Understanding AP Automation as a whole can be quite difficult as it is a fairly new process that can be very complex. Getting a grip of how it all works is one thing, but fully understanding the benefits behind it is another. In this blog post we break down the 5 major benefits of implementing automation into your AP department as well as some extra little side benefits.
- Reduce the cost of processing invoices
The main benefit people think about when switching to AP Automation is the cost savings and the ROI. These cost savings happen for 2 different reasons. The first is the amount of money saved on processing an invoice. It costs on average $11.76 USD to process an invoice manually. When the process is automated that cost can be reduced by 60-70%.
- Take advantage of more vendor discounts on time
The second money saving benefit is that it becomes much easier to take advantage of vendor discounts. On average, when manually processing invoices, less than 10% of vendor discounts are actually taken advantage of. Even 1%-2% discounts can add up significantly over the course of a year adding to your cost savings.
- Reduce the time it takes to process an invoice
Another advantage of automating your AP is that it makes your department more efficient. AP documents would have all of the necessary extracted using software, they could be coded automatically as well and then they would be routed to the appropriate person/people to be coded. After the documents are approved, they can automatically be imported into the accounting application used by the company. Doing all these steps automatically saves a lot of time that can be put to better use doing other tasks.
- Take advantage of retention tracking
Certain Electronic Content Management (ECM) systems offer retention features. This means that you set how long your retention period is for each type of document and then the system will alert you whenever a document has reached its retention and will give you the option to purge it. Having this features means that you don’t keep unnecessary documents and you don’t have to waste your time periodically going through your files to see what has met its retention.
- Protect yourself from losing files
When digitizing your paper files, you add another level of security to your office. Having digital files helps protect against natural disasters as well as fire and other hazards that could damage or destroy papers. You also help prevent against files and invoices getting lost. When papers start piling up or moving from person to person, they can very easily get lost. A good ECM will offer backup and recovery which means you will never lose your digital files no matter what.
When looking at AP automation as a whole, these are the 5 main benefits that will affect the department as a whole and even the company. These will help make the department more efficient while saving money and being better organized. There are some additional benefits such as the following:
Reduce human errors
- Certain AP processes can be very repetitive which might cause the person in charge to lose focus or “zone out” while completing the task. Even if they are fully attentive to what they are doing, there can still be simple mistakes made here and there. When Automating the process, you take advantage of artificial intelligence doing the work which means it will always work to the same quality standard. It will reduce errors and improve the quality of the work being done.
- Audit trails allow for 100 percent visibility of each invoice throughout the process allowing you to access real time liabilities for accurate budgeting and forecasting.
Make a difference for the environment
- When you automate your AP you essentially start eliminating the production of paper in that department. While some of your suppliers may still provide you paper invoices, once those invoices are scanned they do not need to be printed again. Everything is done electronically and everyone who needs to see the invoice can see it digitally. By no longer having to print they invoices every time a copy is needed, it helps saves a lot of paper which ends up saving trees!
According to the Gartner Group, a 5% reduction in operating costs equals a 30% increase in sales, in terms of effect of bottom line. Accounts Payable automation is a great way to reduce costs!
If you’d like to find out exactly what this means for your company, contact us today and one of our representatives will be more than happy to help put this into perspective for you!