Automating Your Accounts Payable: Weighing The Pros And Cons
Automation is a popular problem-solving solution that many companies choose to manage their back office functions. But is it the right solution for your company?
You can really leverage the power of automation when working with the right provider. But many companies are still uncomfortable trusting some of their most important work to a software system So if you are debating about whether or not to automate your AP department, consider these pros and cons first.
We can write whole articles about the benefits of automating your accounts payable process. Here, we’ll just sum-up just a few of the good things it can do for you. Ideally, AP automation will help you:
Automating accounts payable is the best thing you can do to cut cost-per-invoice in the AP department. Research by APQC shows that companies with little to no automation are spending an average of $12.44 per invoice. The companies they describe as “top performers” have far less manual interaction with invoices and spend an average of $4.98.
Automation speeds up AP processing. That alone would make it more efficient. But AP automation also prioritizes documents based on payment due dates to eliminate late fees. And it will make sure documents get to the right people for approvals and send approval reminders to help avoid delays.
Human error is a risk anytime you’re copying information into a system by hand. It just takes one little mistake to introduce errors that will cause problems with making accurate payments and keeping records that will stand-up to audits. Automation takes care of this problem by automatically capturing information from and about incoming invoices and indexing all that information into the system.
Tighten Document Controls:
Automating accounts payable almost always includes centralizing the receipt of invoices and other financial documents. In a manual system, papers often get lost in interoffice mail or go unnoticed buried in stacks of other paperwork. But automation keeps track of all your files in a digital format so they’re easy to track and search. Plus you can set up custom controls to enforce company policy.
Improve Fraud Controls:
Because automation gives you stronger internal controls and real-time insight into your AP process, you can use it to combat fraud. It gives you the tools you need to see what’s going on in your company, enabling the constant vigilance that’s required to catch fraudsters. Plus, the records an automated system creates make audits easier.
Utilize Better Resources:
One of the best things about cloud-based automation is that it can scale to your needs. It has the flexibility to absorb seasonal increases and year-end crunches. And it can grow with your business. You’ll also get access to the latest in technology as your supplier upgrades and offers you personalized improvement opportunities.
Document Your Procedure:
Most organizations have a goal – or maybe a dream – of being able to draft documentation so thorough and complete that anyone would be able to pick up a manual and understand the role they’re being asked to absorb for that time. Moving your processes into a different space will require thorough training and review of every procedure. Although this is a daunting task, it’s also invaluable to the continuing success of your accounts payable and could serve as a model for other departments in the company in need of better information.
Most of the down-sides to accounts payable automation depend on which supplier you choose. With a supplier that’s hard to work with, you’ll be dealing with all these issues and possibly more. But the right supplier can minimize or eliminate these problems.
Implementation and Integration Issues:
You might be surprised to learn that a 33% implementation rate is pretty standard in the IT/Software industry. The majority of implementations fail or at the very least get scaled back. And on top of that, many systems have problems integrating with your ERP. That’s why it’s so important to ask questions before you choose an AP software provider.
Transitioning To New System:
There’s always a certain amount of downtime when transitioning to a new system. Cloud-based AP automation is one of the quickest and easiest systems to implement, but it will still take some time. What could take even more time is getting employees used to the new system. Try to look for a system that’s easy to use and which comes from a company with good customer service.
Data Security Risks:
Most AP automation software stores your information digitally. This means the automation supplier stores your data on their servers and you access it via the internet. When you use this kind of AP automation, you’re trusting the supplier to keep your data secure. There is, however, a chance someone could hack the automation company and compromise those records. You face the same risk storing information yourself, though, so this won’t be much of an issue if you chose a reliable company.
Lack of Control and Customization:
Automating your system does mean giving up a certain amount of control. You’ll be working with someone else’s software and will have to adapt your AP process to their system. Depending on the customization offered by your automation company, that can be pretty limiting. Some AP software systems are very flexible, though, so you can customize how you control the process. Make sure you shop around to get the AP automation that fits your needs.
The decision to outsource accounts payable may not be right for every company. It’s extremely important to look at your AP department holistically and get a firm grasp on what your improvement goals are. And when you do that, there’s a good chance you’ll find that an accounts payable automation software package might be the best idea for your business.
Choosing NextProcess for your automation needs helps you maximize the benefits and minimize the risks of accounts payable automation. We have a near-perfect implementation rate and our software is compatible with most ERP systems. And even after your AP system is up and running, we’ll spend several months working with you to make sure it’s customized just the way you want before we consider the implementation complete. Contact us today to