8 Reasons Why Businesses should Automate their Accounts Payable Processes

accounts payable processes

According to Kofax, businesses using accounts payable automation software can see a 73% faster processing cycle and 81% lower processing costs.

It enables easier management of invoicing and payment processing through a single platform. Moreover, automating accounts payable processes can provide clearer visibility and increased control over data collection and financial operations.

Nowadays, over 40% of small and medium-sized companies integrate automated accounts payable software. From time-saving capacity, seamless integration to fraud protection, and low-cost invoicing, this automation has many benefits.

Read more to explore some key benefits of accounts payable automation.

1.Saves time

For approval, invoices need to wait for a while in email boxes.

But now, these delays can be eliminated through automation. Automation offers a real-time view of invoice processing. It streamlines the entire approval process.

Also, a company can apply specific parameters to the workflow. So the next person receives the invoice on time.

2.Low cost invoicing

According to the IOFM, invoice processing costs vary between $1 and $21 depending on the total cost of accounts payable staff divided by the number of invoices processed.

In past years, it decreased by 4% as many companies struggled to achieve efficient accounts payable processes. It shows that integrating with modern technology to automate their AP process costs five times lower invoice processing costs.

3.Enhanced accuracy

Sometimes invoices are validated against enterprise resource planning with the help of accounts payable automation. It results in quickly detecting duplicate payments.

Therefore, businesses do not have to manually input invoice headers, thus reducing the likelihood of human error.

4.Improved insights

The automation software comes with a comprehensive dashboard that contains every precise detail of the accounts payable process. Further, it makes it easy to identify where the invoice is sitting and who to contact.

With the help of automated invoice processing, businesses can import and export real-time access and facilitate smooth reports.

5.Protection from frauds

AP automation software assigns specific employees to access invoice approval and the release of payments, promoting fraud protection. There will be only one single employee for payment approval.

Further, reducing the chance of fraud and providing ample opportunity to double-check data.

6.Low-cost data preservation

According to HMRC, from the end of the last company financial year, every business has to keep records for six years. But the cost of paperwork and storage will add up.

According to research by North Dakota’s Information Technology Department, the cost to maintain one five-drawer file cabinet is around $2,603.64.

That’s too much.

But it can be reduced by simply automating accounts payable processes.

7.Boost auditing processes

AP automation software boosts auditing processes by linking all documents and messages with each transaction and matching invoices with purchase orders. As a result, it reduces the missing paper and ensures quarterly compliance.

8.Early payment discounts

According to the study of IOFM, most businesses receive less than 21% of these early payment discounts. However, 12% does not collect these early payment discounts. There are several reasons for missing these discounts.

But now, 31% of businesses claimed that automated invoice processing and approval impeded their future early payment discounts.

Wrapping up

So here are some highlighted roles and benefits of accounts payable automation software. Automation plays a significant role in streamlining and optimising invoicing and payment processing functions.

Therefore, every business has to implement this automation to minimise the complexity of the accounts payable department.