The term accounts payable automation,or AP automation, describes the process of streamlining the business processes and workflow of AP departments through technology advancements. Undergoing the transformation from manual to automated AP processes may seem like a no brainer. However, automating AP processes does require an initial investment,which can prompt CFOs and Controllers to question the value of undertaking the project.
But when you examine the benefits by the numbers, it is clear that AP automation pays for itself and can even earn rebates for the business –turning the AP department into a profit center.
In fact, according to the Institute of Financial Management’s white paper, “A 4-step Roadmap to Paperless Payables,” automating AP can reduce processing costs by an astonishing 82% -from $15.00 to $2.74 per invoice.
There are several areas where ROI can be realized after completing a successful AP automation project. For example, automation eliminates the need for entering invoices in the AP systems by hand. This type of task is prone to human error and can significantly delay invoice processing and prevent staff from focusing on value-add tasks.
Another important benefit that AP automation brings is real-time financial visibility. By automating the end-to-end payment life cycle, AP organizations are able to:
- Identify trends and bottle necks in the AP process
- Monitor the volume and value of invoices, related documents and payments
- Improve cash analysis, cash planning and liquidity management
- Speed up accrual reporting on financial reports
- Lower security and compliance risk by providing an adult trail of all payment activity
Plus, making the switch to paper to electronic payments is not only a significantly less expensive way to pay suppliers, it is also a method that is much less prone to fraud. Definitely a problem that keeps financial professionals up and night.
For more insight into other ways accounts payable automation pays for itself, view the full whitepaper “7 Ways AP Automation Can Pay for Itself” and start building your business case!