The true impact of invoice automation
By now you’ve heard about companies using automation to help cut down expenses and boost their bottom lines. You might be wondering what that really means and how you can apply it to your business. There are countless ways that companies can use automation. One of the most impactful is in the accounts payable department.
Accounts payable (AP) requires many time-consuming tasks to happen. Receiving & opening mail, verifying invoices, entering them into your accounting system, obtaining approval, answering questions, cutting checks, sending payment, and filing past invoices for long-term storage each take a substantial amount of time, leaving little for overall strategy. If even one or two of these steps can be expedited, that opens up a variety of opportunities that can help the entire company.
What is automation?
In general terms, “automation” is the use of technology to streamline a task. Whether it’s a self-checkout at the grocery store or an ATM, we are already accustomed to automation everywhere in our daily lives.
For businesses, automation can be used in a variety of ways to help cut operating expenses and find new revenue. More impactfully, AP automation can streamline a number of repeatable tasks and apply new strategies to a department that is traditionally a cost center.
What does it mean for businesses?
Let’s go through some of the benefits of applying automation in this way.
Reduced processing costs
Employee work hours, physical storage costs, time spent auditing are all significantly reduced when companies apply automation to their invoices. Automation can affect every step – from initial reception to final storage.
Improved efficiency and accuracy
Employing automation to reading, validating, filing, and storage provides less room for human error during these processes. Leaders can apply their own business rules within the automation, helping invoices move quickly and more accurately through the entire payment process. Plus, exceptions are easily found and fixed through the platform, creating less hassle for employees.
Greater control and visibility
If an invoice is sitting on someone’s desk, it’s not visible to anyone else. Companies with invoice automation get the added benefit of real-time tracking on all outstanding and paid invoices, no matter where they are in the process. And accrual reporting allows better visibility into complex financials.
Quicker payment cycles = improved supplier relationships
The real-time visibility makes research a breeze. By removing hours of work involved in approval and payment processing, your payment cycles will naturally shorten. Your suppliers will appreciate getting paid on time (or earlier) and could be more willing to offer discounts or other benefits to your relationship.
Possible supplier discounts
Improved supplier relationships and faster payment cycles open up the opportunity for supplier discounts. Many suppliers reward businesses for paying early. By automating parts of your AP department, your productivity can pay off big time.
Faster exception & dispute resolution
Thanks to electronic records and real-time visibility over processes, exception and dispute resolution is easier than ever before. Users can log in online (and even on their mobile phones) to complete approvals, research, and more.
How do you measure its success?
CommercePayments™ AP Invoice Automation helps businesses realize those benefits and more. But companies can truly see their return on investment (ROI) in a variety of measurable metrics, including:
- Lower costs per invoice
- Improved invoice and payment accuracy
- Fewer days payable outstanding (DPO)
- Increased on-time payments
- Increased early payment discount capture rate
- Fewer supplier inquiries
- Less time spent on supplier inquiries and disputes
- Less time reviewing past payments for auditing or other purposes
- Lower printing and paper storage costs
- More time to work on root-cause analysis of issues and value-added projects
Automation can have unique effects for every business and transitioning from manual to automated accounts payable can play a vital role in turning your AP department into a profit center. It’s best to ensure you’re using automation as effectively as possible by implementing a customized plan for your business. Contact a CommercePayments™ automation consultant to get started or learn more about CommercePayments™ AP Invoice Automation.
CommercePayments™ solutions are provided by Commerce Bank.