What is Accounts Payable Automation?
The technical definition of Accounts Payable Automation (AP Automation) refers to the technology used to streamline and automate accounts payable processes, removing manual tasks and providing better visibility and control over important financial data.
While some solutions are as simple as just a piece of software, AP Automation is a holistic process transformation through a set of connected tools that work as one unified solution to simplify your organization’s Accounts Payable processes.
These tools can include:
Document Management allows you to scan, file, and access your documents from one central system. It creates a fully paperless office and files can be accessed from anywhere, at any time, from any device. To help eliminate manual data entry, Optical Character Recognition (OCR) takes data that is traditionally keyed in by hand and sorts and matches to the purchase order and automatically classifies it. This can directly integrate with your existing Enterprise Resource Planning software that your team is already familiar with. By implementing a solution that works WITH your ERP rather than separate from it, you create an even more streamlined process. Building workflows can help customize this entire process to fit your organization’s true needs. You can find the gaps within your process that need fixing, and fix them quickly without missing a beat.
Why implement AP Automation?
The simple answer? It helps your organization save time, money, and resources. Given how tools now exist to solve just about any business challenge, organizations that aren’t adapting to more streamlined processes are simply holding themselves back.
Using manual methods, the average invoice takes two weeks to process and requires approval from two to five people before it is fully processed. If your organization is processing hundreds of invoices monthly, relying on manual payment processing is simply inefficient. In a study on AP automation by the Ardent Group, best-in-class companies process invoices in less than 4 days while others can take over 13 days to process them.
By implementing AP Automation, your organization can decrease invoice processing costs from nearly $40 per invoice to just a few dollars per invoice and reduces process time from potentially multiple weeks to just a few days. It also helps you capture more early payment discounts and avoid late payment penalties and interest accrued from lengthy invoice processing times. These cost reductions will allow your organization to reallocate funds to other initiatives that can grow your organization, and by saving time your accounting team can focus on more valuable tasks.
AP Automation also promotes visibility of cash flow and liabilities. By gaining a better understanding of where your organization stands financially, you can plan and budget better and create a healthier business.
Why else should you Automate Accounts Payable?
- Reduce the time required to process invoices
- Eliminate the manual processes associated with routing, approving, and GL coding invoices
- Process invoices faster and more accurately – reducing payment errors
- Reduced paper and improved operational efficiency
- Better data visibility
- Real-time access across your organization
- Streamline vendor invoice processing and manage discounts to improve cash flow
- Ensure record retention compliance and keep documents safe and secure
- Say goodbye to filing cabinets
- Saves headaches come audit time – have peace of mind that you will find documents you need
When should you Automate Accounts Payable?
While Automation can benefit organizations of all sizes, Accounts Payable Automation is the most beneficial when organizations meet certain thresholds. While any one organization may not have all of these same pain points, it’s likely that they have enough of them to notice a need to make a change!
So, when should you Automate Accounts Payable? Don’t wait until your team is so bogged down with backed-up work that your employees are overwhelmed! Catching pain points early on and implementing a solution that eliminates them can help your team thrive.
1. You process 500 or more invoices per month
If your organization is facing a heavy workload of invoices, it can be difficult for your team to keep up. Keeping track of hundreds (or thousands) of invoices is no easy task, which is exactly what AP Automation is designed to help with.
2. You have to outsource your AP
If you have so much AP work to complete that you have to outsource it to a third-party company, it’s a clear sign that you can benefit from AP Automation. Automation is far more cost-effective than outsourcing and allows you to manage your invoices in-house.
3. You're missing out on early payment discounts
The flip side to avoiding late payment penalties is getting early payment discounts. These financial incentives can serve as a nice boost for your organization and can help you invest in new tools and technology to further better your business.
4. You're running into errors from manual data entry
By relying on your employees to complete repetitive tasks like data entry, you’re likely to run into error. As part of an AP Automation solution, you can utilize artificial intelligence to extract data and push it into your ERP, without any errors.
5. There is lack of visibility of cash flow in your processes
Knowledge is power, and if you aren’t sure exactly what the financial wellness of your business is it can be detrimental. With transparent processes and visible workflows, you can fully understand your organizations cash flow and determine exactly where the gaps are.
6. You have more than 2 full-time AP clerks
Even if you have a larger team of the best and smartest AP clerks, they can quickly become buried by invoices and processing. Relieve them of some of the more tiresome parts of their role (like manually entering and re-entering the same information over and over) by investing in a smart AP solution.
7. You consistently get late payment penalties
Late penalties that stem from AP clerks spending weeks processing an invoice is easily avoidable and can save your organization a lot of money that can be used for more important things.
8. You're processing invoices in more than one location
While your main offices may have one mailing address, you could have employees in multiple locations who all need access to invoices and other documents. By investing in AP Automation your employees can easily access those documents no matter where they’re working.
9. You regularly misplace invoices and other documents
Paper is hard to keep track of, and over the years you’ve likely found yourself tearing your office apart searching for one specific invoice. Storing your documents in a secure, accessible digital system means no more piles of paper to dig through and no more missing documents.
10. It takes longer than a few days or more than a few dollars to process an invoice
Put simply, if you’re spending too much time or money processing each invoice, you’re setting your organization and employees up for stress and frustration. Ap Automation can make processing an invoice faster and less expensive, without error.
Are you ready to implement AP Automation?
If our listed common pain points resonated with you, or you see the value in simplifying your manual Accounts Payable processes, it’s time to implement a solution. While complete transformation on your own can seem incredibly daunting, especially when you aren’t sure when to even start, fortunately, PiF Technologies is here to help.
We have a team of experts from sales, to implementation, to support, who can make the process easier. With over 25 years of experience implementing automation solutions, we know the common challenges organizations face, and we know exactly how to solve them. Kickstart your transformation by scheduling a call with us by filling out the form below, we’ll learn more about your exact needs and build a solution that can solve all of your pain points.
