Let’s face it: most of us are creatures of habit. We often take comfort in the familiar, even when it comes to the intricate details of business operations. Yet, clinging to the comfort of routine can inadvertently lead to the stagnation of crucial processes.
In this article, we will delve into the nuanced landscape of AP processes, and explore the familiarity of the old and the necessity for modernization. We’ll also:
- Navigate through the subtle – yet profound – impact of outdated AP practices on overall business performance
- Explore the pivotal signs signaling that your business has outgrown its existing processes
- Shed light on the compelling benefits awaiting those who dare to modernize
Embracing change may be uncomfortable, but it is often the catalyst needed to propel businesses into a future of heightened efficiency, accuracy, and financial success.
The Impact of an Outdated AP Process on Business Performance
Running a business with an outdated accounts payable (AP) process is like driving a car that’s due for service. It might get you from point A to B, but the risk of breakdowns and costly repairs increases over time.
A streamlined AP process can be the difference between cruising in the fast lane or being stuck in gridlock traffic.
Here are some potential impacts your business could face if it doesn’t keep its AP process up-to-date.
The traditional AP process requires a more hands-on deck approach. Invoices must be entered by hand, checked for errors, matched, manually coded, and manually approved before payments can be processed.
This labor-intensive process takes time away from tasks that generate revenue or/or enhance customer experience since your employees are bogged down with paperwork as opposed to other core responsibilities.
Inaccurate Financial Reporting
Poor data entry or misfiled invoices caused by manual processes often result in inaccurate financial reporting. This makes budgeting difficult and creates headaches during audit season when figures don’t add up.
Automated systems reduce these errors, which results in more accurate reporting.
Cash Flow Issues
If invoices aren’t processed quickly enough due to inefficiencies within your current AP process, payments may end up delayed and cause cash flow problems, which has the potential to disrupt overall business operations.
A more modernized AP process offers real-time visibility into outstanding payables, which will help you to better manage their cash flow.
Increased Risk of Fraud
The risk of fraud is significantly higher with outdated AP processes since it’s easier for unscrupulous individuals to manipulate paper-based systems and/or take advantage of weak internal controls.
Upgrading your AP process can add layers of security, making it harder for fraudulent activities to occur.
Poor Vendor Relationships
If you’re late on payments, it can create tension and vendors might not be so willing to work with you. A more modern accounts payable process ensures vendors are paid in a timely manner, which helps to facilitate a better working relationship on both sides of the table.
6 Signs Your Business Has Outgrown Its Current AP Process
If your Accounts Payable (AP) process is causing more headaches than it solves, you might have outgrown its current state.
But how do you know for sure?
Here are some telltale signs to be on the lookout for.
Prolonged Invoice Processing Time
A sign that screams ‘outdated AP process’ is extended invoice processing time. If your team spends an excessive amount of time on receiving, verifying, matching, coding, or chasing down payment approvals , it’s a clear indication that your current process isn’t cutting it anymore.
An Increase in Human Capital Costs
Cumbersome manual processes require more manpower, which means a higher employee headcount. What’s more, the processes themselves are often riddled with errors, which then requires more training to address and overcome. AP automation simplifies and streamlines workflow, guiding staff members along the way.
Inaccurate Financial Forecasting
An efficient AP process should give precise insights into cash flow for accurate financial forecasting. If this isn’t the case and instead leads to unpredictability in budget planning due to late payments or unprocessed invoices, consider this another red flag.
Lack of Scalability
Your business needs room to grow. But if scaling up means more hours spent managing paper invoices manually, something eventually must give. A lack of scalability indicates a serious issue within your existing setup, which will have to be addressed at some point or another.
Error-Prone Manual Processes
Frequent mistakes like absent data and duplicate payments aren’t just irritating, they also come with a price tag in terms of both time and money. These issues point towards outdated processes that are in dire need of modernization.
Automating accounts payable is a proven way to reduce l errors and streamline operations.
Limited Visibility into AP Processes
If you find it difficult to track invoices – or if there’s limited transparency in your current process – you guessed it, this is another sign. An effective AP process should offer clear visibility at all stages of the process.
The Top 6 Benefits of Modernizing Your AP Process
A fresh approach to your accounts payable process can be a game-changer. Like swapping an old, rusted bicycle for a sleek electric bike, modernizing your AP operations will get you where you need to go faster and more efficiently.
Benefit 1: Saves Time
The right tech upgrades can help eliminate manual data entry. By doing so, you’re talking about giving back valuable hours to your team that could be used on strategic tasks instead. In fact, a study by Levvel Research revealed businesses with automated AP solutions report 80% lower processing times than those without.
Benefit 2: Enhances Accuracy
Typos? Data discrepancies? They’re all part of the past now.
With an upgraded solution like IntelliChief, errors due to manual input are significantly reduced. It’s like having an invisible superhero fighting off mistakes before they happen.
Benefit 3: Better Cash Management
IntelliChief’s intelligent AP automation solution can also give you greater visibility into your cash flow because let’s face it: who doesn’t want more control over their money?
Benefit 4: Cuts Costs
No one likes spending unnecessary money, and especially not companies that are trying hard to minimize expenses and maximize profits. Automated invoice processing helps save on costs associated with paper-based processes, like printing or postage fees. A recent Ardent Partners’ report found that businesses using automated solutions have seen invoice-processing costs decrease by up to 60%. That’s some serious saving power right there.
Benefit 5: Increases Productivity (and reduces manpower)
Eliminating manual tasks, while simultaneously improving accuracy, frees up time for you AP team to focus on higher-value tasks. Productivity levels increase, without the need to hire additional staff.
Benefit 6: Improves Vendor Relationships
No more late payments and no more unhappy vendors. Modernizing your AP process can help ensure timely and accurate payments, which can go a long way in building better relationships with the vendors you work with.
An outdated accounts payable process can feel like a broken treadmill.
Thankfully, there IS a light at the end of the tunnel.
Recognizing signs of an outdated accounts payable process is the first step. When you see them, it’s time to take action.
If anything outlined above feels like it’s hitting a little too “close to home” right now, we invite you to schedule a complimentary 30-minute demo to learn more about the IntelliChief solution, and how it could be the key to unlocking your company’s future financial success.