CFOs & Controllers: 10 Reasons AP Automation Deserves Your Attention Now
By Ernie Humphrey, CTP
Accounts payable, what’s with all the hype? No one paid much attention to accounts payable beyond accounts payable professionals for many years, even decades, until just a few years ago. Then, boom, an explosion of AP automation companies, and webinars, conferences and associations all dedicated to excellence in accounts payable. Is there really so much value to be realized from viewing accounts payable as more than a back-office function? Is there really so much inherent inefficiency in how the vast majority of companies manage accounts payable? The answer to each of these questions is a resounding “YES”!
All companies regardless of size can benefit from the advances in AP technology to make accounts payable more efficient, accurate and expedient. The business case for investing in a cloud-based accounts payable solution makes itself and is compelling to even the most skeptical CFOs and Controllers.
Let’s cut to the chase, here are 10 reasons AP automation warrants the attention of finance leaders:
1. Mitigate invoice processing costs — Many companies spend well over $10 to process a single invoice. All companies should have a solid estimate of this cost. Companies that “do it right” report a cost of $2.00 or less per invoice. For many companies, this potential savings make investing in an AP automation solution a no-brainer.
2. Mitigate processing and/or payment of duplicate invoices — Research shows the processing of duplicate invoices can reach 3% – 5% of invoices processed. Also, consider the time needed to correct these duplicate payments.
3. Mitigate-time spent resolving supplier issues/disputes — How much time does your AP staff spend on the phone with suppliers? Research shows that AP professionals spend as much as 40% of their time on the phone handling supplier calls.
4. Capture discount opportunities — Do you have visibility into the current discounts available to your company? Are you taking advantage of all of them?
5. Capitalize on early payment programs (dynamic discounting & supply chain financing opportunities) — The better relationships you have with suppliers and the faster your company can process invoices, the more opportunities you have to control when you pay suppliers. AP automation means better relationships with suppliers and more efficient invoice processing.
6. Boost AP employee productivity — AP automation eliminates manual tasks, the time spent fixing errors caused by manual tasks, and the time spent resolving supplier issues caused by those manual task errors. Your AP staff can now focus on more value-added efforts.
7. Mitigation of payment processing costs — Good relationships with suppliers facilitate more control over how companies pay suppliers. The more control companies have over how they pay suppliers the lower the cost of affecting payments.
8. Impact working capital management — AP automation provides better visibility into the AP process and more control over when payments are made, resulting in better forecasting and more effective cash management.
9. Impacting the productivity of employees approving & affecting payments — AP automation removes manual and time-wasting workflows giving valuable time back to those who approve and affect payments at a company.
10. Realizing rebates from commercial card payments — There are many card programs that offer rebates. Converting the right suppliers to the right card can lead to rebates. A few words of caution here, AP is not a profit center and should not force card payments on suppliers.
If you want to learn specifically how AP automation can deliver strategic value at your company, please contact us.