Suppose a single decision could help reduce processing time for invoices, minimize errors, and increase the visibility of cash flow across the organization. In most businesses, such a move is Accounts Payable (AP) automation.
Manual invoice processing is rapidly becoming infeasible as finance departments face increased pressure to accomplish more with fewer resources (Unimaze).
The trend towards AP automation is becoming rapid. The global accounts payable automation market was estimated at more than 5.3 billion dollars in 2023 and is expected to grow at a compound annual growth rate (CAGR) of almost 14 percent over the coming ten years, indicating high and robust adoption.
This increase is an indication of an obvious truth: companies are becoming more concerned with speed, precision, and cost management as transaction volume increases and compliance standards grow stricter.
Although other fears, such as initial software pricing or data security, can be raised at the initial stages of the decision-making process, AP automation can always be associated with long-term returns, including reduced processing costs and fewer payment errors, as well as improved vendor relationships and real-time financial reporting.
With the development of cloud technology and the growing number of automation professionals, AP automation is no longer an investment opportunity of the future but a competitive edge in the present (Unimaze).
This blog will discuss how automating accounts payable can change financial operations and the 10 most prominent advantages that can help businesses be more efficient, more accurate, and more scalable across the procure-to-pay process.
10 Key Benefits of Accounts Payable Automation (AP Automation)
Automation refers to the use of technology to perform tasks with minimal or no human assistance. Thus, accounts payable automation automates accounts payable to reduce operating costs, save time, and reduce errors. It enables businesses to digitally submit invoices, manage approvals, and process payments on a cloud-based, unified platform.
Accounts payable automation can also help mitigate fraud risk by providing business owners with detailed insight into their financial records at every step of the AP workflow.
Accounts payable automation can provide SMEs with streamlined, efficient, and tailored workflows that meet their business needs. Unlike manual AP workflows, AP automation is timely, transparent, and secure.
By automating AP, accountants can save time and focus more on the strategic areas of their divisions that may require their increased attention.
Here are the 10 key benefits of accounts payable automation:
1.Accurate Financial Records
To err is to be human. While manually entering data, one can be prone to errors, leading to costly consequences for the business. This is where AP automation comes in: by mitigating such risks and ensuring transparent, accurate invoice processing, it enables stakeholders to make financial decisions based on reliable economic data.
2.Saves Time
Since AP automation requires minimal human assistance, it frees up your resources, allowing them to be allocated to strategic business areas. This can help ensure that the company’s resources are working efficiently to help the firm gain a sustainable foothold in the industry.
3.Streamlines AP approvals
AP automation software includes built-in features that, once set up, streamline invoice approval by applying specific conditions, so you do not have to repeat time-consuming approval processes. This helps ensure timely approvals, less paperwork, and no need to chase stakeholders for their approvals.
4.Clear Audit Trail
Manual invoices can be hard to find and maintain in a large database and are more likely to be lost. It is important to keep track of these invoices for audit purposes. AP automation minimizes this risk by providing a comprehensive digital record of every transaction, ensuring a clear audit trail and making compliance easy. These invoices are stored on a cloud-based platform, which is more secure, accessible, and reliable.
5.Reduces Costs
With manual AP processes, the more invoices your business generates, the more work there will be. This can lead to increased payroll costs. AP automation reduces costs by minimizing manual tasks and reducing errors. In the long term, AP automation delivers low per-invoice costs, resulting in substantial savings. Moreover, AP automation secures your invoices on a cloud-based platform, which you can access anytime without rummaging through an entire invoice database.
6.Highly Secure and Manageable
AP automation software, such as Sage Intacct, offers strict controls and protocols to ensure the security of your company’s finances. This helps mitigate the risk of fraud and cyberattacks. Automated APs also help ensure transparency and accountability across your organization by keeping everything in one place in a highly accessible way.
7.Remote Work Friendly
AP automation is a hybrid, remote-work-friendly model that allows the AP team to stay proactive and up to date on financial entries. Unlike manual entries, you do not have to send a picture to someone else for them to assess the invoice. In automation AP, invoices are uploaded to a cloud-based platform, and credentials are provided to finance team members. This enables them to access and evaluate the firm’s financial information and plan accordingly.
8.Ensure Scalability
Amid rising demand for services and products, invoice numbers tend to increase. Hiring many resources might cause your firm to struggle financially and not meet your financial goals. With automated AP, however, you can organize your invoices on a single platform and focus on strategic business areas. AP automation also prevents duplicate invoices by leveraging accounting-friendly features that streamline accounting workflows.
9.Strengthens Supplier Relationships
AP automation can also help develop and strengthen supplier relationships by ensuring timely payment of dues, keeping suppliers satisfied, and building trust. This provides streamlined workflows.
10.Access to Real-Time Financial Data
Automating APs can also help you gain access to real-time data and charts, which you can use to measure the financial performance of your firm. Moreover, this data can help you stay up to date on industry trends, evaluate your efforts, and adjust your course when necessary.
