Why Would I Automate Accounts Payable If My Current System Works Just Fine?
Here on the NextProcess blog, we spend quite a bit of time talking about how AP automation software can solve big problems in the accounts payable department. But maybe you don’t have huge problems in your AP department. Maybe your current system seems to be working fine. Sure there are some areas where you could be more efficient and a few issues slip through, but overall things are okay. What, if anything, makes AP automation worth it for a company like that?
Even if you’re getting most of your invoices processed on time, there’s a very good chance you’re losing money. According to APQC research, labor costs account for 62% of the money spent to process each invoice. The more manual intervention your processing system requires, the higher your cost per invoice will be.
The average processing cost per invoice is $12.44 for bottom-performing companies. Top performing companies only spend an average of $4.98 per invoice. Implementing an automated system in your AP department is a key step toward moving into the top-performing range.
A study by Aberdeen Group found that automation can cut invoice processing time in the AP department by an average of 17 days. Companies without automation took around 20.8 to process an invoice, while automated companies took 3.8 days.
Faster invoice processing helps improve cash flow by giving you a more up-to-date picture of where your company’s money is. You’ll also avoid late fees, have a chance to get early-payment discounts, and build better relationships with your vendors.
If your AP department is maintaining a paper-based record of transactions, they probably spend quite a bit of time filing new documents and searching through old files. Paper files are also vulnerable to damage or loss from fire, water, and other problems.
An automated AP system makes record-keeping simple, which in turn makes audits easier to face. The system automatically logs a record of every invoice processed and your AP system supplier backs up the records for you to keep them safe. These digital records are easy for you to search and accessible from anywhere you have an internet connection.
Even the best employees are prone to making errors. We’re human; mistakes happen. But in the AP department, those mistakes are costly. Manual data entry can easily lead to typing in the wrong number or placing a decimal point in the wrong place, which can throw off records by hundreds or thousands of dollars. Automated data gathering eliminates the risk of human error and means your employees don’t have to spend time double-checking each other’s work anymore.
If you’re still not sure about whether or not AP automation would be a good fit for your company, contact us. We’ll schedule a free demonstration so you can see how our AP software would fit in your department. No-strings-attached; just a chance for you to see whether or not automation can help your company improve the AP process.