Automating accounts payable can ensure all owed debts are paid on time to prevent defaults. Cost-saving is one of the top benefits of AP automation, alongside time-saving, improved accuracy, enhanced insights, and easy auditing. From low-cost invoicing to data preservation and early-payment discounts, here’s an overview of five ways AP automation saves you money.
1. Low-Cost Invoice Processing
The cost of processing invoices manually is significantly more expensive than automated operations. Cost savings tied to invoice processing are usually the biggest because accounts payable are primarily about invoices. Automating the processes reduces labor costs and hard costs like office supplies, interoffice mail, and postage. It also takes less time to process using automated systems, and you’re more likely to identify and eliminate mistakes.
The American Productivity & Quality Center published research indicating that top-performing businesses spend less on invoice processing. According to the report, the top companies use fully automated processes, while the low-performing firms still rely on traditional invoices. Automating the process leverages sophisticated software and auditors. The more invoices you process, the more money you’ll save if the process is automated.
2. Leverage Early Payments Discounts
Many vendors and suppliers offer early payment discounts, but few businesses capture the opportunity. Using traditional AP processing is slow and inefficient in the modern world. Snail checks and invoices take several days to reach the recipient, making it nearly impossible to qualify for early payment discounts. Automating invoice processing is one way to guarantee instant payments. Most vendors accept secure online payments and wire transfers.
Automation also reduces the chances of errors, ensuring all payments are double-checked and sent to the correct accounts. The invoice data is run against ERP data to eliminate duplicate payments and protect the business from errors. You can guarantee swift and accurate invoice and payment processing and track discounts across different vendors. Early repayments also prevent defaulting and late fees/interests.
3. Reduced Labor Costs
CFOs and AP teams must pay close attention to labor costs when calculating automation cost savings. Labor is one of the most significant expenses, depending on how long it takes employees to process invoices. You can multiply the hourly rate by the hours spent on monthly invoice processing and add up the costs. Automation reduces the processing time drastically, resulting in lower labor costs. The tools also detect fraud, double entries, and other errors automatically.
AP automation takes out much of the manual labor in processing accounts payable. The business can use fewer employees and save more time handling other tasks. Automation brings efficiency, allowing your personnel to be more productive and operate accurately. You’ll also eliminate additional labor costs, including the cost of sending traditional snail mail, supply procurement, storage maintenance, and more.
4. Eliminate Fraudulent Invoices
Fraud protection is another cost-saving benefit of automating your AP. Payment fraud is rampant, and many companies that use traditional systems are big targets. Manual processing involves one person in charge of approving payments. Automation guarantees double-checking and elaborate fraud control featuring multiple employees. Using automation software makes it easier to catch fraudulent invoices before processing payments.
You can integrate AP software with other systems to create a robust process management system that catches missing and incorrect data. Automated systems also use benchmarks and records to identify and report peculiar entries. Companies can build approval workflows and audit records in real-time to ensure only legitimate invoices are processed and paid. Automation also improves data transparency, accuracy, and tracking.
5. Low-Cost Data Preservation
Preserving payments and invoice data is crucial for audits and predictions, especially in the modern world of intelligence and analytics. The IRS also expects you to maintain records for up to seven years. Using traditional methods to save payment data can be costly because of all the paperwork involved. Automation tools leverage cloud and digital storage solutions that can save unlimited volumes of data for several years.
Digitally stored data is also easier to retrieve, audit, analyze and integrate into new systems. Modern technologies allow for quick scanning, recording, and updating. Cloud storage is cheaper and more reliable, unlike paper records that may fade, get torn, and mixed up. Automated systems offer effective organization and sorting, allowing CFOs to manage well-maintained databases and archives.
Reliable AP Automation Software
Automating accounts payable comes with many advantages and saves you more money than traditional manual systems. You’ll need the best software for your business operations, preferably one that’s scalable and customizable. Not all automation platforms and software are effective or ideal. CFOs should seek top products that are easy to integrate with other business software, such as ERPs, PO, and RFQ collaborations.
The best AP automation tools are part of other systems in a digital ecosystem customized for the company and its suppliers/vendors. Choosing reputable solutions like SourceDay can guarantee the best results and more cost-saving opportunities. The goal is to streamline the supply chain, eliminate errors and delays and maximize return on company resources. Using the best automation software will guarantee opportunities to increase efficiency and save money.