What is Accounts Payable Automation?
Accounts Payable (AP) Automation is a revolutionary software solution that supercharges businesses by minimizing manual tasks, thereby optimizing cash flow. This tool allows you to streamline the submission of invoices, manage approval workflows, and execute payments, all within a unified platform. Its efficiency ensures swift approvals and superior visibility and control over vital financial processes and data.
Despite this technological advancement, a surprising number of businesses remain shackled to manual financial data processing. According to an Australian Treasury Consultation Paper, approximately 89% of small and medium-sized businesses still handle invoices manually. Furthermore, 80% of employees in Singapore were reported to go to the office during lockdown specifically to process invoices. This manual method is not only time-consuming but also necessitates significant personnel expenses and increases the potential for errors.
However, time and cost savings are merely the starting point when it comes to the extensive benefits of AP automation. It’s the tip of the iceberg, unveiling a wealth of advantages that await businesses willing to modernize their financial processes.
10 Transformative Advantages of Automating Accounts Payable (AP)
The implementation of Accounts Payable (AP) Automation unlocks unprecedented value and liberates your team, enabling them to concentrate on refining the back office. Here are ten compelling reasons why AP automation should be your next strategic move.
- Time Efficiency: Traditional invoice approval methods often involve prolonged waits and paperwork piled on desks or in email inboxes. AP automation shatters these barriers, implementing automated routing that accelerates the approval process. Tailored rules can be set up within the workflow to ensure timely invoice reception and review. Real-time dashboard views of invoice processing eliminate time-consuming status tracking. Reports from Goldman Sachs suggest AP automation can yield 70-80% time savings for small and medium-sized businesses, consequently reducing days payable outstanding (DPO).
- Cost-Effective Invoicing: Automation slashes labour costs and tangential expenses such as office supplies and postage. AusDigital data indicate the average cost of processing an invoice manually in Australia is AU$20, while automation can reduce this to a mere AU$3, marking substantial savings.
- Enhanced Accuracy: The use of AP automation significantly curtails errors. This innovative software shields you from commonplace mistakes, removing the need for manual data input. Moreover, it verifies invoice data against your Enterprise Resource Planning (ERP) information, aiding in the detection of duplicate payments.
- In-depth Insights: Comprehensive dashboards provide an unobscured view of your payment cycle, offering real-time data access perfect for prompt reporting and analysis, particularly at the close of business cycles.
- Fraud Prevention: AP automation enhances security by regulating access to invoice approval and payment release, according to a Payment Risk Survey report. Approval workflows involving multiple personnel can be set up to catch fraudulent invoices before payment, reducing risks and aiding in the verification of data.
- Increased Data Transparency: Advanced dashboards allow for efficient tracking of employee productivity, useful in performance reviews. Managers can leverage this tool to monitor individual and team performance.
- Cost-Effective Document Preservation: Regulatory bodies like the Australian Securities & Investments Commission (ASIC) and IRS recommend preserving records for seven years. Switching to paperless solutions can save significant storage costs, with Docusign estimating an average saving of $36 per business in hard costs, productivity, and revenue gains. Furthermore, the move to paperless operations has reportedly saved around 100,000 trees in the Asia Pacific region.
- Streamlined Auditing: Robust AP automation software can revolutionize your document management, proving beneficial during audits. The system links all documents and messages related to each transaction, correlating invoices with purchase orders and receipts. This searchable audit trail minimizes the risk of misplacing crucial paperwork and aids in maintaining regulatory compliance.
- Seamless Integration: AP automation software can be effortlessly integrated with your existing ERP, databases, and major financial systems, negating the need for multiple log-ins and repeated data entry, which may increase the risk of errors.
- Capitalization on Early-Payment Discounts: Many vendors offer discounts for early payments, yet several businesses in the APAC region fail to capitalize on these offers. AP automation ensures timely payments, enabling you to maximize savings through any available early payment discounts, as recommended by Deloitte.
Navigating the Selection of an Accounts Payable Automation Solution
Prior to embarking on the journey to select an Accounts Payable (AP) Automation solution, it’s essential to thoroughly understand your existing AP processes. Start by engaging with your team to identify their challenges. What hurdles obstruct their daily AP operations? What do they foresee as essential for future success? Synthesize their feedback into a definitive list of “non-negotiable” features for your AP automation software.
Following team consultation, scrutinize your current technology ecosystem. Liaise with your Information Technology (IT) department to discern any special software prerequisites. System integration considerations are paramount – primary amongst these is your Enterprise Resource Planning (ERP) system. You aim to eliminate redundant data entry. Integration of your expense management system or budget planning software may also be advantageous.
Your optimal choice may be contingent on your number of existing systems. For businesses with numerous pre-existing systems, a standalone automation system may be the superior option. Conversely, if your business is in its infancy or you’re seeking a comprehensive software overhaul, a procure-to-pay suite encompassing AP automation could be the better alternative. This software caters to all procurement requirements, including AP management, and offers modular functionality tailored to diverse needs.
Remember, the ideal AP automation software solution should be equipped to handle any conceivable AP scenario your business might encounter. An integrated platform such as NetSuite is one such example. Thorough research and planning will ensure that your chosen solution is a long-term strategic fit for your business.