7 Ways That Accounts Payable Automation Dramatically Improves Cash Flow

  • 7 Ways That Accounts Payable Automation Dramatically Improves Cash Flow

    7 Ways That Accounts Payable Automation Dramatically Improves Cash Flow

    No matter what the size or type of company, managing cash flow is crucial to success. Every business faces cash flow management challenges, and anything you can do to improve cash flow has the potential to benefit the entire business.

    Even though the level of cash flow isn’t the best measure of overall company performance, it does have a significant affect on your business. Incoming and outgoing cash represents the operating activities of an organization. The more you can improve that process, the better off your business will be.

    One of the ways to improve cash flow is to improve the accounts payable process. Automating accounts payable gives your accounting team better command over cash flow, which also gives them opportunities to affect cash flow in a positive way. Keep reading to learn about 7 key ways that AP automation can dramatically improve cash flow in your company.

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    1) Manage Payments and Balances

    Owing money is an unavoidable part of running a business. Even so, you don’t want to keep carrying a balance that keeps increasing month-to-month. If you want to improve cash-flow, you’ll need to take control of payments processing and make sure that you pay within terms and in full.

    Automation in the AP department helps streamline the entire payments process. You’ll be able to cut costs and time payments to your advantage (which we’ll look at in-depth in the next sections of this article). Automation also gives you increased insight and control into the payment process so you can track carried over balances, average payable period, and your accounts payable aging schedule.

    2) Cut Processing Fees and Costs

    In a manual accounts payable department, it’s often all your employees can do to get the payments out on time. Paper-based systems mean that AP processing takes too long for most companies to take advantage of early-payment discounts. They often get stuck paying late fees as well.

    Accounts payable automation takes care of these problems by dramatically speeding up invoice processing. You’ll never have to worry about late fees again. Plus, you’ll be saving money in labor costs, which is the main thing that drives up the cost-per-invoice in companies that don’t automate AP.

    3) Time Payments To Your Advantage

    Once you’ve taken control of the AP process so you’re always paying bills on time, you can start negotiating payment terms with your suppliers. Suppliers are often willing to negotiate early payment discounts, which can help contribute to positive cash flow in your organization.

    Even if a supplier isn’t open to early payment discounts, you’ll still be able to use AP automation to schedule payments so you control exactly when cash leaves your company. You might be able to negotiate for long payables terms, for example, and set up electronic payments so you can wait to pay until the morning that the bill is due.

    4) Evaluate And Serve Suppliers More Effectively

    When you’re evaluating your cash flow, you’ll want to take a close look at both customers and suppliers. Examine the terms you have with your long-standing customers and suppliers to make sure they’re not having a negative effect on your business. If they are, reach out to try and fix the issue.

    Automating the AP department can help with this because it gives you better oversight into your relationships with suppliers. The automated system lets you track supplier information easily. The system also comes with a vendor portal so you can give vendors and suppliers limited access to your system. You’ll improve your company’s relationships with suppliers when they can access their own invoices, check payment status, and upload any missing invoices with ease.

    5) Use Commercial Credit Cards Easily

    Some businesses find it very helpful to use commercial cards as part of their B2B payment system. Commercial cards aid short-term cash flow with cash-back rebates. They can also provide working capital extensions through their credit line.

    Paying with commercial credits cards can be a cumbersome process, though. You need to figure out which vendors accept your commercial card and then when it’s time to pay there’s a separate log-in credential. AP automation makes the whole process simple and easy, so you get all the advantages of paying with a commercial credit card without any hassle.

    6) Prevent Time-Consuming Errors

    When you don’t have good control over your accounts payable process it can turn into a huge money-waster. Disorganized, decentralized AP results in lengthy payment processing and costly errors like duplicate payments. And when an error does occur, you lose more time and money reconciling the problem.

    Accounts payable automation stops these problems. The system captures information from both digital and paper invoices with a high degree of accuracy. It then processes those invoices automatically and cross-checks information to make sure the same invoice doesn’t get paid twice.

    7) Increase Over-All Cash Flow Visibility

    Because the accounts payable department plays a key role in your company’s approach to cash flow management, increased visibility into the AP process also increases visibility into your cash flow. A well-managed, efficient AP department can utilize automation to provide key insights into the present state of cash flow in your business.

    A good automated accounts payable system keeps thorough records. As invoices go through the system, it tracks every change and event and stores the information in a database. You can access these records in real-time, and the easily-searchable database puts all the information needed to monitor cash flow and plan for future purchases right at your fingertips.


    Technology like accounts payable automation, cash flow spreadsheets, and payment management systems are your best friends when you want to improve cash flow. The more efficient each business process that’s involved with cash flow becomes, the easier it will be to manage cash.

    If you’re looking for quality business process technology, get in touch with us here at NextProcess. We offer a reliable software suite of programs, including AP automation, that work with your existing ERPs to create the perfect business processing solution for your company. Contact us today to schedule a demo and see first-hand how we can help your company improve cash flow.

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