In today’s rapidly evolving financial landscape, achieving fiscal agility is a paramount measure of success for enterprises. Socioeconomic factors such as the pandemic, inflation, and supply chain disruptions have compelled accounts payable (AP) departments to reimagine their operational strategies.
To embark on this journey of modernization, however, organizations need the right tools, which is where AP automation comes into play.
Top Challenges in Modern AP
Modern AP departments grapple with a range of tactical challenges in their daily operations.
In fact, a recent survey by Ardent Partners reveals some of the key obstacles impeding progress:
- Lengthy invoice and payment approval times – 47%
- A high percentage of exceptions – 45%
- Late vendor payments – 23%
- High invoice-processing costs – 22%
Additional challenges include manual and paper-based processes, high-volume invoice management, handling discrepancies and the approval process, limiting fraud and security risks, and maintaining effective vendor communication.
Costs Associated with Manual AP Processing
Processing accounts payable manually incurs various costs throughout the payment lifecycle. These include things like:
- Technology costs
- Paper and printing expenses
- Labor costs
- Errors and discrepancies
- Late payment fees
- Duplicate payments
- Missed early payment discounts
- Vendor relationship costs
- Training and education costs
- Opportunity costs
The Value of AP Automation
AP automation delivers substantial value by reducing labor costs, eliminating duplicate and late payments, enforcing business rules and policies, efficiently handling exceptions, improving vendor communication, and reducing training and education expenses.
Key Features to Consider
When selecting an AP automation solution, prioritize features that maximize efficiency and effectiveness, including:
- Intelligent Intake: Leveraging AI and Machine Learning for accurate data extraction
- Processing Efficiency: Streamlining invoice matching, routing, and GL coding
- Operational Management: Facilitating management of employee workloads and invoice processing times
- System Management: Ensuring security, access control, and departmental performance tracking
- ERP Integrations: Seamless data transfer and synchronization with ERP systems to reduce manual processing steps
At the end of the day, ROI is the cornerstone of your automation decision. There are two major approaches to calculate ROI:
- Quantify total benefit amount (hard cost savings and soft cost savings)and subtract total cost of ownership (software, training, support, etc)
- Compare current processing cost per invoice against anticipated processing cost per invoice for rates of improvement
The Current State of AP Automation
The AP automation market is rapidly expanding, with a forecasted 200% growth rate by this year. Many businesses are still in the “partially automated” phase, however, indicating room for scalability. Manual processes continue to prolong invoice processing times and hinder efficiency.
Security and Valuation
AP departments are frequent targets of cyberattacks and fraud, making robust security measures a “must.” What’s more, AP’s growing importance is reflected in how senior leaders increasingly view it as a valuable contributor to overall business performance. For example, automation can help businesses combat the effects of rising inflation.
What Lies Ahead
AP teams will continue to balance traditional methods with advanced technologies, focusing on improved processing times and accuracy. AP automation is evolving into a strategic hub of intelligence for businesses.
AP automation offers numerous benefits, including efficiency, accuracy, and significant cost savings. As digital transformation reshapes financial processes, selecting the right AP solution is paramount.
Change management is crucial, ensuring a smooth transition for your team. The question is no longer “when,” but “why not” AP automation?
To help you embark on this transformative journey, we’ve put together a guide that further expounds on the factors listed above so that you are poised to select the optimal AP solution, and set your organization on a path to financial freedom.
Experience industry-leading process automation with IntelliChief. Download our guide today!