Accounts Payable Automation in the 21st Century
In this the 21st century, a profitable and effective accounts payable department is essential for any organizations survival. In fact, taking a closer look at almost any type of business, you will find an accounts payable department at its center of operation. It’s easy to forget that accounts payable cannot exist without the skills of a talented CFO. It is his or her responsibility to strategize a long term financial outlook for the organization and how it will prosper. Based on this analysis, it is the job of a CFO not only to establish a successful accounts payable department, but also to make sure that the AP methods employed are suitable for the company.
The Benefits of Accounts Payable Automation
It’s no easy task to manage an AP department and the job is made harder if a company refuses adapt. But if organizations can approach paperless methods, like electronic invoicing and EIPP (electronic invoicing preferred payment) systems more openly, CFO’s will be able to bring their organizations into the 21st Century. It takes time, effort, money and human resources to deal with paper based records. AP managers are advising CFO’s to switch to a suitable accounts payable automation solution that can bring them significant savings.
It is important to understand that the objective of electronic invoicing software is not to switch out a workforce or department for technology, but to cut the cost of human resources. It combines human skill with advanced data capture and innovative workflow techniques, so that AP departments become more efficient.
Why CFOs Should Reject Paper Based AP Departments
If CFOs, are not yet seriously considering switching to a system based on e-invoicing, then they are likely to miss out on significant savings and opportunities to further streamline the business in future years. With the support of electronic invoicing tools, invoice delivery software and document management systems, AP departments can reduce the amount of time spent manually inputting data. Now AP can free up valuable time that AP teams can designate for more pressing jobs.
This is the most efficient way to invest more capital in profit generating ventures and less in administrative procedures. With the right kind of support in place and a transition away from paper based systems, CFOs can alleviate some of the pressures of managing an AP department.
Four Reasons Favoring AP Automation
‘Procure to Pay’ Process – AP automation increases productivity by receiving and redirecting invoices instantly, without the need for human intervention. This happens from a single location, so there is virtually no risk of double entry errors. If suppliers do not have to revisit invoices to correct errors, there are no delays to the ‘procure to pay’ funnel.
Early Payment Bonuses – Companies with accounts payable automation and electronic invoicing resources capture as much as 35% more capital from early pay discounts and bonuses (dynamic discounting). This is easy to do with e-invoicing. Once the supplier decides the date they want to be paid for their product or service, the discount amount is then automatically calculated.
Enhance Vendor Interactions – if customers are satisfied, they have no reason not to return to your company. The same rules apply to vendors and suppliers, but it is arguably even more important to keep them happy, because they are the foundation on which you run the business. For vendors, simple and efficient invoicing always tops the list of priorities – they have a lot of deliveries and orders to honor and delays to payment are bound to make this more difficult than it needs to be.
More Valuable Business Insights – AP data is able to help CFOs when it comes to charting financial results, as it offers an increased degree of transparency into each stage of the process. The information relating to deliveries and orders is all stored in a single location, which gives CFOs a much needed chance to look at the wider picture, rather than at pieces of an order as it moves through disparate systems.
With these accounts payable automation tools CFO’s & accounts payable departments can achieve the financial analysis that several years ago they would have dreamed about, but with today’s 21st Century technology (E-invoicing) can make it a reality in their own organizations.