance data, managers can create evaluations faster and easier.
Plus, you can reduce the risk of fraud. There are no stacks of paper for invoices to "get lost" in. There are no special deals between employees and vendors on the side. And it's much harder to fabricate spending.
5. Improved Data Accuracy
No one enjoys manually inputting data. It's boring, time-consuming, and repetitive. As a result, people make mistakes. It happens all the time. And the chances of errors happening multiply with each person involved in the process.
Without AP automation, you won't have accurate data. And without accurate data, you can't make meaningful insights. In fact, you may end up making decisions based on incomplete or inaccurate data that hurt your business in the long run.
AP automation software moves data between your systems seamlessly. It can, for example, automatically populate invoice headers, line-item data, and payment details. And it can validate that data against what's in your other systems to ensure accuracy. Ultimately, you'll end up with accurate data you can trust.
6. Real-Time Insights
In the complex web of accounts payable processes and tools, AP automation software connects multiple data silos to give you better reporting and more complete insights.
Rather than running around pulling reports from all your tools, spreadsheets, and platforms only to have one unlucky team member compile the data into a report, you can get real-time insights in a simple dashboard with a few simple clicks.
With real-time insights, you'll empower your AP team by giving them the data they need to remain agile and make proactive changes that give your company the edge.
And you'll have more accurate insights into your budget. This will keep you from overspending, ensuring you stay cash flow positive.
7. Enhanced Compliance
With increasingly stringent standards and regulations through 2022 and beyond, you need to stay compliant. This means you need to ensure that your customer, employee, and vendor data remains secure. AP automation software makes it much easier to keep your sensitive data protected.
Spreadsheets aren't secure. One leaked password and someone can access all your sensitive supplier data. Email isn't much better. Since the COVID-19 pandemic, there has been a 6,000% increase in cyber crime. All it takes is for an employee to click on the wrong link to compromise your system.
With AP automation, you can secure your data in an encrypted system while setting up additional security features for access. For example, you can add dual-factor authorization and multiple approval checkpoints for purchases. You can even add alerts for suspicious activities.
8. Low-Cost Data Storage
Storing physical copies of your business records can cost thousands of dollars to maintain. File cabinets are also tedious to sort through when searching for documents.
Still, the IRS recommends that you save your records for up to seven years...That's a lot of paper to have to lie around, stuffed in cabinets, taking up space in your business.
AP automation software relies on digital copies of your records instead of physical ones. This allows your company to easily migrate all of your records to an easily searchable cloud storage space. As a result, you'll have more room in your office without rows of filing cabinets everywhere.
9. Simple Systems Integration
Any new system you deploy in your organization should easily integrate into your existing ones. Accounts payable automation software typically integrates easily into your ERP, financial, and other business systems. This allows data to transfer smoothly between your systems without relying on employees.
10. Improved Morale
As we mentioned earlier, no one likes doing boring, monotonous work. It's soul-crushing and draining. Ask any one of your team members if they'd rather work on a strategic project that can grow your business or move data from one spreadsheet to another, and you'll quickly discover the truth.
When people have to do a task they dislike over and over again, it wears them down. So, when you give someone a huge time-eating task like manual data entry to balance with their daily tasks and the pressure of having to meet business objectives with deadlines, you get the perfect recipe for frustration and (ultimately) burnout.
AP automation frees up your employees by letting robots take over the monotonous work so they can focus on the value-add activities. Your team will feel less stressed as they work on tasks that make them feel successful.
Automate AP with Low-Code
With so many clear benefits to AP automation, why do so many businesses still rely on manual processes? In simple terms, software solutions aren't cheap. Whether you buy a turnkey AP platform or your business a custom one from scratch, there's a cost.
Granted, the cost benefits of any AP system will help a business save more over time, there is still a lot of hesitation at the start. Change management, disruption, and the horror stories of failed digital transformation efforts don't make it easy.
Fortunately, there's an affordable way to automate your AP processes without breaking the bank on a custom build or navigating the downsides of cookie-cutter solutions.
Low-code empowers businesses by making custom application development cheaper and faster than traditional software development. With low-code, you can create custom applications and integrations with a "drag and drop" visual interface.
The end result is custom software solutions that go live in days or weeks instead of months and years (and for much, much cheaper.)
Check out the case studies below to see how we've helped our clients build custom accounts payable automation solutions using low code.