AP automation speeds up invoice processing and allows companies to handle a greater volume of documents that would otherwise be impossible. Beyond speed and volume improvements, accounts payable automation also provides reductions in three areas that can greatly affect a business’ bottom line: processing costs, time management concerns and human error.
1. High Invoice Processing Costs
The amount of money automation saves businesses really can’t be overstated. According to one study from an APP2P 2016 special report, mid-sized businesses pay approximately $10 to process a single paper invoice, while small businesses spend nearly $15 to do so. Conversely, the Aberdeen Group reports that automating invoice processing allows the healthiest businesses to spend one-fifth of what their peers do, an average of $3.34 per invoice as opposed to $16.67.
Primarily, this cost goes towards paying for accounting staff. With a manual AP process, paper invoices need to be opened, sorted and routed for proper handling, approval, validation and processing. Each of these steps is performed by a staff member making a salary commensurate with his or her abilities and experience. With an automated system, on the other hand, staff would only be necessary for value-added services, exception handling and a small number of other administrative tasks. Automation would take care of everything else, and much more efficiently than even the most highly-trained employee.
2. Long Invoice Processing Time
It’s not just a lot of money that a manual, paper-based process requires. There’s a lot of time involved, too. Businesses nearly double the speed of processing when they switch to an automated accounts payable process. Depending on the volume of invoices processed, that amount of time saved can complete change a company’s business plan.
According to that same APP2P 2016 special report cited above, top-of-the-industry organizations process invoices 75% faster (in an average of 4.1 days) than those on the bottom (an average of 16.3). With the help of automated matching, less manual keying required and electronic routing moving at the speed of available tech, there’s just no way manual processing can keep up with the speed of AP automation. This allows businesses to take advantage of early payment discounts, further saving them money and eliminate the risk of souring supplier relationships due to continued late payments.
3. Manual Processing Errors
Even with highly-trained workers, errors are a given with manual processing. The IOMA estimates about 3.6% of invoices processed manually have errors. That’s not a high number, but extrapolating it over the course of all invoices a business handles shows the stakes: for companies that process $100 million in payables over the course of a year, this figure means that $3.6 million was erroneously entered and processed!
Now, with that in mind, consider that APP2P 2016 reported that 90% of invoice data can be extracted automatically, with no human operator intervention required whatsoever. In other words, the vast majority of all necessary information can be extrapolated in a way that does not require opening up the process to human error. This being the case, why would any business, given that choice, continue to deal with these errors?
Businesses Reduce Unnecessary Issues with AP Automation
Companies that continue to rely on manual accounts payable processes spend too much money, move too slowly, and open themselves up to processing errors. Each of these three concerns takes a huge toll on a company’s health and well-being, but AP automation makes them all go away. There’s no better way for companies to improve their standing within their industry and improve their long-term outlook simultaneously.
For more information on finding the right AP automation partner, check out our infographic, “8 Signs You Can Trust Your AP Partner.”