Why you should automate your Accounts Payable management
Among the most important processes a company deals with on a day-to-day basis, managing invoices is very close to the top of the list. Given how critical invoice management is to fiscal health, why are so many businesses trusting this process to manual methods like spreadsheets or a paper-based system?
A recent study from International Data Corporation (IDC) researched the costs and benefits of switching to a cloud-based, business-ready solution for the accounts payable process – and the results were clear. Below are the five best reasons, taken from the study, to automate accounts payable management:
1. Cloud-Based AP Solutions Are Redefining How Businesses Are Engaging with Stakeholders
A more efficient and thoughtful accounts payable process isn’t only good for managing invoices. It also changes the entire dynamic of how a business runs. According to the report, the average time to pay vendors accelerated by 51% and the number of late payments to vendors was cut by 67%.
Far from simply improving vendor relationships, a cloud-based system also enhanced the experience for employees and managers who were responsible for submitting and approving invoices. As one of the study’s participants stated, “It gives the approvers better visibility because they can see what’s coming through as they get order notifications and reminders.”
2. Manual AP Processes Are Slow, Inefficient, Fragmented, and Prone to Human Error
Going paperless isn’t just a benefit that reduces waste on our planet – it can also increase efficiency and lower costs. Through ease of use, and lowering the risk of error, an automated solution enabled substantial time savings for staff responsible for supporting the invoice management cycle.
For example, one of the businesses that IDC surveyed for the report had a 10% general ledger coding error rate, which required workers to then create journal entries after the transaction to correct the errors. After automating their AP process, the error rate was reduced by 90% because the business isn’t relying on humans to remember all of the codes.
3. Invoice Management Software Provides a More Accurate Picture of a Company’s Finances
You can’t manage your finances if you can’t see them. Legacy solutions like spreadsheets or pen-and-paper reporting don’t allow for workers at different offices to get clear visibility into spending. With a cloud-based solution, one of the survey’s organizations reported that it “enables thousands of accountants across the globe to analyze their monthly spend and enables greater accuracy in our accruals.”
4. Automate Accounts Payable Management Systems To Improve User Productivity
By allowing users to submit, review, approve, and process invoices on mobile devices, cloud-based AP management afforded line-of-business employees an increase of productivity of up to 11%.
And overall business productivity wasn’t the only area of improvement; IT staff specifically also saw huge benefits. IDC projects that IT staff productivity gains are equivalent to $23,359 per organization – or $465 for every 1,000 invoices processed.
5. Automated Invoice Solutions Are Proven to Be Cost Effective
Business costs come in many forms, and some of them can be harder to spot than others. For instance, lack of compliance and late payments can cause unnecessary penalties and interest fees. Because an automated system increased efficiency and sped up payment times, delayed payments for the study’s respondents were reduced by 67%, saving on fees. On average, the organizations also saw a 32% increase in the percentage of employees following their procurement policies, which cut compliance penalties as well.
According to IDC, for the businesses surveyed, automating their invoice process not only helped them gain efficiency and productivity, but it also provided big-picture data visibility and increased employee satisfaction for more effective operations and a better bottom line.