The Basic Framework
AP automation can improve cash flow, increase customer satisfaction and company profitability. One of the first and most labor-intensive aspects of accounts payable, rests in the 60-70% percent of invoices that are received in the form of paper. This is in spite of the many advances in technology, digital forms of invoices come in a wide variety of forms such as email, fax, and EDI (Electronic Data Interchange).
Even when the invoices are read, whether manually or digitally, there is no standard format the receiving company can rely on that applies to every company. This lack of AP format standardization usually results in a backwards-thinking approach that costs the company money, particularly in the form of additional salaries and overhead. Accounts Payable Automation is an obvious solution to this problem. However, choosing the right AP Automation solution that management agrees upon is critical for an AP department’s future development.
Capitalizing on the AP Process through AP Automation
AP automation should be approached from the perspective of being an investment rather than another added expense. An electronic invoicing solution that is the right fit for a business will effectively address the problems of the basic framework, freeing up resources that can be used across the company. This is one of the key factors that should be a primary consideration when making the final decision.
One of the best ways to achieve cost-effectiveness in AP automation is through the establishment of a uniform method of handling the original AP documents. E-invoicing, or electronic invoicing, is one of the most effective ways to significantly reduce manually processed documents which will result in reducing overhead and offers a consistent result. Furthermore, accounts payable automation brings with it an easily definable invoice format that can be used throughout the company to identify errors and re-route for resolution.
An EIPP (Electronic Invoice Presentment and Payment) system actually works to reduce overall costs and ubiquitously adds to the company’s net profit. The reason is that the AP process affects virtually every department, and the results of the streamlined automated processes will be positively seen throughout an organization.
The creation of an automated process immediately restricts access and creates an electronic audit trail for every task within the process. This strengthening of internal controls is unquestionably beneficial to the bottom line and also has the added benefit of increasing the integrity of the company from top to bottom.
The Net Result
Automating the AP process has long term, positive effects on cash flow, profitability, customer satisfaction, and company integrity. The evident increase in efficiency and the best use of available company resources opens the door for expansion and growth. One of the hidden realities of AP is that it is essential for the company to function, as it enables inventory purchases, pays for service providers, and is a large determiner of available cash. An accounts payable automation solution proves itself to be a tool that will enhance a company’s overall health and prosperity.