In today’s fast-paced, competitive digital space, financial teams have more pressure from management to better handle working capital and corporate spending. Accounts payable teams should handle the entire procure-to-pay cycle effectively to improve the organization’s accounting processes. From moving purchase orders out to getting approvals to release payments to the vendors, AP teams should manage many time-consuming tasks in specified timelines. However, this can be done by replacing the traditional, paper-based accounts payable processes with electronic invoicing and automation. With the advanced accounting solution, most of the tedious tasks involved in the process can be automated, relieving the AP team to concentrate on more thought-intensive, productive work.
Here we’ve cited a few ways accountants’ payable systems dramatically benefit your AP teams.
Significant Labor Savings
Manual accounting processes are the biggest contributors to high accounts payable processing costs. In traditional accounting systems, AP teams have to download attachments, scan documents, manually key in data, search for lost invoices, reconcile supplier and PO information, code invoice data and more. This consumes more time and is prone to errors.
The Institute of Finance and Management (IOFM) reported that more than 60% of the organizations have stated that reducing invoice processing costs as their priority.
Fortunately, automation can help decrease manual tasks and labor costs. With the automated AP software, you can extract invoice data, classify documents, match invoices with purchase orders and receipts, assign distribution codes, post, and archive invoices quickly and automatically. Experts say that the average cost to process 5000 invoices manually is 85% less with automation.
Usually, AP teams spend more time handling financial transactions, leaving less time for value-added activities. Automated accounting solutions eliminate several complicated tasks involved per invoice, reducing the amount of time accounting teams have to spend to process invoices. The AP staff can devote this time to identify and resolve any invoice backlogs or utilize their time to other value-added activities. The processes that require human attention include ensuring contract compliance, rationalizing supplier spend, managing cash flow, mitigating compliance issues, managing budgets and accruals, forecasting budgets and more.
Faster Invoice Cycles
Regardless of the type or size of the organization, slow invoice processing cycles hurt business. The unpredictable cash outlays and bottlenecks in invoice processes can cause backlogs and strains the vendor relationships.
Ardent Partners’ research revealed that organizations using the automated AP system are processing a single invoice in 3.6 days, while the businesses that are relying on manual processes require 16 days to process a single invoice. Research also revealed that only four percent of the businesses are clearing all the invoices on time.
Automated accounts payable processing means faster invoice cycle times. The AP software solutions can greatly speed up the invoice cycle by automating most of the time-consuming aspects such as data capturing, invoice validation and matching and more.
Fewer Payment Errors
Whether it’s an invoice with inaccurate data, transposing numbers while hand-coding or duplicate invoices, errors can come from anywhere. These data and processing errors can contribute to the hidden AP processing costs. Luckily, the automated AP processing reduces the errors associated and helps you streamline the process. AP software solution automatically captures the invoice headers and line items data without manual keying, ensuring accuracy. The software also validates the invoice data against purchase orders and quickly calls out the duplicate payments.
More Early Pay Discounts
Experts say that more than 80 percent of the suppliers offer early payment discounts to encourage businesses to clear payments on-time. But, only four percent of the businesses are utilizing these discounts. Still, many organizations are relying on the manual AP processes due to which they are unable to gain early pay discounts. With significant automation, you can receive 70 percent of the early pay discounts, which helps you save the processing costs of the business.
The Bottom Line
The way businesses manage accounts payable processes will have a direct impact on the organization’s cash flow. If gaining a competitive advantage sounds appealing, automating AP processes should be your top priority. The financial benefits of automated accounts payable software and a quick ROI offers you enough of an edge to stay ahead of competitors. With the right support and assistance, AP software enables you to manage the entire P2P cycle and helps you improve the overall productivity of the organization.