Dramatic Savings in Processing Time with AP Automation
Studies have shown that companies using AP automation far outperform those that do not in just about every aspect of invoice processing. In fact, when using high-level AP automation, a company’s invoice processing should be reduced from an average of 12 to 15 days to between 3 and 5!
The time saving starts from the moment an invoice arrives electronically, rather than by paper mail. While a mailed invoice must be opened and rerouted to the correct department, the electronic invoice appears instantly in a designated account customized for who a supplier works with. Mailing time has been saved and the invoice has avoided the gauntlet of being rerouted to the wrong department or being lost among hundreds of other pieces of mail.
Once received, typically the invoice must then be approved by someone outside AP – usually the procuring party or the manager of that department. If it’s a paper invoice, there’s no telling how long this part of the process could take. Unfortunately, paper invoices can often be misplaced or overlooked. Without high-level processing through automation, sometimes they even get lost, in which case an AP employee has to get on the phone and ask the supplier for another copy. With electronic invoicing, none of this occurs. All it takes is a few clicks from the procuring party’s desktop computer.
Now, what if there’s an error along the way? Or some glitch, either from the supplier’s side or AP? Worse, what if this leads to late payment or no payment at all? Now the supplier is on the phone, demanding to know where payment is, and someone in AP spends valuable hours chasing down information that may or may not be contained in a physical file. With AP automation, AP staff aren’t the only ones with access to the electronic account. Every department in the company, as well as the supplier, can see what is happening in real time to invoices they’re responsible for. Errors and missing information can be corrected early and with little effort.
Once the invoice has been approved and the green light for payment is lit, how does it get paid? If by paper, a check is written out and sent via hard mail, which could take days. If electronic, it gets paid instantly, courtesy of the internet.
It’s true that some companies have become adept at paring down their paper invoicing system enough to avoid late payments and save a little money elsewhere. But that’s only avoiding the inevitable. One by one, companies are learning what saving time through AP automation can do for them. Once they do, the decision is easy. Going from late fees to early-pay discounts, cutting down on labor hours, creating goodwill with suppliers, leading to more favorable trade terms. These are just some of the benefits that make Electronic Invoicing the fast—and cost effective—way to compete in the 21st century.