May 3, 2023
In the process of keeping track of what might be hundreds or thousands of invoices every month, there will always be errors and a certain amount of known loss. In fact, in 2019, an estimated 81% of businesses were targets of payment fraud, which might be because over 55% of these businesses were still manually handling their company’s financial data. If you are one of the 40% of small or medium-sized enterprises that are thinking about adopting AP automation software this year, reach out to Milner’s expert team of IT specialists to learn how to switch to an automated accounts payable system.
Accounts payable automation is technology used to streamline and automate accounts payable processes by removing manual tasks. This enables businesses to process supplier invoices without any human intervention and provides better visibility and control over important financial data. Businesses can save significant amounts of money by automating accounts payable, in addition to the anticipated savings from eliminating manual tasks. By automating accounts payable, businesses can optimize vendor portfolios, avoid duplicate and erroneous payments, and benefit from early payment discounts.
Traditionally, AP workflow has been handled by individuals being involved in each step of the process of receiving invoices and making payments. Manual accounts payable uses the accounting system as the hub of all AP processing, when in reality, much of the work of AP is taking place on enterprise resource planning (ERP) software to manage day-to-day business activities. This involves employees manually inputting all invoice data into your accounting system which is a laborious process that creates great opportunity for error and translates to both additional time and money.
In short, AP Automation solutions bring value to your organization by integrating accounting with your company’s ERP, databases and other major financial systems, ensuring accuracy and security of your data. You no longer have to go to several different applications or re-enter data into multiple systems. Instead, all your financial data is easily organized and searchable all in the same secure location.
It is not just the final cost that determines the true price of an invoice. Vendors incur hard costs like supplies, and you incur indirect costs like employee time to complete all of the manual tasks, which often accounts for more than half of the total invoice processing costs. In fact, processing an invoice manually is said to cost somewhere around $15 per invoice. With an automated system, that cost is reduced to $5 or less per invoice. Labor costs can also be decreased through automation by reducing 83% of data entry while also speeding up processes like payments and invoice matching. Automating also frees you from invoice irregularities and fraudulent payments caused by human error that can harm your balance sheet, costing you time and money.
Automation reduces the time required to process an invoice. With a traditional manual system, it can take as much as two weeks to fully process an invoice due to the need to confirm details and get all the necessary approvals. With automated AP systems, that approval workflow and invoice processing time can be cut by over half. Additionally, with automation, you can arrange the routing of payables based on prescribed business processes, automatically and instantly. When your organization implements an AP automation system, your employees will never have to spend another second searching for invoices or trying to figure out where they stand in the approval process. As soon as you implement AP automation software, you will never again experience "misplaced" invoices as you free your business from manual data entry.
Furthermore, your business will save time by allowing as many people as possible to collaborate in real-time on any payable. This way, anyone who needs to can easily access any invoice to confirm or dispute charges, clarify any inconsistencies or get clarification. No waiting on a response to an email or further risk of frustration or unhappiness due to misunderstandings.
One of the most salient AP workflow automation benefits is that with transparency and visibility into the approvals and payments workflow there comes greater control over AP risks and fraud. You no longer have to rely on your employees to look out for false billing, duplicate payments, or fraudulent transactions as the automation software does this for you. AP workflow software will flag duplicate invoices, extraneous charges, or any suspicious activity, including phishing scams, duplicate payments and unapproved vendors, giving you both control over your business’ finances and your peace of mind.
This is never more clear than with fraud detection. The ease of automating your AP workflow process versus using a manual process is never more clear than through the implementation of electronic invoicing systems which allow you to see electronic “paper” trail from invoice receipt to payment.
The benefits outlined above emphasize the role that your AP automation software can play in optimizing and streamlining your invoicing and payment processing functions. Milner’s IT experts can help you discover how many hours you could be saving using an AP automation solution. Contact us for more information about minimizing the complexity and insecurity of your accounts payable department today.