When businesses think of saving money, they look for ways to cut back expenses. Cutting down on supplies, and reducing the amount spent on each department are some of the ways to save money. However, cutting back is not always the solution.
When you take the accounts payable department, cutting back the number of employees and limiting resources will result in delayed processes and costly audits. It would be best to improve AP processes in order to make the department run as smooth and cost-effective as possible.
Cutting Costs Vs. Process Efficiency
The best practice is to shift your focus from cutting costs to improving processes. Ensure the money you invest is being used wisely and covers essential business operations. Each department should have enough resources to perform their job well. Alternatively, spending time and money on improving business procedures might not help cut costs on an immediate basis, but, the more you optimize your business processes, the more your costs will get reduced. Streamlining business procedures will eliminate the need for employees to spend time on regular tasks, and ultimately, you’ll start noticing savings.
Automation is an ideal way to improve business operations. Investing in automation requires set-up costs and a regular fee based on the contract. While this looks like another expense, the return on investment can be very high. For instance, automating AP procedures will yield significant benefits such as decreased procure-to-pay cycle time, reduced delays and faster invoice approvals. Certainly, this would let you avoid late fees, leverage early payment discounts, and costly errors.
AP is not the only department that benefits from automation. Automation gives you more control over internal processes and helps track cash flow. Travel and expense automation speeds up expense report processing and keeps the company on a budget. Business process automation not only shows immediate, tangible benefits but also lets you see long-term improvements in cash management.