How to Automate Accounts Payable
Before automating your accounts payable, you must evaluate your business needs. A best practice is consulting a finance expert on this, who can help you find the best software solution to meet your business needs. IT-driven custom builds and built-in ERP add-ons may not be appropriate for automated AP software. Make sure the AP software meets your business needs regarding scalability and service.
You can also outsource your accounts payable and speed up your financial operations with E.A.’s Accounts Payable outsourcing services. Our experts ensure a seamless process and optimize your accounts payable, empowering businesses to thrive.
Industry Insight: Accounts Payable Automation is Changing Business:
Automation of accounts payable is no longer a matter only of large companies; it is now a strategic concern in every industry. With increasing invoice volume, supplier base, and compliance requirements, manual AP processes cannot keep up.
Companies across all industries are now using AP automation to not only process invoices faster but also achieve visibility, reduce risk, and enable scalable growth (Workday). The insights below are one indication of the ways AP automation is used in the real world- and why the effect of AP automation can have much more than operational efficiency.
Manufacturing: Bottlenecks in High-Volume Invoicing:
Thousands of invoices are associated with raw materials, logistics, and several suppliers; manufacturing companies often process them. Three-way matching between purchase orders, goods receipts, and invoices is also enabled by AP automation, helping eliminate many manual checks.
Examples: A mid-sized manufacturer would manually match and delay payments due to inaccurate quantity and price matching, thereby enhancing supplier trust and sustaining production.
Retail E-Commerce: Seasonal Invoice Surges:
The retailers have invoice peaks during peak seasons. Manual AP teams cannot operate at the required speed, and consequently, they end up paying late and missing early-payment discounts.
Example: Before the holiday season, an e-commerce retailer automated its AP and was able to process a large number of vendor invoices without adding staff.
Healthcare: Enhancing Audit Readiness and Compliance:
There are stringent regulatory and audit rules for healthcare organizations. AP automation gives transparent audit and approval records and document retention.
Example: A medical organization automated AP processes to monitor approvals between departments; this makes audits easier and reduces compliance risk.
Construction: Multi-stage, Complex Payments:
Construction companies are concerned with progress billing, invoicing subcontractors, and retention payments. The AP automation assists in controlling milestone-based approvals and documentation.
Example: Automated approval workflows were implemented at a construction company, so invoices were released only after project milestones were checked.
Professional Services: Enhancing the Visibility of Cash Flow:
Service-based companies are based on the project-related costs and periodic payments to the vendors. AP automation provides real-time access to liabilities and cash outflow.
Example: A consulting company automated AP reporting to predict monthly cash requirements better and prevent unpleasant surprises.
Technology & SaaS: Ensuring Rapid Scaling:
Tech firms that are rapidly developing have to deal with a growing volume of invoices without a developed finance department. AP automation increases with an increase and retains controls.
Example: The AP automation for a SaaS startup was the first implemented, and it enabled the company to quickly add new vendors without compromising approval governance (ABBYY).
Logistics & Transportation: Reducing Paying Cycles:
Logistics companies depend on vendor payments to ensure on-time completion of operations. Delays can disrupt supply chains.
Example: One of the logistics providers automated invoice capture and approvals, shortened the payment cycle, and enhanced relationships with the carriers.
Hospitality: Multilocation Management:
The invoices are processed in various locations and cost centers by hotel and restaurant groups. AP automation is a centralized approach that provides control and visibility at the location level.
Example: A chain of restaurants has automated AP so that all stores can invoice under a single system of approval and reporting.
Financial Services: Internal Control Improvement:
Finance and insurance companies need close separation of responsibilities and chains of command. AP automation does not retard processes but provides controls.
Example: A financial services company that utilized AP automation confirmed multi-level approvals to prevent unauthorized payments.
SMEs Cross Industries: Doing More on Lean Teams.
Small and medium-sized companies do not have their own AP personnel. Lean teams can be run efficiently at the enterprise level through automation.
Example: A small or medium-sized enterprise has automated manual invoice processing and enabled its finance department to perform analysis and negotiate with its supplier, rather than spend time on data entry.
Conclusion
Accounts payable automation is not merely a process enhancement in the industry; it is a strategic facilitator. In the range of controlling invoice complexity, improving compliance, enhancing cash flow visibility, and enabling scalable expansion, AP automation provides quantifiable value across a variety of business settings (Unimaze).
Since companies are still modernizing their finance processes, those that implement AP automation put themselves in a better position to become more efficient, foster better relationships with their vendors, and operate more effectively in the long run.
As the industry continues to pace forward, automation is becoming the norm. From marketing to finance, business owners automate repetitive processes and encourage their teams to focus on strategic business areas. Imagine you hire a fresh resource who may have optimistic ideas for your business’s growth, but you assign them repetitive tasks.
This would not only be an undesirable outcome for your business, but you may also lose a valuable employee. To retain employees, automate the basic accounting workflows and involve them in key business areas to make them feel important and get access to promising ideas for your ventures.
