It’s important to understand some of the latest trends and best practices when it comes to using electronic payments. There are still a large number of businesses paying at least half of their invoices using paper checks. By understanding the compelling benefits of an AP automation solution, you can make some significant changes to the way you operate your business, including the use of AP automation.
The Methods to Pay
You may be surprised to learn that there are several ways in which you can pay invoices. Particularly when you work with companies that provide e-invoicing, you can turn around and utilize ACH, wire transfers or a virtual card.
ACH, for example, is a low-value payment solution that is secure and reliable as a result of several layers of fraud protection.
Wire transfers will also allow you to take care of electronic invoicing with the click of a button.
Several different types of virtual cards, also known as purchasing cards, will allow your employees to take care of invoices that come in. You can also track the spending more effectively in order to identify where money is being spent and who is providing the authorization.
Automation in AP
When you look at AP automation, you can implement a procurement-to-pay process. You have the ability to reduce air rates by approximately 44% and reduce the time responding to supplier inquiries by 30%. You will also reduce invoice processing costs by as much as 30% to 60% depending on the use of dynamic discounting.
Consider the standard process when an invoice comes in. If it is a paper invoice, it sits on someone’s desk and is then forwarded to another desk where it may sit for several more days. If it is for a particular product or over a certain dollar amount, it needs to be approved by a department head or CEO. At that point, the approved invoice is then given to Accounts Payable where a check is cut and mailed. The entire process can take several weeks before the supplier receives payment.
By embracing the latest trends using electronic payments, you can improve your AP workflow considerably. Accounts Payable software will allow you to receive an electronic invoice. You can then submit an invoice to a particular department head for electronic approval. Once approved, the money is released directly to the supplier. This means that the entire process can take hours in order to approve.
When you have greater control over the invoicing process and how quickly invoices are paid, you also have more room to negotiate with suppliers. This is where dynamic discounting comes into play. You may be able to receive discounts by paying faster than you were able to do prior to implementing new technology.
As a buyer, you can reduce the likelihood of fraud with a higher level of protection and security in place. You can improve your supply chain and the relationships that correspond. Additionally, you may find that it increases your gross profit.
It’s critical to explore the best possible solution for your business. Regardless of what size business you are, you have the ability to pay electronically. More and more businesses are making the switch because it is easy and provides you with a greater level of control. Your accounts payable department will be able to work more effectively when they have better technology at their fingertips.