Recognizing the inefficiencies, time delays, and costs of manual payments processing, you’re ready to take the plunge and modernize your process. The next step is to figure out how to do it — should you automate just payments as a first step or tackle the entire AP process all at once?
5 Reasons to Automate Your Entire AP Process
While arguments can be made for both approaches, in the long-run, you’ll gain greater value and efficiency by automating the end-to-end process of accounts payable.
Here are five reasons why:
- The power of synergy. Payments and invoicing processes are inextricably linked, and effective invoice processing is critical to enabling timely, accurate payments. End-to-end AP automation gives you a consistent, streamlined workflow – from capturing, coding, and approving invoices to authorizing and executing payments, all while continuously syncing invoice and payment data with your accounting system.
- Visibility sheds light on problem areas. Automating AP end-to-end provides visibility across the entire process, enabling you to see, for example, what issues are holding up payments. For example, you can view which payments are late, which invoices are aging, the average approval time, and the average time it takes to pay an invoice, among other key data. With this complete picture of your AP process, you can determine the root causes of issues you are facing. At the same time, you can gain insight into your finances and make better decisions on which invoices to pay first, identify opportunities for volume or early payment discounts, and opt for more advantageous payment methods.
- It’s hard to overcome the resistance to change, so why do it twice? It’s only human nature to resist change and want to keep doing things the way they have always been done. Once you’ve made the business case for automation, obtained management buy-in, and marshalled the resources, it’s much easier to go through the change process once. Also, if you separate payments and invoice processing into two different implementations, can you count on having the time and support to get to full AP automation later?
- It doesn’t take much more work to do it all at once. Automating the end-to-end process takes just a few weeks and it doesn’t require any IT involvement, other than keeping them in the loop. You still have to enlist the input and support of management and stakeholders, and conduct minimal staff training, whether you are just automating payments or the whole AP process. The only difference is that end-to-end needs a little more integration.
- Greater ROI. While payments automation drives the majority of ROI, especially if you’re benefiting from rebates from virtual cards, the more you automate, the greater your ROI will be. You’ll gain additional cost savings and efficiencies from digitizing as many processes as possible.
Despite the benefits of automating the entire AP process all at once, your organization might not be ready or willing to do that. Maybe you already have an AP processing system, or you’re going through an acquisition, or focused on other initiatives. In those cases, it makes sense to start with payments automation first because that’s where you’ll get the greatest impact. Not only can you save a lot of money by automating payments, but you generate funds through rebates from virtual cards, and perhaps even transform payments from a cost to a profit center. Automating payments also reduces the complexity and effort of managing multiple payment methods and makes it easier to reconcile them all in one place. In addition, payments automation reduces your vulnerability to fraud – a growing concern for all organizations — by reducing your reliance on checks and building safeguards and controls into the process.
Why Should You Automate Accounts Payable?
If you’re not sure whether you’re ready to automate the entire AP process, consider the following questions:
- Is your invoice process inefficient or broken? If you’re bogged down with manual or outdated workflow and you’re wasting time, money and effort, it’s probably time to automate the end-to-end AP process.
- How dispersed is invoice receipt? If different people are receiving invoices across the organization, and in multiple formats (paper, email, etc.) you need to find a streamlined way to centralize and automate the process.
- Do you have a problem with AP accuracy? Manual invoice processing not only slows down the process, but it leads to human errors that can cause problems and take more time to fix.
- How many approvals are needed for invoice processing? If you have a complicated workflow, you need to find ways to streamline the process, while maintaining controls.
- How often are you late with payments? AP is often the culprit behind late payments and resulting penalties due to lost or misplaced invoices, delays in processing or approvals, and other issues.
The good news is that you’ve already made the decision to fix your payments and AP headaches, and technology can help you do that. The more you automate – across the entire AP process – the greater the value, cost-savings, and efficiencies you’ll gain. While that’s the best option to maximize your benefits, you can’t go wrong if you need to do it incrementally, starting with payments automation. Begin somewhere and get underway, or as Nike says, “Just do it.”