Less is more…
We’ve all heard this maxim plenty of times, but there’s tons of truth when you apply it to your AP department. Think about it for a minute:
Accounts payable automation benefits include:
- Less overhead, more efficiency
- Less paperwork, more easily accessible digital files
- Less chance of error, more accuracy
- Less monotony for your employees, more positive morale
The list goes on, but that’s truly what AP automation is all about—getting more done with less.
As the benefits of accounts payable automation pile up you can start to see that this isn’t just cutting a corner here or shaving a little time off of a process there. There is potential for large-scale operational victories within the implementation of AP automation.
But we’re not just talking about a ‘nice-to-have’ tool for your department. Many of the manual processes of an AP department are inherently flawed. We ask humans to have robotic efficiency, accuracy, and temperament, which is a recipe for errors, burnout, and especially when it comes to an audit.
In this post, we aim to look at some of the problems with traditional AP workflows, quantify the benefits of automation, and examine AP automation best practices you can use moving forward.
Let’s get started.
The traditional accounts payable process is broken
As you know, the real cost of an invoice is more than what’s written on the bottom line. Your vendors have hard costs like paper, ink, envelopes, stamps, etc. You have the indirect costs of the employee time to work through all of the manual tasks in the process, which often accounts for more than half of the invoice processing cost. Lastly, invoices with errors or fraudulent payments can wreak havoc your balance sheet.
A quick note on errors—from a management perspective, if the AP department is committing too many errors during their processes, the natural reaction is to add checks into those workflows to prevent the errors. This adds time to fulfillment while decreasing employee morale. In that sense, adding more process to your workflows is less effective.
This level of inefficiency is the norm, however, not the exception. Yet the majority of AP departments are still using a paper-based invoice processing system.
There is a better way to keep up with the speed of business in the technology era—accounts payable automation.
The benefits of AP automation
AP automation contains many benefits is a huge win for businesses.
A ping pong table in your breakroom is a benefit—fundamentally changing how work gets done within the AP department while increasing efficiency and reducing cost is a big win. But of course, many benefits will roll out to AP employees upon successful implementation of AP automation.
Here are some of the benefits you can expect by automating your accounts payable process.
Cut invoice processing time
It turns out when you are able to automate time-consuming tasks such as invoice capturing, coding, and routing, you can save tons of time. According to a study by Aberdeen, automation can reduce invoice processing time from 20.8 to 3.8 days. That’s over two weeks faster!
Upon implementation of Stampli’s AP automation platform, the accounting team at Renova Energy now spends 50% less time on AP processing. This has given them more time to focus on forecasting and reporting.
Save on invoice processing costs
As we mentioned above, the actual cost of processing an invoice is significantly more than the bill itself. Depending on the company, the processing of an individual invoice manually can range from $10-30, sometimes more in extreme cases.
When companies introduce AP automation systems, however, that number drops significantly.
In a survey by APQC, top performing companies switching to AP automation spend just under $5 per invoice, and even the lowest performers only spend $12.44. Extrapolated over thousands of invoices, automated invoice processing creates a huge win for the AP department in terms of money saved. Not bad for a department that’s known for spending money.
Reduce errors on invoices
Inaccuracies on invoices from vendors is a fairly common—a report from the Institute of Finance and Management shows that about 3.6% of invoices include errors. You have to have incredible attention to detail to catch all those errors via matching invoices to their supporting documents, and even the most dependable AP employee is susceptible to human error on occasion.
Workflows like automatic invoice matching can catch and flag errors quicker and with more accuracy than is possible with the human eye.
And these are just a handful of accounts payable automation benefits you can realize, but you can already see how they can add up into major wins for your business.
Accounts payable automation best practices
Are you all in on AP automation yet? If so, we have a couple tips and tricks to make sure your implementation goes smoothly and optimize your workflows for efficiency.
Map out your current AP processes
AP automation isn’t a magic wand that conjures new workflows—it only works when you have standard processes that it can automate. This means that if you want to implement, you’ll need to completely map out each and every AP process from soup to nuts. Once that’s done, you can match current workflows to software capabilities while eliminating redundant or tedious tasks.
The key to success is standardization first; automation second.
Build advocacy before implementation
One issue within the corporate world is that anytime somebody hears the word “implementation,” they think of a long, arduous endeavor that they have to take on in addition to their current workload. In reality, AP automation can be implemented in as little as a single day, but you would be wise to help your coworkers prepare for the changes ahead of time.
To do this, build advocacy around the implementation ahead of time. Have each employee map out their own workflows (see above) and turn in. As you review, you can point out how automation can remove parts of their workflow that they (likely) do not enjoy. In this way, you can get people looking forward to the results of AP automation instead of dreading the time spent implementing.
Celebrate victories and milestones
Rome wasn’t built in a day, and you can’t force a digital transformation project on the entire company in one, either. Instead, pick out workflows from your list and tackle them one at a time. Upon implementation, monitor how the new systems have improved workflows.
Consider the following:
- Time to complete a task
- Days to fulfill an invoice
- Employee response to new processes
If you can quantify your results, you can share with your team and encourage others to push your new AP automation system to new heights. And just think of what your company can do with all that extra time and money!
Interested in claiming some of the benefits from AP invoice management automation for your own company? Schedule and appointment to chat with one of our AP heroes!