Understanding AP Automation
Accounts payable (AP) automation is a game-changer for businesses operations. It streamlines invoicing, payment processing, and approvals, all on a single platform, minimizing manual intervention and enhancing cash flow management. With AP automation, businesses gain clearer insights and tighter control over their financial operations.
Despite its evident advantages, a staggering 89% of small to medium enterprises, as reported by the Australian Treasury Consultation Paper, still rely on manual processing of invoices. Surprisingly, in Singapore, 80% of professionals had to physically attend offices during lockdowns just to handle invoice processing. This reliance on manual methods not only consumes time and resources but also raises the potential for mistakes. And these challenges are merely the surface of the broader benefits of automation.
10 Key Advantages of Accounts Payable (AP) Automation
AP automation is more than just a streamlined approach to invoice processing; it’s a transformative tool that can enhance the efficiency and efficacy of your back office. Here are the prominent benefits:
- Efficiency Boost: Forget invoices collecting dust on desks or lost in emails. Automation ensures swift routing, streamlines approvals, and can condense the process, leading to a potential 70-80% time-saving for SMBs. Goldman Sachs even notes a decrease in days payable outstanding (DPO).
- Cost-Effective Invoicing: With automation, you could reduce the processing cost of an invoice from AU$20 to just AU$3, as indicated by AusDigital’s data. Savings extend beyond labor – consider reduced office supplies and postage.
- Enhanced Accuracy: AP automation minimizes human error. Automated validation against your ERP and elimination of manual data entry ensures fewer mistakes and fewer duplicate payments.
- Clearer Oversight: Comprehensive dashboards offer a transparent view of the payment cycle, making it easier to monitor invoice statuses, streamline reporting, and analyze data.
- Robust Fraud Prevention: Payment Risk Survey reveals that payment fraud concerns have surged since 2019. AP automation fortifies defenses against fraud by delineating access controls and approval workflows, adding layers of scrutiny to payment processes.
- Transparency Boost: The enhanced dashboards are not just for invoices. They offer insight into employee productivity, streamlining performance reviews and team assessments.
- Affordable Record Keeping: Transitioning to a digital model, as endorsed by Docusign’s research, can result in significant cost and environmental savings. Compare the maintenance of a terabyte of data at $6.71/month versus traditional paperwork costs.
- Simplified Audits: AP automation streamlines document management, which is pivotal for audits. A searchable audit trail, paired with comprehensive record linking, ensures no document goes missing and assists in maintaining regulatory compliance.
- Seamless Integration: Compatibility with existing ERP systems, databases, and financial platforms means there’s no hassle of juggling between applications or redundant data entries.
- Maximize Early-Payment Perks: Many vendors offer early-payment benefits, but businesses often fail to capitalize on them. Automation can ensure timely payments, enabling companies to harness these financial incentives, as suggested by Deloitte.
Harnessing the power of AP automation can lead to significant organizational improvements and substantial financial gains.
Selecting the Right AP Automation Solution
Before diving into the vast sea of AP automation software options, it’s imperative to introspect and evaluate your current accounts payable operations.
- Engage Your Team: Initiate a dialogue with your team. Identify their challenges, uncover bottlenecks in their routine AP tasks, and understand their aspirations for the future. Their feedback will be invaluable in outlining a set of non-negotiable features for your new AP automation tool.
- Assess Your Technical Ecosystem: Collaborate with your IT department to comprehend the nuances of your tech environment. Are there distinct software stipulations? Think about essential system integrations, with your ERP system being paramount to prevent redundant data entry. Integration with other platforms, like expense management or budgeting software, might also be on your radar.
- Determine The Right Fit: If you’re operating with multiple existing systems, a standalone AP automation platform might serve you best. However, for newer businesses or those contemplating software overhauls, a comprehensive procure-to-pay suite—offering a holistic approach inclusive of AP management—might be ideal. Such suites generally offer modular structures, adaptable to diverse requirements.
- Versatility is Key: The perfect AP automation tool should be adept at handling every conceivable AP scenario your company might face. Platforms like NetSuite, for instance, seamlessly incorporate these capabilities. Investing time in research and due diligence ensures you’re choosing a tool that not only meets present needs but is also future-proof.
Making the right decision now will secure smoother and more efficient AP operations for your business in the long run.
