As we discussed in the previous two posts in this series (Part 1, Part 2), AP automation can provide solutions to common business challenges experienced by AP teams that are too reliant on manual processes.
Outdated solutions that require manual data entry, building spreadsheets from scratch, line-by-line audits and reconciliations, and other pen-and-paper methods often lead to a myriad of problems.
For example, companies that rely on outdated workflows can often take at least 11 days, if not more, to process a single invoice—and this doesn’t account for any additional steps your team may need to take on a case-by-case basis. Not to mention that a long, drawn-out AP process can lead to unnecessary delays in approval or payment, which can jeopardize company success and client relationships.
These organizations also run the risk of incurring additional administrative costs while exposing themselves to potential fraud. Many AP teams spend as much as $10 per processed invoice (including invoices processed for the purposes of training new hires, as well as day-to-day mistakes). By contrast, the most efficient businesses pay just $2 per invoice.
The lack of insight and automated compliance controls inherent to manual AP workflows also raises the risk of fraud. Malicious activity, like fraudulent charges and suspicious invoices, will go unchecked, potentially costing a company thousands (if not millions) of dollars over time.
Of course, this begs the question: Why take these risks in the first place?
Let’s take a look at how AP automation can save your business both time and money by helping you recognize trends within your business while increasing employee compliance.
1. Reduce approval and processing delays
Manual data entry methods can (and often do) delay the processing and approval of invoices. By hand, the average AP clerk can process a mere five invoices per hour. While this may suit a small business processing only a few dozen invoices a week, for larger companies, this snail-like pace could never keep up with daily volumes.
Human labor is also far more error-prone than a system of automated checks and balances. Typos and other keystroke errors can drag out processing times and lead to unforeseen bottlenecks that could impact cash flow. A staggering 36% of surveyed professionals admitted they were concerned about late payments due to processing delays.
Fixing these problems will cost more money, but they can also be detrimental to valuable vendor and client relationships, which are priceless.
2. Maintain (and improve) vendor relationships
Overall, modern accounts payable teams pay a higher volume of invoices due to the increased efficiency of automated versus manual processes. Automation doesn’t just streamline information communication and processing; it also reduces the margin of error at all steps of the process.
And that’s not just true for multi-million dollar companies or billion-dollar corporations. Since modern automated AP teams can—and do—pay a greater number of invoices at more efficient rates, it’s definitely worth considering for your growing business, too.
By digitizing invoices and eliminating hard copies, you not only make it easier to quickly forward information to the right people, but you also speed up the process by reducing the amount of tedious paperwork that goes along with payments.
Online, cloud-based AP solutions also make it easy to build automated workflows and approvals that require fewer touchpoints. This, in turn, makes it easier to pay vendors on time, avoid late payments and fees, and—most importantly—maintain those positive relationships.
3. Prevent unforeseen administrative costs
Eliminating unnecessary costs is an obvious benefit of a better expense management solution. Paying vendors through snail mail and paper checks may seem to carry insignificant fees, but those pesky costs can really add up. They also slow down AP cycles and can lead to late fees if payments are not received on time.
Then there’s the problem of employee overspending. Without a program that manages employee accountability and helps streamline their shopping experiences no matter where they work, employee spend can easily spiral out of control.
Both of these issues can be solved by digitizing and automating your AP workflows. Moving to electronic or direct-to-bank deposits ensures your vendors receive their payments on time (no late fees!) and cuts the costs of mailing out checks and other important documents.
Bringing your AP operations into the cloud also eliminates potential employee overspending by offering a tailored shopping experience with a high degree of control. Features like shopping with pre-approved vendors, issuing as-needed virtual cards, tracking orders for timely delivery, and earning early-payment discounts can all help your employees curb their spending and save your organization money every single day.
4. Reduce the risk of payments fraud
Then there’s fraud, which is always a risk factor. Whether it’s customer fraud, cybercrime, or asset misappropriation, fraud can cost a company millions each year. Protect your business by investing in an online solution that offers greater visibility and insight into your company’s payments in real-time.
MineralTree noted that modern accounts payable teams use corporate credits to handle vendor payments. This method allows teams to receive cash rebates and cut down on suspicious activity. In fact, respondents automating two or more company processes made 79% of their company’s purchases with a corporate credit card, demonstrating just how safe and reliable this method can be.
Interested in the perks, but worried about the cost of investing in an AP solution upgrade? Don’t be—you’ll achieve a return on investment sooner than you think. In fact, 78% of Emburse Certify customers who increased productivity by automating manual tasks saw a return on their investment in under six months.
MineralTree also reported that modern accounts payable processes are run by small teams, meaning you can keep a small staff while your business booms. This allows you to put resources to better use in other parts of your business, benefiting the company as a whole.
5. Improve compliance and data visibility
New AP tools allow you to prevent paying duplicate invoices, automatically send back bills lacking necessary information, and automatically reject requests for supplies not covered by your company’s policies.
Configurable AP software will automatically comb through and cross-check information and helps your employees stay compliant 24/7. Just set your rules once and watch your solution work its magic. AP team members can also focus on more pressing tasks without worrying over minor details.
Any automated, cloud-based AP solution you invest in should also include a data analytics dashboard. In fact, 88% of finance professionals said data and intelligence are significant pieces of the AP puzzle. For example, ask yourself the following questions:
- Are you more likely to receive invoices at the end of the month?
- Does one department tend to overspend compared to another?
- Are you missing out on early payment discounts?
- Are you spending way more on certain vendors for the same goods and services you receive from another?
With proper data management and visibility, you can better forecast AP cash flow and predict where your resources should go at any given time.
- Driving AP Success With Automation Part 3: How to Save Time and Money While Increasing Compliance
- Driving AP Success With Automation Part 2: How to Create More Efficient Processes With AP Automation
- VAT IT Partners With Emburse to Help Companies Save 27% on Expenses
- Driving Success With Automation Part 1: 4 Common AP Management Bottlenecks
- The Future of Finance: 5 Predictions For Digital Transformation in 2022 And Beyond
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.