In today’s rapidly evolving digital world, CFOs have to be well-rounded and innovative in order to help an organization gain a competitive edge. They have to understand that just because a system works, doesn’t mean it can’t be improved. This especially applies to the accounts payable process- although many manual AP processes work, they work rather inefficiently.
The Modern Digital CFO
A well-rounded CFO is able to identify the manual, time-consuming tasks that are not delivering value to the organization and is able to lead their teams towards strategic initiatives that increase the team’s efficiency.
Some of the tedious manual tasks in the accounts payable process include capturing and coding invoices, chasing down approvals, getting checks signed, and payments sent. These processes take up more time and resources than they are worth to the company. The AP team’s resources could be better utilized, rather than logging invoice and payment records into the system and sending payment follow-ups to vendors. This process is also prone to errors from data that is input incorrectly and creates further setbacks when those mistakes need to be corrected down the line.
CFOs in today’s digital age are able to keep an eye out for technological advances that will increase operational efficiency by researching and implementing automation and software for processes that are typically manual and time-consuming. Accounts Payable presents a huge opportunity for improvement and perhaps more so than any other workflow across all finance functions today, where innovation in the B2B and B2C markets are constantly evolving.
Your company may already have an accounting system set up (ie. NetSuite, QuickBooks, Microsoft Dynamics Great Plains, etc.), but that accounting system does not automate your AP processes. A great AP automation software has the capability to sync with your accounting system– meaning that the entire invoice is captured & coded, and the data is transferred into your accounting system automatically. All updates and changes made in either program will sync and reconcile with the other. Also, a great AP automation software is an End-to-End solution that streamlines the process from invoice receival to payment completion. Stringing together multiple different “point” software solutions is far less efficient and can create complications. And lastly, a great AP automation software offers free, secure payment options, such as virtual cards, that can earn the payer rebates and give the AP team peace of mind.
The Benefits of Automating AP
Automating AP presents a number of benefits for the entire company. A few of the major ones are:
1. Increase Efficiency
Automating your accounts payable process increases efficiency in a number of ways. By eliminating manual invoice data entry and integrating directly with your ERP, your AP team can avoid hours and hours of mindless, tedious work each week. They also won’t have to waste time tracking down approvals, getting signatures, and mailing payments manually. They can be more strategic and focus their energy on higher value-adding projects.
2. Optimize Cash Flow
One huge element of Automating AP is using a scheduled, payment execution system that allows approved payments to be automatically sent. This also means you may be able to take advantage of early-pay discounts and cash-back opportunities. Knowing where your money is going to be and when are essential factors in optimizing your cash flow. On that same note, it’s also important that an AP Automation solution does not use settlement accounts during the payment process, so that you can be sure you are reaping all the benefits associated with holding onto your money (ie. earning interest, timing your payments strategically) and being able to effectively communicate with vendors on what they can expect for a payment timeline.
3. Mitigate Fraud Risk
AP automation solutions also drastically mitigate fraud risks through the use of 2-factor authentication and segregation of duties. Not to mention offering the use of virtual card payments, which are the most secure payment method available today. According to our State of Accounts Payable Report 2020, 57% of respondents say they had received a fake invoice or experienced fraud in some way. The regularity with which this occurs only strengthens the importance of ensuring your sensitive data is absolutely secure. All three of these controls add an extra level of security to the AP process.
4. Centralize Control
Another benefit that AP automation provides is centralizing control. All parts of the process can typically be seen and moderated through a single portal, providing a huge level of oversight to team members. Everyone can be on the same page and communicating efficiently. Usually, you can also schedule your payments, all the while giving users complete transparency into when the payment is happening, how it’s happening, and where the money is at all times. Well-rounded CFOs are able to identity the key benefits of automating accounts payable and take the necessary steps to implement the best systems in the organization.