The benefits of accounts payable (AP) automation are sweeping, including enhanced cash flow, early pay discounts, and analysis and reporting. While AP staff are familiar with OCR and invoice scanning tools, it’s ultimately payment automation that completes the procure to pay cycle.
8 accounts payable automation benefits:
- Customer Service
Vendor enrollment services help companies move at a faster speed in the AP business process while managing both vendor and customer needs.
- Cash Capability
Epayment solutions enhance cash flow by freeing up resources to allow investment in high(er)-priority areas instead of wasting money on late payments, mailing costs, and adding temporary headcount. Reduce costs in AP related to invoice processing and vendor payments with an automated solution.
- Automated Early Pay Discount
This brings us to the topic of early pay discounts. Early payment discounts free up cash through a predetermined agreement with a supplier who is willing to accept an organization's invoice payment at a discounted rate for payment funds delivered before the due date.
- Automation of Deductions
The less manual processes you have, the better. This includes searching for deductions and exceptions. With an automated system, AR staff is handed exactly what they need.
- Enhanced Collection Activity
Collection efforts are always a pain. Process automation helps optimize these efforts by saving time spent tracking down payments via phone.
- Lockbox Integration
Ditch paper processing once and for all with a secure, electronic lockbox service that provides payment visibility and consolidated remittance data. The lockbox gives customers a single place to view payment data and makes it easily accessible to accounts receivable.
- Single Receivables Processing Hub
The various data capturing points in an AP back office can be overwhelming. A single receivables processing hub alleviates this problem by aggregating payment types and capture points into one workflow.
- Analysis and Reporting Functionality
This feature may be the best of all. Providing trend analysis and data reporting is an essential tool in the AP department staff’s arsenal for projecting cash flow. The ability to export data and quickly acquire payment information is a coveted tool useful for financial reporting purposes and even audit trails.
Obstacles to automation
Freeing up working capital is an important priority to most business owners, but accounts payable is often not the first place they look. This could be due to lack of awareness or lack of executive buy-in. The fact that accounts payable automation is still relatively new technology makes the development of an airtight business case that much more important.
The number of vendors a company has often creates a challenge for AP staff to keep current in the ever-changing landscape of vendor information. What’s more, optimizing vendor payment type proves an equally time-consuming task as ACH, credit cards, paper checks, and wire transfers are all captured at different points along the payables process.
Changing solutions landscape
Thanks to the new era of electronic payment (ePayment) solutions, automating the accounts payable workflow via cloud-based software is not out of reach. Many of these hosted solutions eliminate the need to protect sensitive vendor data in-house, or invest months into a new technology initiative that is expensive or incompatible with existing ERPs.
The benefits of accounts payable automation extend far beyond this list, but it provides a window into the opportunities that lie in taking a proactive approach to automation initiatives that cut costs in AP processing.