Recent rising inflation impacts global communities, businesses, and individuals. Increased costs reduce spending power. From cutting coupons for groceries to adopting AP best practices to reduce costs, lowering expenses is the way to regain some sense of financial security.
While certain expenses are uncontrollable, intelligent operations are an intelligent way to reduce your organization’s payout. As a result, focusing on areas within the organization’s control can cut operating expenses and boost the bottom line.
For example, adopting automation reduces AP costs and helps organizations realize more significant savings, such as discounts for early payments to suppliers. Discover five ways to lower AP costs as inflation continues to rise.
Eliminate Costly Manual Processes
Manual AP processes are time-consuming, tedious, and subject to inevitable human mistakes. However, in a recent study, The Institute of Finance and Management (IOFM) calculated automation reduced processing costs per invoice from $6.30 to $1.45. Plus, AP teams can process about twice the number of invoices in the same amount of time. An added benefit of automation is it supports remote work to avoid costly business interruptions.
Getting rid of manual labor and partial automation saves time and money, proving the ROI for AP automation. In addition, automation eliminates late payments and fees when invoices sit on a desk awaiting approval. The AP team emerges from the back office to provide strategic financial insights and negotiate money-saving discounts for early payment.
According to Jess Scheer, executive editor at IOFM, only half of the North American companies adopted automation before the pandemic. Now 77 percent of companies have adopted some type of automation, realizing finance and AP are more strategic today than ever before. However, failing to adopt automation means being left behind the competition.
Completely Automate the Invoice-to-Pay Process
Implementing partial automation means leaving room for costly errors. Manual processes prove to be expensive and subject to errors. In addition, total automation streamlines operations for the highest level of efficiency and transparency. For example, completing automating the invoice-to-pay process eliminates late payments and helps the AP team detect potential fraud.
Consider the risks of partial automation, such as late payments that negatively impact supplier relationships and productivity. As a result, the business brand suffers. Automation supports meaningful negotiations with suppliers based on payment history and transparent terms. Additionally, contracts and real-time data are at the team’s fingertips to make crucial decisions when they matter most.
Companies investing in automation quickly realize a measurable ROI because it costs less to process invoices. In addition, supplier relationships improve because payments are timely and the terms are clear to everyone. Plus, faster onboarding supports a more diverse supplier base to avoid business interruptions - regardless of weather or world conditions.
Negotiate Money-Saving Discounts
Customized workflows and increased efficiency mean the AP team has more time for strategic financial management. For example, consider the time tasks such as invoice matching and annual reporting were completed manually. With automation, monthly and yearly reports are quickly and easily generated to make crucial financial decisions.
Access to real-time data streamlines processes to simplify payments and supplier onboarding. As a result, AP professionals eliminate late payments and gain opportunities to negotiate money-saving discounts with suppliers for early payments. In addition, supplier relationships improve, which supports timely production.
Plus, automated workflows ensure transparency every step of the way to detect fraud and inconsistencies. Establishing fraud detection and elimination policies is another way to cut costs and improve brand reputation by using automation intelligently.
Invest in Automation and Eliminate Manual Tasks
Consider the cost of having the AP team work endless hours of overtime to generate annual reports versus real-time access to the latest financial data through automation. Eliminating manual tasks minimizes mistakes and helps lower labor costs. Plus, the AP team adopts an integral position to work with management to secure money-saving discounts and establish strong vendor relationships.
In addition, cloud automation offers visibility from any location and device to support remote workers. As a result, companies pay less for office space and utilities. Plus, millennial workers and top talent prefer flexible careers with the opportunity to work remotely part-time - or all the time. As a result, cloud automation helps companies attract the best team members while reducing costs.
In addition, a third of AP department personnel feel they are not afforded the respect they deserve. Automation boosts employees’ relevance by giving them more valuable work to do. One of the most significant future benefits of AP automation is the increased career satisfaction in a role that makes a notable difference to the organization.
Make Payments Paperless
The paper chase has always been a significant pain point in the accounts payable department. Paper checks, financial reports, and invoices required large - and often expensive - storage areas to maintain. Plus, processing paper means endless hours of manual labor for invoice matching, verifications, and reporting.
Automation eliminated paper, and the hassles of spreadsheets mailed around electronically and uploaded to banks for transfers in other countries. By getting rid of paper, the business also stopped paying extra for items such as paper, printers, and ink. As a result, automation improves accuracy and cuts the costs associated with paper.
Use these five essential strategies to cut AP costs during rising inflation. While we may not be able to control inflation, organizations can control their spending and expenses to boost the bottom line. In addition, implementing AP automation today means realizing a measurable ROI tomorrow.
Your business is probably being defrauded right now. Here’s how to spot it and stop it.