7 Reasons to Automate Accounts Payable!

Many of the issues, problems, and errors that arise in accounts payable can be handled through automation. Accounts Payable is essential to maintaining strong relationships with suppliers and positive cash flow, which is why you should automate accounts payable.

It’s easy to overlook the importance of accounts payable until a significant problem arises.

Some of the most common problems encountered with AP are:

Slow processing

If your office still relies on paper-based processes, consider the average number of desks each invoice traverses before it’s approved for payment. Every time someone completes the paperwork, the risk of errors increases and processing slows down. When your turnaround time is slow, it leads to unhappy vendors and late invoices.

mapping error

If there are discrepancies between your orders and your invoices and you receive reports, this will result in reconciliation errors. If the attribution error requires manual investigation, this is the time deducted from your employees’ other work.

payment before delivery

When an AP team tries to stay ahead of things, they might make payments as soon as they receive an invoice. Yes, there can be benefits to paying quickly, but not if you haven’t received your goods or services yet. If the shipment arrives with missing or damaged items, it’s much more difficult to fix the problem once you’ve already paid.

Duplicate Payments

There are many particular errors that can result in two invoices being issued. For example, if there is a typo in one of your orders, two invoices may be created, both for the same order. Duplicate payments can also be due to human error, e.g. B. when invoices are not marked as paid.

Faced with these mistakes, automation is one of the most important things you can do to improve accounts payable in your organization. Below are seven specific reasons to automate accounts payable.

1. Savings and improved ROI

If you have a high volume of payments, you probably use a lot of resources on manual tasks. There are costs associated with manual accounts payable processes.

When you automate your accounts payable process, you can reduce turnaround times, and the more you automate, the greater the ROI you will see. Payment automation contributes most of your ROI.

You can also see benefits in reducing the number of late payments your partners and suppliers receive. Your team will be able to time your suppliers correctly, freeing up your working capital and allowing the department to take advantage of early payment discounts.

2. Reduced errors

There is a large volume of invoices managed in AP, so it is inherently error-prone. If a supplier sends an invoice in the post and then a follow-up email, the invoice can be paid twice. Errors can increase the cost of doing business, hurt your cash flow, and hurt vendor relationships.

If you spend a lot of time on manual tasks and errors, you cannot focus on other strategic business issues or strategic initiatives.

It can take up to two weeks to fully process invoices without automation, so automate your processes to avoid this.

Any manual process that an organization still relies on is ultimately error-prone and inefficient. Just one wrong digit can be a big problem.

3. Facilitates remote work environments

The modern work environment is often hybrid, meaning there is a mix of on-site and off-site work. There are benefits of hybrid work from an employer and employee perspective, e.g. B. the fact that you have better talent to fall back on and workers are more flexible.

If you have remote workers in any capacity, using automation and digital solutions becomes a necessity. You want the experience for employees out of the office to be the same as it is for employees in the office.

In hybrid or remote work environments, manual processes are no longer an option.

4. Increased visibility

You have invoices from different locations and payments that need to be made to suppliers who also operate in different locations.

You must be able to keep track of everything. Automation ensures transparency. Authorized employees have access to the data they need, when they need it.

Everyone in the AP department knows when a problem arises and has the data to fix that problem at their fingertips, regardless of physical location.

5. Improved cash flow management

When you use automation in the form of AP software, your accounting team and management have more control over your cash flow. This opens up opportunities to manage cash to your advantage.

You can easily create reports and review them in real time.

With AP automation it is possible to identify spots where you can save money and since you have improved visibility this in turn means better forecasting.

As invoices go through the system, the AP automation platform tracks every change and event and stores this information in a database.

6. Legal Compliance

There are reporting and tracking features that come with AP automation that can help create detailed audit trails.

Automation makes your audits faster and more cost-effective.

You can also more easily maintain compliance with state and federal regulations.

7. Improved security and fraud protection

Fraud and embezzlement situations can cost your company financially, but also in terms of your reputation. When you automate accounts payable processes, you can eliminate paper checks. Payments without the necessary approvals are very unlikely with automation.

With invoice checks, it is almost impossible to pay an invoice twice.

When a fraud incident occurs, AP automation notifies the relevant stakeholders of what happened, how it happened, and who did it. They have a very deep insight into the automation of who authorizes which payments and the verification steps they go through before being approved.

It reduces the likelihood of fraud occurring in the first place, and when it does, you can clearly see who is responsible.

Accounts Payable Automation article and permission for publication here provided by Susan Melony. Originally written for Supply Chain Game Changer and published on July 21, 2022.

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