Modernizing AP now: why accounts payable automation matters today
- 05 Jun 2020
- Best Practice & Strategies
As the world endures the Covid-19 pandemic, the majority of companies have employees working remotely. Digital, cloud-based solutions helped keep critical business processes, such as accounts payable, running even when staff cannot be physically present in the office.
Consider the manual AP processing of the past versus the AP automation solutions that exist today. Instead of relying on paper invoices and locally stored files, everything is securely hosted and accessible in the cloud. Modernizing processes by adopting accounts payable automation streamlines accounts payable duties with conveniences such as online invoicing, and mobile invoice approvals.
Beyond world crises, there are other compelling reasons to modernize the AP department now and establish an automated workflow. Keeping up with the competition, accuracy, saving time and money, and other benefits last long beyond the pandemic and offer an ongoing ROI for the company. Businesses around the globe are adopting AP automation and no company wants to be left behind.
Why Should I Modernize AP?
Working remotely is one of the reasons for modernizing AP. Additionally, companies dealing with large volumes of supplier invoices, such as distribution, manufacturing, and retail, should modernize AP to:
- Get control and improve accuracy of financial processes and reporting
- Release time for value add activities in the AP team
- Secure timely and accurate payments to suppliers and keep supply chain intact
- Ensure business continuity in challenging times (such as the current pandemic)
Accuracy and Control Over Financials
Cloud AP automation supports remote workers and business managers who travel for work. Having an automated accounts payable workflow in place is especially beneficial during a pandemic or natural disaster that takes down traditional office facilities and operations. All financial updates are accessible in real-time, putting the latest facts and figures within instant reach of the C-suite and finance team. With modern AP automation you can tackle:
- Accurate and timely accrual reporting - accruals for manual AP departments are time-consuming or based on guestimates,
- Control over approval and cost of general expense invoices, as a manual process provides no visibility/audit over indirect spend
- Error in hand-keying invoices – industry analysis shows expected error rates of 0.5 - 4%, which means out of 100,000 invoices keyed in one year, from 500 to 4,000 invoices could contain errors
- AP automation reduces the risk for fraud - detect duplicate or fraudulent invoices to stop problems before they occur
The high cost of making mistakes in the financial industry, especially AP, can add up to lost savings, compromised vendor and client relationships, minimized brand reputation, and diminished profits. Accounts payable automation eliminates human error for the highest level of accuracy.
Value Versus Busy Work
Modernizing the AP process helps save time for everyone, not just AP professionals. When administrative tasks are automated, valuable resources are made available for activities that bring measurable value to the company. The past way of managing AP is a drain on approvers and buyers from mid-level to upper management and the C-suite. Manually pulling up POs for matching and email or paper communications for approval is inefficient and time-consuming, which could result in late or missed payments. Plus, a manual process makes it impossible to get accurate financial data in real-time during remote working periods, such as the current world crisis.
Plus, CFOs want to prove their AP team provides real value to the company through detailed analysis, superior vendor negotiation, and finding cost-saving opportunities for the company. By streamlining operations, AP automation also keeps the cost of maintaining the team low. And, with financial data readily available for the financial statements, the closing of books is done quickly and easily. The AP team can focus on money-saving initiatives, such as discounts for early payment and improving vendor relations to secure the best pricing, rather than tedious manual tasks that are now touchlessly performed by AP automation solutions.
Security, privacy, and fraud are top concerns for businesses. Any breaches can result in future lost profits, a tarnished reputation, and even liability that costs the company profits. Recent eye-opening news includes:
- MyPayroll HR defrauded almost $13 million out of two finance companies.
- An internal audit of a Simi Valley business revealed more than $300,000 was embezzled from a California business through its corporate credit card.
- A woman accused of submitting fraudulent invoices for a fake fencor embezzled $4.5 million from an Oregon company.
AP automation detects inaccuracies and inconsistencies to eliminate fraud and improve overall security. Clients and vendors depend on companies to have fraud protection in place to protect their privacy.
AP automation streamlines operations for the AP department, C-suite, and approvers by eliminating tedious manual processes and the inevitable paper chase. With everything in the cloud, financial data is at the fingertips of all who need it. Instead of waiting days or weeks for approvals, they happen in just seconds or minutes.
Also, accounts payable automation improves the quality of the working environment by eliminating mind-numbing manual tasks. AP professionals tackle greater challenges that improve the corporate brand image and save the business money. AP automation changes the typical day for the AP professional for the better while they focus on money-saving projects and vendor relationships to help the company reduce costs.
In light of the current pandemic and the need to work remotely, AP automation is a critical solution to keep everyone connected, updated, and working so businesses can move forward. Companies with automated AP workflows are ahead of the curve, ready to face the challenges and changes in the future.