Liberate your AP team from manual processing woes: Automation for accounts payable efficiency
The COVID-19 pandemic brought home one really hard-hitting point—that companies with people-intensive processes instead of automation risk business disruption during a crisis. Small and medium enterprises, in particular, face enormous challenges to survival due to their lack of automation.
Accounts Payable (AP) is a critical function for any company, large or small. Timely vendor payments, managing cash flow, and maintaining accounting control are essential to the company's success. Most organizations start with manual AP processes, mainly due to budgetary constraints. But as the business scales, maintaining accounts payable efficiency with these processes becomes a challenge.
Disadvantages of relying on manual invoice processing
In a world of rapid technological advances, relying on manual AP processes has many disadvantages:
Inaccuracy: The AP department requires more staff to execute manual tasks like data entry. Manual processes also suffer from high error rates.
Lack of visibility: When error rates are high, the data is inaccurate or incomplete, making it difficult for organizations to understand their AP liabilities, and this affects decision-making negatively.
High costs: It takes approximately $13 to process one invoice manually, which is almost three times the cost of automated processing. Add to this the cost of identifying and fixing errors. In addition, manual processes cause bottlenecks in invoice processing, leading to late payment penalties or loss of early payment discounts.
Disruptions during crises: With paper-based AP processes, maintaining business continuity becomes a challenge during a crisis, and organizations with manual AP processes are highly prone to debilitating business disruptions. Take the example of the COVID-19 pandemic: With most of the workforce forced into a work-from-home situation, manual invoice processing functions came to a standstill until organizations put in processes to handle invoices electronically.
Transform accounts payable with automation
Move from a manual model to a digital one and leverage new technologies to transform your AP process—no more processing backlogs and late payment challenges!
Earlier, automation was a luxury afforded only by the largest enterprises. But today, technology is accessible to companies of all sizes to accelerate the AP function, making it possible for SMEs to automate their accounts payable (AP) function.
An inefficient AP process can rake up a range of challenges for the organization. Delays in invoice processing lead to increased vendor dissatisfaction, penalties and missed early-bird discounts. Ultimately, AP challenges impact cash flow and lead to unhappy customers and vendors.
What is required is a systematic and structured program to standardize and optimize processes and smoothen out its adoption with a change management plan. This combination of cutting-edge technologies and a digital operating model transforms your AP process.
Companies can achieve increased efficiency in their AP process by implementing the following:
E-invoicing: Encourage vendors to submit electronic invoices.
Intelligent character recognition: Implement ICR tools to automate data extraction from paper invoices.
Change management: Drive change management with vendors and internal departments to minimize the number of exceptions, like Purchase Order (PO) and Goods Receipt (GR) mismatch. Automate exception routing and posting through optimized workflows or intelligent process automation (IPA). Use process mining tools to obtain an analysis of delays to initiate corrective action.
Vendor portal: Deploy self-service digital vendor portals which record vendor account details, including invoice and payment status. Use intelligent process automation (IPA) to provide automated responses to vendor queries.
Using a combination of technology and process optimization, you can streamline your AP process and achieve significant efficiency. Technology solutions that provide real-time analytics improve decision-making. They also give you better control over your AP liabilities, reduce fraud risk, and improve supplier relations.
Achieve accounts payable efficiency with AP automation
Every type and size of company facing invoice processing problems can use automation to reap benefits. A case in point is that of Bayer Properties, a small company in the real estate sector. The company implemented a paperless AP system even though they were "too small" to need a paperless AP system. Their AP/AR department consisted of three associates, and volume invoicing processing was not the need of the hour.
Here are the key benefits they reaped from AP automation:
Visibility: At any point, their AP team could trace where an invoice was in the process workflow. The system gave them an insight into the bottlenecks in the approval process that they could then resolve quickly.
Speed: They experienced efficiency gains in invoice processing. They saved days by routing invoices electronically by scanning and uploading them.
Efficient reporting: The automated reporting functionality eliminated manual processes of transmitting invoice copies to clients, auditors and vendors in response to requests.
Time savings: Automation freed up the AP team from tedious, time-consuming tasks. Their senior AP associate moved to a new role in the construction department, and the other two associates assumed added AP/AR duties.
Reduce costs: Labor costs reduced by half. Data storage costs were also reduced as electronic storage space is cheaper than real estate for paper storage. No paper transmission meant lowered courier costs.
Finally, companies that adopt AP automation benefit from scalability as the optimized processes will scale seamlessly with the business! A definite reason why smaller companies must take the leap and adopt AP automation!
With the benefits of AP automation evident for all sizes of companies, the market size for accounts payable automation is estimated to reach USD 4 billion by 2025. The factors responsible for this growth include increasing focus on reduction in days sales outstanding and enhancement of cash flow and decreased accounting cycle time.
Streamline AP with digitization and automation solutions from RDS
RDS offers your AP department a mix of conversion and automation software solutions. We take care of all your document digitization needs, whether they are old backlogs of invoices or new invoices as they come in. We offer digital mailroom services and set up a mailbox and email address for all your incoming invoices—effectively creating a paperless AP department for you.
OpenText (formerly known as ApplicationXtender) is an enterprise content management solution used by AP departments across the globe to manage financial information. It integrates with all of the leading ERP systems like SAP, Workday, JD Edwards and many more. It improves invoice processing by:
Reducing manual data entry errors by automating invoice data capture using our OpenText Captiva software.
Speeding up payment processing with automated invoice approval workflows
Ensuring compliance via audit trails and record retention compliance.
Our powerful, Intelligent Process Automation (IPA) software, docAlpha, streamlines cash flow controls for invoices and sales orders from capture to approval. Some of the benefits of using docAlpha include:
Streamlining payment approvals, rejection and escalation
Creating payables transactions in your ERP system
See a clear audit trail
Increased data accuracy
Reducing invoice processing cost
Schedule a free consultation with us and ask for a no-obligation demo of our AP automation solution.