At the surface, Accounts Payable is destined for greater things, supported by the growing perception that the function adds real value to the enterprise at large. However, as per Ardent Partners’ Accounts Payable Metrics that Matter in 2020, several sizable barriers exist that hold Accounts Payable automation back are:
- Too much paper (40%)
- Exceptions Rate (62%)
- Lengthy invoice approval times (51%)
Estonia has celebrated its one-year anniversary when its public organizations quit the usage of paper invoices. This public strategy has likewise encouraged the private sector to the utilization of advanced digital invoices.
What is Accounts Payable Automation?
AP automation enhances the efficiency of accounts payable operations with improved information accuracy, complete visibility into AP department performance, and better consistency with business and industry guidelines. With the automation of some manual time-consuming processes like invoice data entry, gap analysis, and approval workflow, AP Automation software expedites the execution and maintains the accuracy of payments. In many cases, approved payments can be scheduled and automatically adjusted on the proper date.
Six Reasons to Consider Automating Invoice Processing
1. Working Capital Optimization
In today’s business climate, businesses cannot afford to squander opportunities to free up their working capital. To effectively identify these opportunities and determine the right course of action when facing potentially conflicting outcomes, businesses must take a more strategic approach to accounts payable.
Many businesses work with increasing payables as their core strategy by extending payables as long as possible to maximize free cash flow. Unfortunately, this approach is not always the right one. In some cases, delaying payment can erode supplier goodwill, resulting in slower delivery times, less willingness to fix defects, slower responses to queries, and more onerous payment terms. On the flip side, paying early can sometimes yield substantial benefits in situations where suppliers offer discounts or rebates for early payment.
AP automation software enables you to choose the most advantageous payment terms or selecting appropriate timing in which to pay vendors. With complete visibility of payment terms and corporate liabilities, AP Staff can adjust payments accordingly for taking advantage of early payment discounts, delaying payment till the last deadline of payment, etc.
2. Faster and Accurate Invoice Data Entry
In the traditional workflow, invoices data are being manually entered and passed from business units to the accounts payable team for review and approvals. This manual invoices payment cycle often introduces data inaccuracy, delayed responses, and lack of visibility, leading to late payments, duplicate payments, erroneous payments, and sometimes invoices are left unprocessed at all because they’ve somehow gotten lost in the manual process.
If an organization is still accepting paper invoices, it is not gaining the advantage of the current situation. They’re additionally building up the cost and time-saving potential for easing their AP team of tedious work, for example, opening the mail, and documenting mountains of invoices. These manual assignments can prompt lost invoices and human mistakes during the information section.
With the introduction of AP Automation, enterprises can automate the invoice data entry using AI and NLP with only a few exceptions get routed through AP staff. This helps accounts payable to operate much more efficiently than if they had to shuffle paper invoices around.
3. Improve Invoice Processing Accuracy
While managing accounts payable, errors are costly and take time to fix. Exceptions are often caused by discrepancies in PO and invoice data, missing/incorrect POs, and bottlenecks in the approval workflow. When there’s a problem with an invoice—pending approval or routing errors—an invoice exception occurs. This can lead the payable process to a screeching standstill, and without verification or centralized information access, can also give chances to duplicate payments and other payment errors.
AP Automation can resolve some key challenges like:
- Automate the manual data entries, which are known to have higher error rates
- Automate electronic validation of invoices, against contracts, goods received, and purchase order data.
- AP staff workflow automation streamlines every step in the invoice approval process, eliminates back and forth on administrative tasks, and facilitates collaboration between business functions to become more accurate.
4. A Simpler Way to Spend Analytics
Spend visibility and planning is a critical issue, especially with paper-based invoices. Replacing manual processes with automation prevents delays. Lost or misplaced invoices become a thing of the past when you have easily accessible digital archives.
Greater spend visibility also improves planning by allowing for more accurate budgeting and forecasting. It provides transparency and greater insight into where cash is spent.AP Automation software like Aavenir Invoiceflow provides real-time dashboards that monitor invoice status and key AP KPIs.
5. Increase Productivity
Exceptions are often caused by discrepancies in PO and invoice data, missing/incorrect POs, and bottlenecks in the approval workflow. When there’s a problem with an invoice—pending of approval or routing errors—an invoice exception occurs. This can lead the payable process to a screeching standstill, and without verification or centralized information access, can also give chances to duplicate payments and other payment errors.
6. Reduce Invoice Processing Costs
AP departments that automate invoice processing can cut their processing costs and save money from day one. Switching from manual to automation of AP can access invoices, extract information, sort, scan, validate, match, archive with the ultimate goal of reducing manual handling, cycle time, and costs.AP automation can decrease the average cost to process a single invoice (all-inclusive, including labor, overhead, technology, etc.) by nearly 13%. This suggests that it improves the day-to-day operations that support invoice processing and enterprises that are not focusing on AP performance are falling behind.
All these just scratch the surface of the benefits. The Accounts Payable team, along with the Purchasing and/or Procurement departments, must collaborate with senior management to inject an AP Automation workflow throughout the company. This is about more than ensuring invoices are received and processed in a timely fashion.
AP Automation has the capabilities to eliminate the bottlenecks and error-prone processes that are consuming your staff’s time and costing your company money.
The unique AP Automation solutions like Aavenir Invoiceflow – Accounts Payable Automation solution offers machine learning-enabled capabilities such as zero-touch invoice data extractions. Aavenir Invoice is helping ServiceNow customers to accelerate the speed and accuracy of multi-vendor invoices processing while eliminating human intervention by 3x.
Having cognitive invoice processing capabilities, Aavenir’s AP automation solution leverages ServiceNow’s enterprise-class workflow management capabilities to streamline accounts payable processes, eliminates the need for manual checks, and reduces AP cycle times by validating and bringing thousands of invoices from different channels such as; e-procurement systems, emails, scanned PDFs and even, printed letters on one platform.
Aavenir’s Invoiceflow delivers faster invoice processing with fewer touchpoints, fewer errors, and more early payment discounts, thus improving the vendor invoice processing. To know more, Schedule a Personalized Demo of Invoiceflow accounts payable automation or request a free trial from the ServiceNow App Store.