How Business Leaders Can Leverage AP Automation for Greater Financial Literacy
April is Financial Literacy Month, an annual initiative that emphasizes the importance of financial education.
While many believe that they have a good understanding of their finances, studies show that 43% of US adults lack basic financial knowledge.
When this is true of your workforce, these misunderstandings can lead to overspending, non-compliance, and poor data management in your business.
But companies that invest in AP automation avoid these risks with greater visibility into their financial processes. In this article, we’ll discuss the benefits of enterprise-level AP automation and how it can improve financial literacy in your organization.
Business Benefits of Financial Literacy
Improving financial literacy in your workforce can help you enforce process compliance, improve forecasting, reduce fraud risks, and increase professional development efforts.
AP automation is a powerful tool in driving this effort. Let’s take a closer look.
Enforce Process Compliance
Financially literate employees play a crucial role in maintaining industry-specific compliance for businesses.
When employees understand the repercussions of non-compliance, such as financial risks, penalties, and damage to reputation, it motivates them to be more cautious in their day-to-day tasks and to ensure they aren’t breaching any compliance measures.
How AP Automation Helps
AP automation ensures process compliance by enforcing predefined policies and procedures.
By implementing custom automated workflows and approval processes, you can set standard practices in place that meet your business’ specific needs. This ensures invoices and payments are processed according to established policies, minimizing non-compliance risks.
AP software makes it easier to view audit trails and offers more visibility into financial transactions, as well. This allows you to track and monitor compliance and helps your team identify deviations from procedural standards more easily.
Furthermore, a comprehensive AP automation solution will effectively address data security standards, such as HIPAA, PCI, and SOC 1, on your behalf, eliminating many security maintenance burdens.
With these guidelines in place, your entire AP department will gain a better understanding and ability to operate within the compliance measures specific to your business.
Improve Forecasting
Accurate forecasting is a critical component of making informed business decisions, but it’s only possible with the help of financially literate employees.
Unreliable insights into cash flows and payment cycles can lead to overspending or over hiring.
That’s why it’s important for your workforce to comprehend how their day-to-day responsibilities, like timely invoice processing, impact your ability to obtain accurate insights.
This understanding helps them place a priority on improved cash flow visibility and allows them to take actions that align with your organization’s financial goals.
How AP Automation Helps
An ideal AP automation solution offers real-time visibility into financial data, including invoices, payments, and cash flows.
With ERP integrations and automatic data syncing, AP solutions eliminate the need for redundant data entry and establish a single source of truth for financial insights.
This ensures that data is accurate, giving finance teams reliable and trustworthy information for optimal decision-making.
Automated invoice processing, payment approvals, and vendor management features in AP automation platforms give finance teams more time in their day to analyze data and provide insights for forecasting. With features like digital dashboards and customizable reporting, collecting and presenting this data is effortless.
Reduce Fraud Risks
A survey from PwC revealed that over half of enterprise businesses generating over $10 billion in revenue experienced fraud attacks in 2022, a concerning 20% of whom suffered losses as great as $50 million.
With shrinking budgets and increasing pressure to optimize profits, businesses must prioritize fraud prevention.
Enhancing financial literacy through fraud awareness is an effective strategy to safeguard your organization’s financial integrity. Educating employees on signs of fraud, like unauthorized transactions, falsified records, and unusual financial patterns, is an essential component of this effort, as it helps promote early detection and resolution of issues.
How AP Automation Helps
AP automation enhances fraud prevention efforts by helping you more easily identify irregularities in financial transactions.
Automated invoice matching helps teams detect discrepancies, like duplicate invoices or instances of overbilling, by intelligently flagging these activities using machine learning technology.
AP software also helps you enforce segregation of duties, access controls, and approval workflows. By using role-based permissions and customizable business rules, you can ensure that all payments have multiple levels of approval before they’re paid.
These features promote employee vigilance and empower them to detect and report potential fraud before losses occur.
Increase Professional Development Efforts
Apart from financial analysis and profit optimization, a CFO must also develop a skilled workforce that can drive financial performance and contribute to the organization’s success.
With a foundation of financial literacy, AP teams can align their actions with the organization’s financial goals and work toward future leadership positions.
This supports talent management and leadership development, ensuring teams have the skills necessary to achieve the organization’s objectives.
How AP Automation Helps
AP automation solutions remove the need for manual effort in AP processes, giving teams time to focus on more strategic and valuable activities.
The hours saved can be used for training and professional development programs to strengthen employees’ financial education and critical thinking skills, especially in areas like data analysis.
Top-notch AP automation solutions offer valuable insights on financial metrics, including vendor performance and payment terms. This leads to more informed decisions, better vendor relationship management, and improved term negotiations that positively impact your bottom line.
Final Thoughts
As Financial Literacy Month draws to an end, it’s a reminder that enhancing fiscal education should be an ongoing priority in your organization.
Equipping your team with financial knowledge and supportive tools like AP automation builds a more resilient organization and empowers your business to make the most informed decisions, even in challenging times.