The evolution of AP automation solutions and the benefits of automating now
- 20 May 2019
- AP Automation
Once considered a luxury for the tech-savvy, AP automation solutions are now a necessity for businesses to remain productive and profitable. The latest research reveals the accounting software market will expand rapidly at a rate of 8.5 percent per year, beginning in 2018. By 2026, the market’s global value is expected to reach $11.8 billion. A growing number of companies around the world are adopting these technologies to streamline operations, reduce the errors associated with manual entry, and improve cash flow. Find out the benefits of AP automation now and in the future.
A brief and interesting history of accounting and AP automation
The concept of accounting originated thousands of years ago in Mesopotamia and Egypt. In the 13th century, medieval Europe transitioned to a money economy necessitating more sophisticated bookkeeping strategies to keep up with payments and bank loans. Then Benedetto Contrugli invented the double-entry accounting systems in 1458, with debit and credit entries for transactions that revolutionized accounting. Soon Luca Bartolomes Paciolo, known as the father of accounting, invented a record keeping system using a journal, ledger, and memorandum. By the mid-1800s, the first professional organizations for accounting were established in Scotland, leading to the establishment of the American Institute of Certified Public Accountants in 1887.
At around this time, accountants and inventors continued to find new ways to improve accounting and AP processes, such as the invention of the adding machine in the 1880s. Over the past century, technology progressed at a rapid pace. Punch cards were used at the turn of the 20th century to handle accounting processes faster. By 1955, General Electric became the first company purchased a computer for accounting. In the 1960s, EDI standards were developed to streamline AP processes. Then in 1979, the first spreadsheet software was introduced to the market. In the late 1990s, Quickbooks made technology accessible to the mainstream. At the turn of the 21st century, advanced data capture, optical character recognition (OCR) and intelligent data capture (IDC) technology make AP automation a reality for a growing number of companies. Now cloud automation and artificial intelligence (AI) are the wave of the future for optimum efficiency and speed.
Modern AP automation is getting close attention from various areas, including the C-suite, AP professionals, finance and procurement organizations, and even the investment community. AP automation solutions include efficient electronic invoice capture as well as paper scan and data extraction features, invoice processing, validation, matching, and approvals, supplier portals and reporting as well as system and suppliers integration for payment. Routine tasks are handled automatically, creating a touchless AP environment. As a result, the AP team has more time for analytical projects, such as finding money-saving opportunities to improve cash flow and optimizing the process. Plus, greater efficiency and accuracy reduces errors and enables invoice processing in a fraction of the time it takes to do it manually. And cloud AP automation put essential financial updates at the fingertips of the C-suite in real-time.
Focus on facts over fear
Change can be fearsome for the C-suite and the AP team, who are accustomed to doing things the same way. As accounting automation becomes the norm among international companies, the inevitability of change is evident. Failure to operate as quickly and accurately as the competition can mean being left behind. AP automation solutions put businesses ahead of the curve and helps them keep up with, or surpass, the competition.
With robust automation solutions, AP professionals spend less time on manual and tedious tasks such as data entry and invoice matching. The added time gives them an opportunity to become strategic partners with the C-suite when it comes to finding money-saving ideas that can improve cash flow, such as discounts for early payments. Cloud AP automation offers the highest level of convenience, enabling real-time access and collaboration at any time, from anywhere. Updated data, the use of benchmarks, and visibility into the AP workflow provide insight into a company’s overall finances and operations.
The sky’s the limit - cloud AP automation
Now 58 percent of large companies use cloud accounting, making it the definitive wave of the future. AP software requires time-consuming updates to ensure ongoing efficiency. Failure to make the required updates means using an inefficient system. Some of the most significant conveniences of cloud AP automation solutions include faster payment approvals and more opportunities for collaboration as well as working remotely. Cloud AP automation provides secure storage of sensitive financial documents, making them more difficult to access than paper documents that could fall into the wrong hands. Corporate team members can use the cloud to find invoices and accurate vendor information, as well as gain insight through the visibility and data found in the daily AP workflow.
Catch up with the international competition
Companies around the globe have embraced back-office automation such as AP, but the pace has been slower in the United States. Although definite progress has been made over the past decade, businesses are discovering the need to update their AP systems to keep up with the worldwide changes, such as VAT laws in Europe and Latin America. Conversely, with the lack of regulation that exists in the US, as the tax systems are mostly sales and income based.
There are numerous benefits of automating transactions such as invoicing, invoice approval, and making and receiving electronic payments. Despite this fact, many smaller organizations remain unwilling or unable to adopt available AP automation solutions. The majority are still handling invoices manually, with just 14 percent using an automated solution. Nearly one-third of mid-market organizations have adopted these essential technologies, and more than half of large organizations are using AP automation. Progressive companies have already discovered efficient and automated finance operations are a must to support business growth.
The bright future of AP automation
AP automation is quickly becoming the standard as the accounting industry continues to depend on software and cloud automation. By 2026, it is estimated the accounting software market will have a global value of $11.8 billion. And despite lagging behind for a while, North America is the largest contributor to this growth based on revenue, as management recognized the need to integrate accounting software with mobile devices and move to the cloud. Last year, this growing market was valued at a substantial $5.7 billion.
With a growing interest in the potential of AI and RPA, it is important to note RPA relies heavily on the data provided by the company, whether through a separate data capture tool or manual entry, which leaves room for error. Additionally, connecting outside systems with RPA means layering coding, so the data is processed according to business logic. Cloud AP automation creates a touchless environment with fast, accurate processing to save organizations time, money, and effort while improving accuracy and ensuring payments are made on time, or early for money-saving discounts.
Some of the largest international organizations have been part of the evolution of accounting and AP practices yesterday, today, and look forward to a bright future. The growing role of AP automation proves advanced technology has become a necessity, rather than an option. With the adoption of AP automation solutions, organizations realize the myriad of benefits firsthand.