“They don’t make them quite like they used to.” While this rose-colored take on nostalgia may be true of certain products or services, accounts payable invoices certainly aren’t one of them. The AP process has historically been labor-intensive, time-sensitive and rife with opportunities to make manual entry errors.
Automation has created a smoother and smarter workflow, and, in turn, driven widespread adoption. Data suggests that nearly 65 percent of companies who have not yet adopted AP automation are planning to do so within two years.
Here are some of the ways digital has transformed AP for the better, transforming the thorny and labyrinthine into smooth and hassle-free.
1. No More Misplaced Accounts Payable Invoices
In the world of accounts payable, efficiency is the ultimate aim. Under manual AP – which, in spite of automation on the upswing, remains in place – orderliness and timeliness are rarities due, in part, to the sheer volume of invoices and what might best be described as “location frustration.” Indeed, in a 2016 study conducted by Aberdeen, more than a quarter of respondents – 26 percent – cited misplacing paper-based invoices as their chief stressor.
Participants in a separate poll pointed to similar perturbations. Nearly 10 percent of respondents in an iPayables survey said missing or lost invoices was their biggest vexation.
Lost invoices can lead to excessive penalty fees, stemming from companies missing their payment deadlines. For AP managers specifically, the disorganization that is endemic in manual AP processes can spawn other issues that affect business and customers relationships. When the occasional late payment becomes habitual, vendors may come to expect problems before they even happen, which can strain otherwise harmonious partnerships and result in reputational damage.
2. Importing Digital Invoices More Easily than Manual Data Capture
A key development in the evolution of AP automation has been the shift from technological solutions built around accommodating the traditional paper invoicing to technologies that are more forward looking.
With most invoices being delivered in a hard copy format, automation solutions integrated optical character recognition (OCR) tools, “reading” information and capturing the data. While still a hands-off process – one that significantly reduces manual entry errors – OCR still has some room for improvement, as inconsistencies in formatting, invoice complexity, type and other physical artifacts can require manual intervention and data entry clean-up.
All this, however, is changing as electronic invoices enter the fray: Rather than capturing data physically written down, electronic invoices have the potential to simply import and parse this data directly into an automated AP solution. Without the need to essentially translate physical information into digital, manual intervention and data entry is even less of a need. This is a particular boon to companies dealing with international vendors and making cross-border payments, as potential language barriers can be easily circumvented and the raw data parsed automatically, regardless of the original language of the invoice.
3. Increased Employee Satisfaction
Automation has helped resolve these performance issues, and Americans – by and large – welcome the transition. In a recent poll conducted by the Pew Research Center nearly two-thirds of college graduates said automation made their work more interesting and 53 percent indicated it created more opportunities for career advancement.
The advantages are quite clear in the AP performance space. Based on a study conducted by benchmarking and adviser company APQC, there’s a wide disparity in how much money it costs businesses just to process invoices. For example, among some businesses, the average spent was $12.44 per invoice, CFO Edge reported. However, for companies with better systems in place, their per-invoice average spend was $4.98.
Why the stark difference? Manual versus automated. Industries that used manual accounts payable invoice processing, APQC found, typically paid more in labor expenses. The accuracy and intelligence automation is known for, meanwhile, helped reduce companies’ operating and processing expenses.
This is deeply relevant to AP managers because it’s an indication of the automation direction companies are gravitating toward, rejiggering labor processes to squeeze every last drop out from hired help, technological or people-based.
Accounts payable is a job function found in every industry. Thanks to automation, the payment process has never been simpler or faster, making the transition from manual a fait accompli for businesses looking to streamline. The AP automation solutions MineralTree offers is streamlined redefined. Contact us for a free consultation.