Any accountant can testify to how challenging properly managing payments to creditors can be. It’s a critical element of running a business, but software is helping to alleviate the pressure. In fact, Accounts Payable Automation is doing more than simply reducing the hassle involved in handling the stream on payment obligations.
Understandably, it can be difficult for some companies to fully accept cloud Accounts Payable Automation software. But the accuracy with which modern AP Automation software operates, and the degree of complexity it is able to handle, means that efficiency is extremely high, ROI is worthwhile and security is no longer an issue to worry about. Typically, Automated Accounts Payable software digitises paper invoices using optical character recognition (OCR), and can route, track and archive invoices that are paid, cancelled or outstanding.
Of course, time is a key benefit to using AP Automation. Research indicates that adopting Accounts Payable Automation in an AP Department can reduce time spent on a manual AP process by as much as 80%, leaving staff with much more time to deal with other responsibilities. But while speedy and processing efficiency is clearly a major attraction for switching to cloud-based procedures, there are other benefits on offer too.
Part of the reason so much time is spent on a manual AP process is the constant need to double-check figures. Human error is a constant threat in manual procedures, a fact highlighted by a 2010 report from the Institute of Finance and Management in the US, which revealed that, typically, about 3.6% of supplier invoices include errors. A huge degree of care is needed to ensure accuracy, and Accounts Payable Automation is an effective way to eliminate the chance of errors.
When the time saved is estimated to be 80% of the manual process then the costs saved are clearly going to be equally impressive. A 2015 survey carried out by APQC, a US-based non-profit business benchmarking and research firm, showed how significant the difference in costs can be, with top performers amongst the 997 participating companies spending just under $5 per invoice and the lowest performers spending $12.44. The survey also stated that manual intervention typically consumed 62% of total AP costs. Accounts Payable Automation, therefore, can drastically reduce overall AP processing costs.
For some business owners, AP automation feels like placing their head in the lion’s mouth. They prefer to keep control over procedures in human hands. But online and cloud security has developed rapidly in recent years, and if the leading security technologies available today are adopted then the risks involved in automation become minimal. Of course, the right cloud security technology needs to be adopted, and ISO accreditation is a key part of ensuring that. It’s why we knew it was important for our own AP Automation solutions to earn ISO 27001 Information Security certification.
Everyone likes to get paid on time, which is why many service providers are willing to offer benefits to customers who do so. This is generally in the form of discounts, and while none are particularly large on their own (often around just 2%), the benefits can be significant when added up over the course of a business year across hundreds of creditor accounts. Accounts Payable Automation allows payments to be made on agreed dates without fail, so there is no chance of forgetting to settle an invoice on time – which also eradicates the chances of being slapped with a late payment penalty.
The old office filing systems always required time to search through when information needed to be retrieved. The fact that automated systems use leading cloud-based technology, and that all details related to accounts payable can be stored electronically, means that a host of statistical information can be retrieved quickly and easily whenever necessary. What is more, with software typically collating information in real time, AP month, quarter, half-year and annual reports can be created and printed almost immediately.