Prestige. Honor. A reputation for reliability and performance. Many of the traits associated with tradition make exceedingly positive contributions to a company’s health and longevity. But in the twenty-first century, where Big Data is king, digital disruption is rapidly reshaping the way everyone does business, and a global supply chain comes with expanded risks from pandemics, war, and environmental concerns, doing things the way they’ve always been done isn’t necessarily a recipe for success. Optimizing your most important processes, such as accounts payable (AP), by moving beyond manual workflows can give your company a serious competitive boost. It’ll also help you integrate two critical technologies—digital transformation and continuous improvement—into the DNA of your business process management.
One of the most accessible, and powerful, ways you can introduce both digital transformation and continuous improvement to your business is through accounts payable automation. With help from AI and advanced analytics, you can break free from the limitations of traditional AP paradigms and improve your company’s efficiency, profitability, and competitive agility.
How Accounts Payable Automation Benefits Your Business
Like a lot of other core business practices, accounts payable has traditionally been handled using paper, pen, and manual workflows. Since the introduction of computers to the office, AP staff have adapted to spend significant time on manual data entry, manual exception reviews, manual invoice processing, and other time-consuming, error-prone manual processes.
With the current shift toward next-gen technologies and the growing importance of Big Data in strategic planning and business process management, accounts payable has rich potential for improvement through automation. 2020 research performed by Ardent Partners found that more than half (55%) of businesses view their accounts payable department as either “very” or “exceptionally” valuable to the overall enterprise.
And yet, despite that perceived value, best-in-class accounts payable departments had average invoice processing costs of just $2.18 per invoice, while those lagging behind spent a whopping $12.60—nearly 500% more.
Ardent Partners also found that, among the AP professionals surveyed, the top pressures exerted in 2019 included:
- High percentage of exceptions (62%)
- Invoice and payment approval delays (51%)
- Too much paper (40%)
- Lack of visibility into invoice and payment data (24%)
These pressures, along with the need to generate value as well as savings, help explain why those same AP professionals said their goals for 2020 and beyond included:
- Improved AP reporting and analytics (48%)
- Elimination of paper and reduced manual processes (47%)
- Implementation of AP automation (40%)
- Lower processing costs (30%)
- Improved supplier collaboration and connectivity (27%)
- Improved collaboration with procurement (22%)
- Better data visibility for invoice and payment activity (20%)
Despite these goals and the desire to capture greater value and performance from AP, Ardent Partners found that just 31% of businesses surveyed automate their exception management, while just 28% are moderately automating their analytics. A sobering 40% had no spend management automation in place at all.
Invoice receipt processing, invoice processing, and invoice approvals all had much stronger adoption rates at 67%, 56%, and 64%, respectively, but it’s clear that manual workflows and paper-based processes continue to hold many companies back from truly optimal competitive performance.
Old-school, manual processes and paper-based payable workflows present a number of obstacles to value creation, including:
- Needless delays and expense due to human error, including overpayments, duplicate invoices, and late fees, as well as lost value from missed early pay discounts.
- Paper invoices and other documents require physical storage as well as digital, and can be lost, mis-filed, or never make it into the system at all.
- Bottlenecks created by manual approval workflows.
- Higher invoice processing costs due to longer invoicing lifecycles and generally slower and less accurate payable workflows.
- Lack of real-time data collection, organization, management, and analysis, creating excess risk through increased maverick spend and invoice fraud.
- Higher resource costs and a larger environmental footprint than payable departments using automation software.
Choosing a comprehensive, cloud-based accounts payable automation solution like PLANERGY gives companies greater freedom, maneuverability, and value by lowering costs, slashing waste, and incorporating digital transformation technologies like business process automation, artificial intelligence, advanced analytical tools, and mobile-friendly, real-time data management.
Manual workflows waste time, money, and resources. Automated workers are 100% accurate and can process vast amounts of information much more quickly than humans. And thanks to machine learning that learns as it works, every iteration of a given process, from approval workflows to automated three-way matching, uses historical performance data to achieve greater efficiency, speed, and accuracy.
Key Benefits of AP Automation
If your accounts payable department is still relying on manual payable workflows or last-gen AP software solutions, you may be missing out on benefits your competitors are already using to improve their competitive strength and profitability. Making the digital leap is more important than ever, especially for businesses looking to shift the focus of their process development and management away from cost reductions alone and toward building value.
Robotic process automation (RPA), a key component of best-in-class accounts payable automation, is particularly beneficial, generating an estimated 30-200% return on investment (ROI) for companies choosing to automate repetitive, rules-based, and high-volume tasks.
Consider these additional benefits of transforming your AP processes with automation software:
Reduced Waste Across the Board. Capturing, storing, and processing all your documents digitally doesn’t just save you serious time and money through efficiency improvements. Eliminating the need for physical storage, as well as the extra days and materials costs that come with paper invoices and purchase orders, reduces your overall environmental impact, too.
Better still, not having to wait for “snail mail” (while still having the capacity to add physical documents to your system as needed through optical character recognition (OCR) technology) can help you capture early payment discounts and avoid late fees.
Complete Data Transparency. A comprehensive AP automation suite captures all transaction data across your entire Procure-to-Pay (P2P) process, as well as all related data, such as correspondence. Everything is stored on a mobile-friendly, centralized server in the cloud, where stakeholders with leveled can access, review, modify, and analyze the data they need to:
- Monitor transactions in real time.
- Create financial reports.
- Search for actionable insights and opportunities for innovation or strategic supplier partnerships using deep analytics.
- Make strategic planning decisions.
- Monitor key performance indicators like vendor compliance, lifecycles for invoice and purchase orders, etc.
- Perform financial and performance audits.
- Track cash flow.
A Complete and Secure Software Environment. Accounts payable automation solutions like PLANERGY bring a lot to the table on their own. But because they also interface with your existing software environment, you can connect your accounting software, enterprise resource planning (ERP) tools, and other software packages—from customer resource management (CRM) to marketing platforms and office suites.
The more interconnected your software environment, the easier it is to track and share information, collaborate, and develop new protocols and processes that generate greater savings while reducing risk. When buyers route all purchases through the system, using information automatically populated from the vendor database to provide optimal terms and pricing for every good and service you purchase, it’s much easier to capture all your transaction data—and eliminate costly rogue spend, theft, and invoice fraud.
Every email, fax, letter or note can be added to the digital archive and associated with the appropriate purchase order number. This not only helps minimize confusion and miscommunication, but creates a clear audit trail for both internal and external reviews.
In addition, vendors can use supplier portals to interface with your systems for onboarding, review, and invoicing without risk of exposing sensitive information. Your team can receive, review, and pay electronic invoices automatically, or route them for further review if something doesn’t quite add up. Ardent Partner’s research found that best-in-class organizations were 152% more likely than underperforming competitors to provide their vendors with a supplier portal.
Ardent also found that, beyond greater compliance and improved vendor management, AP automation with support for electronic invoicing and payments also:
- Improved vendor relationships (32%)
- Increased accuracy and control (65%)
- Led to more efficient invoice processing (65%)
- Improved the ability to capture early pay discounts (39%)
- Improved fraud prevention (32%)
Process Optimization as Standard Operating Procedure. Manual workflows waste time, money, and resources. Automated workers are 100% accurate and can process vast amounts of information much more quickly than humans.
Removing human AP staff from your workflows eliminates human error, as well as the need to waste staff time and talent on tedious, time-consuming tasks like data entry instead of high-level strategic planning, cash flow management, etc.
Improving accuracy and speed through automated invoice and purchase order processing also eliminates the need for staff to spend hours tracking down exceptions to correct duplicate payments or investigate invoice fraud.
For approvals, automated workflows speed the process by:
- Autopopulating documents with information from the original purchase order.
- Supporting routing contingencies to keep bottlenecks from delaying essential material orders or costing you savings through lost early pay discounts.
- Automatically cross-checking all documents against the same PO when it’s time to process the invoice.
And thanks to machine learning that learns as it works, every iteration of a given process, from approval workflows to automated three-way matching, uses historical performance data to achieve greater efficiency, speed, and accuracy. Over time, what starts with your AP department can be expanded to all your business processes, making continuous improvement the default for every task or process.
Better Communication and More Effective Collaboration. The power of RPA to streamline your AP workflows gets a lot of attention when AP automation is discussed, but it’s important not to overlook the human factor, too. The wrinkles ironed out and bottlenecks unplugged by process automation, combined with total data transparency and mobile-friendly, work-anywhere secure access, create a shared environment where your teams can collaborate swiftly and effectively, communicate clearly, and focus their skills on innovation, growth, and shared success. One of the largest benefits AP automation brings is the freedom to perform the work that only humans can do, and an environment conducive to doing so with clarity and consistency.
Create a New Tradition of Excellence with AP Automation
It’s time to leave the limitations of traditional AP workflows behind—without sacrificing your company’s dedication to excellence and profitability. Embracing digital transformation with accounts payable automation software can help your company achieve a wide range of improvements through time savings, smoother payable processes, better document management, and optimal collaboration and communication.