Free money! Few things are more attractive to a business than finding a way to get more by doing less. For accounts payable departments, embracing automation to take the pain our of vendor invoice processing results in far less time and effort spent chasing invoices, securing payment approvals and hand-keying information. At the end of the day, the savings in terms of time and effort are enough to cost justify the investment. But, let’s face it. Processing vendor invoices more quickly just means getting money out the door, right? Yes, but when done correctly, the new speed and efficiency that comes from automation translates into better visibility and control over cash flow—and the ability to reap substantial cost savings from vendors that offer early payment discounts.
According to the Institute of Finance and Management (IOFM), 80 percent of suppliers offer some form of discount on invoices in exchange for early payment. In contrast, less than half (46%) of companies capture just 1 to 5% of available early payment discounts and one in five companies fail to take advantage of discounts for early payment. Talk about leaving money on the table!
There are many reasons that companies fail to take advantage of these discounts—most of which have more to do with process inefficiency and visibility than with a lack of desire to save money.
Top reasons include:
Companies can overcome all of these challenges by automating the most stubborn bottlenecks in their AP vendor invoice processes—the manual handling of paper and digital invoices, manual approval routing/coding and manual transaction entry into accounting/ERP systems.
Typically, business transformation systems like Artsyl’s docAlpha and AP automation applications like InvoiceAction can be implemented within 90 days. Cost savings from efficiency gains alone typically allow companies to realize a return on investment in 180 days.
Early pay discounts, essentially, are icing on the cake for companies that automate AP.
To learn more about how your company can lower costs, boost productivity and achieve greater process control, contact your Artsy account executive at email@example.com.