Six Ways AP Automation Can Impact an Organization

AdobeStock 117973711 2 1

Managing an accounts payable department can prove to be quite demanding, but with the proper tools, it can be rewarding and profitable. Accounts payable is often looked at as a subordinate department—expected to cut costs while increasing performance, visibility, and supporting its company’s strategic goals. These goals often conflict, curtailing an AP department’s ability to meet them or even show progress. For an AP organization to flourish, implementing high-level automation is crucial. There are a few different ways that AP automation can impact an organization’s efficiency.

1. Invoice Processing Costs Improve

According to a recent Ardent Partners study, the average total cost per invoice for AP departments without best-in-class automation is $9.25. With enterprise-level AP automation, accounts payable can lower their total cost per invoice to as low as $1.

2. Improves Cash Flow

By using dynamic discounting, AP automation can impact an organization by offering suppliers faster payment in exchange for a discount. Automation solutions that provide dynamic discounting utilize advanced algorithms to determine the appropriate discount for the supplier and customer based on a selected date and terms previously decided on. Once the supplier decides the date that they want to be paid for their product or service, the solution automatically calculates the discount amount. With dynamic discounts, accounts payable reaps big savings, while improving cash flow for suppliers.

3. Increased Defense Against Fraud

High-level automation solutions will offer several lines of defense to protect your department from fraud. This includes measures such as duplicate invoice flagging, PO matching, and extensive vendor validation.

4. Increases Customer Satisfaction

Manual AP means there’s a different process for each invoice format. This decentralizes the processes, which means that paying the bills on time is determined by the slowest division. By automating the process, suppliers can actually see where their invoices are in a single centralized system. Visibility and simplified invoice submission makes for improved satisfaction among suppliers.

5. Improves Internal Quality

Identifying the right data to capture and resolve discrepancies ensures process integrity. Data capture software automatically populates company databases to make one viable system. Accounts payable automation provides data for improving metrics such as cost per invoice, receipt to payment approval time, and discounts captured versus discounts offered. By using these metrics, AP and other organization managers can improve not just the AP division, but other areas of the company as well.

6. Provides Resiliency

Automated accounts payable departments require fewer resources and overhead costs. Company managers can use manpower on higher-value work, and move limited funding to other areas of the company. The automated accounts payable process also allows AP and other managers to move more quickly to support suppliers and other customers who may be facing issues.

Making It Happen

When trying to get the funding approved for automation, it’s important for AP managers to build a solid case on how AP automation can impact an organization. They should gather every bit of data (internal and external) that shows their current processes; what’s working and what isn’t. Next, they should seek success stories for examples of what successful automation looks like. An enterprise solution will be able to integrate with any AP department seamlessly, meaning that accounts payable can reduce costs without negatively impacting customer and supplier satisfaction (often times, improving it).

Share On: