AP software provides clear visibility and increased control over your business's financial processes and data. Discover 10 benefits of AP automation here.
Accounts payable automation software enables easier management of invoicing and payment processing through a single digital platform. It can provide clearer visibility and increased control over both financial processes and data collection.
According to PayStream Advisors’ 2018 Payables Insight Report, 55% of business handle financial data manually. However, in 2020, over 40% of small and medium-sized enterprises claim they’re ‘somewhat likely’ to adopt AP automation software in 2021.
With these figures in mind, there’s never been a more relevant time to explore the benefits of AP automation and assess whether a shift toward automated software is appropriate for your business in 2021. To aid your research, we’ve collated the 10 key benefits of AP automation, from its time-saving capacity and seamless integration to low-cost invoicing and fraud protection.
1. Time savings
In times gone by, invoices would sit on desks or wait in email inboxes for approval, but AP automation eliminates such delays, streamlining the entire approval process. Intuitive dashboards afford users a detailed, real-time view of invoice processing, while you can also apply specific parameters to the workflow, so the appropriate person receives a timely invoice.
2. Low-cost invoicing
According to the Institute of Finance & Management (IOFM), the invoice processing cost varies between $1 and $21 (73p-£15.39). This benchmark is based on the total cost of accounts payable staff divided by the total number of invoices processed.
On the other hand, Ardent Partners estimate the average cost per invoice to be $11.57 (£8.48), including labour costs, overheads, and technology. This benchmark has decreased by just 4% in the past year, suggesting many firms are struggling to achieve efficient AP processes. The research concludes that best-in-class companies typically leverage modern technology to streamline their AP processes, resulting in invoice processing costs priced five times lower than average.
3. Improved accuracy
With AP automation software, your invoice data is validated against enterprise resource planning (ERP), making it easy to detect duplicate payments. There’s no need to manually input invoice headers or line-item data either, reducing the likelihood of human error.
4. Enhanced insight
Comprehensive dashboards detail the AP process clearly, making it easy to identify where an invoice is sitting, and who to contact in case of delays. You can also import and export data courtesy of real-time access, facilitating smooth reports and analysis, which are crucial at the end of business cycles.
5. Fraud protection
In 2020, the AFP Payments Fraud and Control Survey revealed a staggering 81% of companies were targeted for payment fraud in 2019. Fortunately, AP automation software protects your business against fraud by assigning specific employees’ access to invoice approval and the release of payments. This AP process ensures no single employee is responsible for payment approval, the benefits of which are twofold – it reduces the chance of fraud while providing ample opportunity to doublecheck data.
6. Increased transparency of data
Enhanced dashboards are a recurring theme, but their utility cannot be overstated. For instance, when it comes to employee reviews, you can use them to analyse employee productivity in as much depth as you want.
7. Low-cost data preservation
According to HMRC, your business should keep records for six years from the end of the last company financial year – but those storage costs and paperwork can soon add up.
Research by North Dakota’s Information Technology Department found it costs a staggering $2,603.64 (£1,908.19) to maintain one five-drawer file cabinet. A terabyte of cloud storage, meanwhile, will typically set you back less than £10 per month.
8. Easy auditing
AP automation software can assist with document management, boosting your auditing processes. It does this by linking all documents and messages involved with each transaction while matching invoices with receipts and purchase orders. This trackable audit trail reduces the likelihood of paperwork going missing and ensures compliance for your quarterly or annual filings.
9. Integration with existing systems
Another benefit of AP automation is its ease of integration with your business’s ERP, databases, and other financial systems. A comprehensive suite removes the need to log in and out of different applications or re-enter data into several systems, both of which make errors more likely.
10. Early-payment discounts
Most vendors offer early-payment discounts, but a study conducted by IOFM found that most businesses receive less than 21% of these offers, while 12% don’t collect any early-payment discounts at all.
While there are myriad reasons for missing such discounts, 31% of respondents to PayStream Advisors’ AP & Working Capital Report claimed that manual invoice routing and approval impeded their prospective early-payment discounts.
Adopting AP automation
These benefits highlight the role that AP automation software can play in optimizing and streamlining your invoicing and payment processing functions. Taulia’s invoice automation solution is one way of realizing these benefits, minimizing the complexity of your accounts payable department.