If you’re looking for a solution to alleviate financial issues caused by manual processing, AP automation is the way to go. Automating your accounts payable process can help you increase efficiency, improve accountability, and simplify compliance, all while saving your company time and money—and these are just a few of the benefits.
As you eliminate manual invoice processing, you reduce the pains that accompany paper-based processes and overloaded inboxes. For example: invoices piling up waiting to be moved to the next approver, lack of visibility into the status of each invoice, and missing out on early payment discounts due to slow processing. Managers can have a resigned outlook on these problems because they’re unavoidable with manual AP processing. But with automation, that’s not the case.
AP automation can also have a significant positive impact on your staff by reducing the stress of errors, menial tasks, tight deadlines, and heavy workloads, resulting in a happier and more productive workspace. We’re just touching the tip of the iceberg with this list, but here are the top five benefits of replacing your manual AP process with an automated one:
1. Your employees spend less time processing invoices
Manual processing is laborious. Although processing invoices is necessary for your business’s functionality, it’s also repetitive, time-consuming, and takes valuable working hours away from more highly valued tasks. The potential savings in labor costs are striking; Levvel (formerly PayStream Advisors) research shows that a single invoice costs an average of $15 to process manually, and only $2.50 with an automated workflow.
Employing AP automation for your invoice processing, on the other hand, means that after your invoices have been received, digitized, and indexed by an AP automation partner, workflow automation software takes it from there. When your digitized invoices are loaded into software that has been adapted to your business rules, they kick off automatic workflows that move them between approvers and other processing steps quickly and seamlessly. Instead of having to worry about chasing down managers for approval or carefully tracking the progress of each invoice, employees can let workflow automation handle those steps, and process more invoices in less time.
2. Automation minimizes manual data entry errors
Outside of saving time and money normally spent on manual processing, another huge benefit of automation is that it drastically reduces data entry errors.
With AP automation, your invoices are carefully indexed after scanning. This means that instead of relying on staff to manually input invoice data into your ERP system, data is accurately extracted from invoices and then loaded into your system directly. By eliminating your staff’s data entry errors, automation increases accuracy and saves your employees hours of tedious backtracking to find and fix data entry mistakes.
But data entry errors waste more than just time. Data inaccuracies increase the, risk of making double payments or paying for goods you haven’t actually received. Not only do these issues take a significant number of working hours to correct, but they also restrict your finances until rectified. Because of its data accuracy and built-in business rules, workflow automation software protects your business against duplicate payments and overpayments, helping you save time, money, and mental resources.
3. No more late payments
Avoid Fees and Penalties
According to Levvel, with a manual AP process, average processing time from invoice receipt to approval can be as high as 45 days. This time period can include all manner of slowdowns—from lost and misplaced invoices to bottlenecks caused by an approver’s busy schedule. Slow processing times caused by issues like these are not only frustrating, but expensive; they inhibit you from taking advantage of early-payment discounts and can even lead to late fees.
By contrast, AP automation cuts out the manual steps to accelerate processing times. With your new, shorter processing times (which can be reduced to 3 days or less) you can pay every single invoice on time, or even early.
Enjoy a better relationship with vendors
Did you know that late payments are the leading cause of poor supplier relationships and increased supply costs? Over time, consecutive late payments put your relationship with key suppliers at risk, as tardiness can imply a lack of resources, responsibility, and respect.
AP automation helps you consistently make payments early or on time. This is important for managing your business relationships—suppliers are highly motivated to keep partners who pay quickly, so they may be more likely to work with you on pricing and ensure an uninterrupted supply of goods.
A good relationship with your vendors has another important (but less obvious) beneficiary: your employees. Correcting mistakes with outside parties can be both tedious and stressful. Your staff shouldn’t have to spend time on the phone with angry suppliers or feel like their actions have put key accounts in jeopardy. That burden can strain their well-being and distract them from doing their jobs.
4. Workflow automation simplifies audits
Simply put, paper documents are easy to lose. From the risk of misplacing a document, to the threat of a document being stolen to the difficulties of paper storage, there’s no end to the number of ways an invoice can go missing. Combined with the challenges of receiving invoices across multiple office locations and the whopping $120 in labor spent searching for a single lost document, paper AP processes are probably creating more issues in your business than you realize.
Come audit time, these issues can be a huge liability. When auditors request files, they need to see consistent and accurate recordkeeping. Not being able to locate the requested files puts you at risk for having to pay hefty non-compliance fines—not exactly something you want to have to work into your budget.
With AP automation, after invoices are processed, they can be securely stored in document management software for instant accessibility, sharing, and tracking. Files can be located with just a few keystrokes and sent right to auditors digitally, meaning audit preparation can be done in a matter of hours—even minutes. No more sorting through file cabinets and banker’s boxes to find what you need.
5. Decluttered workspace and happier staff
Lastly, AP automation relieves your company of the burden of storing paper. With digital data storage being as cheap and reliable as it is, file cabinets and boxes of paper are an egregious waste of space. It can also create workplace clutter that stresses out employees and makes it harder to navigate the office. Getting rid of paper and the tedium of managing it will improve everyone’s day.
Experience the benefits of AP automation
To have a high-performing accounts payable department, you need a streamlined process and full transparency. Automation gives you that—and more. With AP automation, you’ll save time, avoid late payment penalties, duplicate payments, and non-compliance fines, and your employees will have more time to focus on critical work rather than chasing paper invoices around.