Accounts payable (AP) is an essential part of any business. However, as it involves a lot of paperwork and manual processes, it can be time-consuming and error-prone. This is where AP automation comes in. Automating your AP processes can streamline your workflow and save time and money.
In this blog post, we will discuss the benefits of AP automation. This article will explore the most important benefits of AP automation that every CFO should know.
Automating invoice processing can streamline your AP workflows, reducing the time and resources needed to manage payments.
AP, or accounts payable, refers to the amount of money a company owes to its suppliers or vendors for goods or services purchased on credit. Essentially, accounts payable represent the company's outstanding debts or unpaid bills.
When a company purchases goods or services on credit, the supplier or vendor will typically send an invoice to the company. The company will then record the invoice in its accounts payable ledger and will be required to pay the supplier or vendor within an agreed-upon timeframe.
Accounts payable is a liability on the company's balance sheet, as it represents money that the company owes to others. The accounts payable balance is typically closely monitored by company management, as it can impact the company's cash flow and overall financial health.
Effective management of accounts payable involves monitoring payment terms, ensuring that invoices are accurate, and paying suppliers on time to maintain good relationships with vendors. So how can you improve your AP processes?
Optimizing accounts payable processes can improve the efficiency of your financial operations and reduce costs. Here are some tips to optimize your accounts payable processes:
By implementing these strategies, you can optimize your accounts payable processes, reduce costs, and improve the efficiency of your financial operations. Here’s what you can expect to achieve by adopting the most important strategy: automating your AP processes.
Manual invoice processing can be prone to data entry mistakes or processing the wrong amount.
Automation can improve accuracy and reduce the need for manual checks.
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Automating AP processes not only results in an increase in value but also frees up your staff to concentrate on other parts of the back office that may require attention. The following gives you an idea of some of the most significant benefits of automating accounts payable:
According to estimations provided by the Aberdeen Group, implementing automated accounts payable leads to time savings of approximately 5.55 days for the typical person.
In the past, invoices were left on desks or in inboxes in the AP department until someone could pay them. This would take a significant amount of time. These wait times can now be avoided thanks to automated routing, which also helps to speed up the approval process.
By applying rules to the process, the proper person will be invoiced and reminded of their obligations at appropriate times. Dashboards allow users to monitor the status of their outstanding invoices in real-time, saving them the time and effort they would have spent otherwise looking for this information.
One of the biggest benefits of AP automation is increased efficiency. With automation, you can eliminate manual processes, such as data entry, which are time-consuming and prone to errors. This allows your team to focus on more important tasks, such as analyzing data and making informed decisions. AP automation also enables faster processing times, improving cash flow and reducing late payments.
That’s right: AP automation can help you save money in many ways. For example, automation can reduce the need for paper, saving on printing and postage costs but also helps you to reduce your environmental footprint.
By reducing common operations, businesses can save money on labor and material expenses, such as the amount of paper and ink required for internal messages.
According to estimates compiled by APP2P Network, the typical monthly cost of manually processing 5,000 invoices is 64,500 dollars. An estimate of $8,850 is needed to cover the expense of automating AP processing of the same amount of invoices. This is a reduction in the cost of approximately 85 percent.
Additionally, AP automation can help you avoid late payment fees, which can add up over time. Finally, automation can help you reduce labor costs by eliminating the need for manual data entry and other time-consuming tasks.
Manual data entry is prone to errors, such as typos and duplicate invoice entries. This can lead to payment delays and other issues. AP automation reduces the possibility of these errors by automatically capturing and verifying data.
This not only increases accuracy but also helps you to maintain compliance with various financial regulations.
AP automation provides you with better reporting and visibility into your accounts payable processes. Automated invoice processing enables you to track payment dates, monitor cash flow, and view payment history in real time. This helps you to make informed decisions and identify areas for improvement.
AP automation also benefits your suppliers. By automating your payment processes, you can improve payment accuracy and speed up payment times. This helps you to maintain positive relationships with your suppliers, which is essential for any business.
AP automation software may assist you in lowering the probability of fraud occurring at your organization by enabling you to control who can approve invoices and who can authorize payments. When a process management system of this kind is implemented, it ensures that no single employee is solely responsible for authorizing outgoing payments.
According to the rules provided by tax authorities, documents should be preserved for several years, from seven years in the USA to five years in Canada. The costs associated with storing all of your documents may add up quickly.
The typical yearly cost of maintaining a single standard file cabinet with five drawers is $2,603.64. On the other hand, keeping a terabyte of data will set you back only $6.99 per month.
The enterprise resource planning (ERP), database, and financial infrastructure you already have in place are optimized to operate easily with the accounts payable automation software you use. There is no need to go between programs or enter the same information into separate databases.
Automating AP activities can improve your company's efficiency, visibility, and audibility levels. This is one of the primary goals that Artsyl strives to achieve. By using intelligent process automation solutions by Artsyl, you can automate your business processes cost-effectively and efficiently. Furthermore, you can put your data to work for you by automating the process of capturing, organizing, and leveraging its many benefits.
By automating payment processing as part of AP automation, businesses can streamline the payment process, reducing the time and resources needed to manage payments. This can free up time for employees to focus on other important tasks.
Another reason is that manual payment processing can be prone to errors, such as data entry mistakes or processing the wrong amount. Automation can reduce the risk of errors, improving accuracy and reducing the need for manual checks. Automated payment processing can speed up payment processing times, reducing the time it takes to process payments and improving cash flow.
The main reason to automate invoices is to improve the efficiency and accuracy of the invoicing process. Manual invoice processing can be time-consuming, error-prone, and lead to delays in payment processing, negatively impacting cash flow and vendor relationships. Automated invoicing can speed up the invoicing process, reducing the time it takes to create and send invoices and the time it takes to process payments.