How Effective Is AP Automation?

• Standard
• AP Automation, Business Expenses

Automation is a hot topic in Accounts Payable (AP) today, but is it really as good as it sounds? It turns out that top researchers and companies who’ve already implemented Business Process Automation (BPA) are finding that accounts payable automation saves a significant amount of time and money.

Manual accounting systems, spreadsheets, and outdated technology can bog down your AP processing with slow processing and expensive errors. In contrast, BPA automation streamlines processing. Automating the AP department is a major move your company can make to speed up financial close, cut costs per invoice, increase productivity, and reduce AP errors.

Speed Financial Close

Several years of surveys by Ventana Research show that companies that rely on automation in their AP departments close their quarterly books more quickly than companies with little or no automation. In 2019, they reported that 85% of organizations that are nearly or fully automated complete a fast, clean close in 6 days or fewer. Only 43% of companies with partial automation and less than 33% of companies with no automation are able to close that quickly. The percentage of companies closing in less than a week went up significantly between the 2014 and 2019 surveys, largely thanks to increasing levels of automation.

Completing the monthly and quarterly close faster makes a significant difference. Timing is critical in financial and accounting departments. The faster you can close the books, the faster you’ll get numbers to executives and managers. This makes it possible for the company to react more quickly to opportunities and deal with issues before they become larger problems.

Cut Cost Per Invoice

Each invoice your organization processes costs a certain amount of money. Figures from the Institute of Management & Administration (IOMA) show that the average cost to process an invoice and accompanying purchase order is $11.62 with low levels of automation. Implementing high levels of automation in the department cuts that number by 40% (down to a $6.99 average per invoice).

With NextProcess software, electronic invoice intake happens rapidly via XML, EDI, email, or direct upload from vendors. Any paper invoices can be scanned and processed quickly. The software is designed to handle multiple types of invoices, including PO, non-PO, statements, ERS, check requests, recurring, and more. Approval rules in the system are flexible to fit your business’s exact needs, and the system will automatically alert the accounts payable team to deal with any exceptions as they arise.

Increase Efficiency

Higher levels of AP automation mean higher productivity. When companies implement high levels of automation, the number of invoices processed per AP staff member per month can double or even triple. And since there are no individual user licenses with NextProcess, you never have to compromise about who on your team has access to the software. Everyone can take advantage of the increased productivity afforded by AP automation.

BPA software takes over routine, repetitive tasks such as data entry, matching invoices and POs, and sending approval reminders. This speeds up invoice processing and also takes some of the workload off employees. Employees in your finance team now have time to spend on more valuable–and typically more interesting–tasks such as data analysis and interdepartmental collaboration. As you implement AP automation, make sure you also provide training to equip employees for their changing roles.

Reduce Errors

A recent literature review published in Frontiers of Computer Science examined 35 years’ worth of studies on spreadsheet errors. This review found “that about 94% of the spreadsheets in use contained faults” (Poon et al., 2024, p. 1). And spreadsheet errors are just one of the ways that accounting mistakes can impact the AP department.

Human error, typically by accident, accounts for many of these errors. By replacing manual processes with automation, you can dramatically decrease the error rate in an AP department. With invoices, payments, and expense reports processed automatically according to pre-programmed rules, the software catches many errors before they happen. It also virtually eliminates data entry errors with reliable data capturing technology.

Beyond Effective AP Automation

Accounts payable automation is an effective way to speed up monthly and quarterly close, reduce processing costs per invoice, improve departmental efficiency, and reduce errors in financial processing. It’s also pretty easy to implement, especially if you opt for a cloud-based Software-as-a-Service (SaaS) solution where the software provider handles implementation, integrations, hosting, security, and software updates for you.

BPA automation isn’t limited to the accounts payable department. You can streamline and optimize every financial process from budgeting to procurement to payment with an end-to-end software solution. NextProcess provides BPA software modules to power and simplify your capital project management, procurement & purchase orders, accounts payable, travel & expense, and payment disbursements. Our software system is flexible and highly customizable, ensuring that it will be able to meet your company’s needs and preferences.

Ready to see positive change in your company’s financial processing systems? Contact NextProcess today to learn more about how our automation software can help you. We can answer any questions you have and set up a free demo so you can see for yourself how the software would work in your company.