There are a number of ways which account payable automation can benefit the cash flow of a business. Arguably, the most important is the ability to take advantage of enhanced invoice approval channels. This boosts overall transparency, which leads to a clearer perspective on the financial state of an enterprise.
In light of how much emphasis is placed on the financial status of an organization, it should come as no surprise to find that this kind of transparency is highly coveted. There are certain technological provisions which must first be in place for an accounts payable solution to offer benefits which can transform payment activities with the intent that payments are never unintentionally missed or delayed.
Characteristics of Valuable AP Automation
The most successful AP organizations are those which are willing to opt for total AP Automation. This involves the following key stages:
- Receipt: or the way in which a company receives invoices.
- Processing: the way in which a company checks and confirms invoices.
- Completion: the way in which a company schedules and fulfills payments.
It is possible to automate all three stages by investing in one complete system or, alternatively, by blending a number of complementary solutions. The true value of an integrated system, however, can be seen in the increased degree of control, transparency, and accuracy which it offers – this is a direct result of the following characteristics.
- Accounts Payable Automation: can generate and send digital invoices
- Automatic Payment: can process and complete multiple payment types (ACH/EFT, wire transfers, commercial cards, etc.)
- Automatic Approval: automated matching, processing, and confirmation of invoices
- Scan and Capture: paper invoices can be transferred to an Electronic Invoicing method
While this is not a complete list of the most valuable AP automation characteristics, the capability to direct invoices quickly and efficiently through these channels is the most essential aspect of automating accounts payable workflows. These benefits are reinforced by the ability to observe the invoice receipt and confirmation process with the end result to identify vulnerabilities.
More Benefits of Advanced AP Systems
There are some providers which offer Dynamic Discounting which is essentially the ability to secure early payment bonuses. They are made available to companies which have made efficient use of digital resources, being skilled in maintaining an elevated degree of accuracy and transparency.
Trade Finance Supplier: invoices are confirmed and completed early (aside from a financing discount). The buyer pays the total invoice sum according to a predefined schedule. This system increases the steadiness of fiscal flows.
Trade Finance Buyer: the lender sets up a credit system (with an expanded payment schedule) for the buyer. The supplier receives payment on a ‘net due’ date, when the total invoice sum must be paid (with a financing fee on top).
Dynamic Discounting: enables buyers and sellers to responsively change the standard terms of payment. Buyers can give early payment bonuses to suppliers, if they agree to pay a pre-calculated fee for the privilege of being paid early.
The Effects of AP Automation
The technologies utilized within accounts payable systems are likely to have a far reaching effect on working capital. Whether a company prefers a scan and capture method, which facilitates the digital conversion of all paper invoices, or a comprehensive electronic invoicing system. Ultimately it is that automating Accounts Payable software that will boost the transparency of payment movements and activities.