8 minute read
5 reasons your business should enable accounts payable automation
Is your business ready to go digital with your B2B payments? If not, it should be. As industry leaders and our customers identified, digitizing B2B payments in 2022 is a top payment trend and priority. It is one of the easiest and fastest ways to optimize your workflow and cut costs.
This year, more companies will focus on automating the manual processes and operations associated with accounts payable (AP) to help digitize their B2B payments. As a result, the AP automation market is projected to reach $4 billion by 2025.
A significant driver of this growth? The vast global work-from-home employee base. According to MineralTree's 6th Annual State of AP Report, only around 15% of finance teams reported working remotely before the pandemic. After its onset, 62% of finance teams are either fully remote or hybrid. With so many employees working from different remote locations, accounts payable automation is becoming a necessity.
Invoice-to-pay goes digital with AP automation
Grounded in legacy manual processes, AP departments are primed for the next wave of digital transformation. While companies today may emphasize automating purchase orders and invoices, the majority still send a paper cheque to pay. Over 50% of B2B payments are still paid by cheque.
AP solutions can automate the entire process from workflows to sending invoices and digitizing payments. End-to-end automation can dramatically help increase efficiency in your business.
Here are five benefits you can expect from your investment.
1. Improve business performance
The benefits to your overall business performance are astounding when you move to AP automation. When you stop cutting cheques and using postage, you greatly reduce associated costs and manual processing time—not to mention helping create a more sustainable environment. Your cash flow will also increase by creating faster payment turnaround times.
The average paper invoice costs about $10.08USD and requires 8.3 days to process, while the average automated invoice is processed in 2.9 days for $2.18USD. That's a savings of almost $8 and more than five days of delays per invoice, a significant cost reduction for enterprises handling thousands of invoices per month. Research suggests that reducing cheques by 10-50% equates to $1.3-$58.3 billion in savings each year.
Automating AP gives your finance department more time to budget, analyze metrics, and find ways to reduce costs. They no longer have to spend their time scanning cheques or invoices, shredding paper, waiting on signatures or approvals, or uploading digital files. Accounts payable automation makes the approval process more efficient and your entire system more scalable for the future.
2. Reduce errors
Several errors can plague manually driven accounts payable departments:
- Mistakes that arise from data inputs like overpaying and making duplicate payments.
- Human errors create unwanted invoice exceptions, a discrepancy between the data on the invoice and the data associated with the order. These exceptions can add up when invoices go missing, are entered incorrectly, or when someone inputs a number wrong in a supplier code, postal code, or purchase order.
- A lack of appropriate checkpoints may cause discrepancies to go unnoticed.
Accounts payable automation will reduce, or better yet, eliminate these manual data entry and verification errors.
3. Improve relationships with suppliers
Over the last year, nearly 40% of respondents to the 6th Annual State of AP Report made more supplier payments. With supplier payments increasing, it's no wonder why more companies are implementing accounts payable automation.
Doing so improves transparency with suppliers and prevents users from making lengthy calls to the help desk or wondering about the status of their payments. Suppliers will receive payments faster and can log in at any time to view their account. This all adds up to better supplier relationships. According to Bob Cortopassi, president at Global Payments, "Vendor management is one of the biggest benefits of digital B2B payments."
4. Generate business insights with real-time analytics
Leading automated AP solutions come embedded with sophisticated machine learning and AI algorithms. With these, you can get faster and better financial insights through real-time data analytics. You can use these algorithms to help you visualize new ways to cut costs and drive efficiencies. Insights that may have taken your finance department weeks or months in the past to generate manually are now available with a click of a button.
"The derivative benefit of automating is that you've now digitized the data so that the inputs and outputs become usable information. With digital information, you get aggregated data, where we can layer in machine learning on that data to realize efficiencies you would have never seen before," said Andrew Mathieson, chief enterprise initiatives officer at Global Payments.
5. Create more transparency across your organization
With an automated solution, you can ensure that your entire team has access to the information they need to do their jobs effectively wherever they are in the world. This added transparency can enable business continuity even when employees can't be in the physical office. It also enables others to step in when needed. For example, another employee can manage your AP workflow without missing a beat if someone is out of the office.
In this way, your workforce has the potential to become more efficient and can handle more projects with fewer resources. Sixty-four percent of respondents who have implemented AP automation process more invoices and payments with the same size team and another 13% reallocated staff time that freed up to other projects.
An opportunity for companies of all sizes
MineralTree's 6th Annual State of AP Report found that only half of the enterprises and less than a third of small-to-medium businesses have taken advantage of the benefits that AP automation brings. Exploring what AP automation can deliver to your business is an opportunity that can't be passed up, particularly as the world becomes more and more digital.
"We're a software company that thinks day in and day out about how we can apply software to solve business problems like reducing friction, cutting fraud, and increasing cash flow," said Mathieson. "In the digitization of B2B payments, we're driving efficiency, eliminating waste, and unlocking hidden value in your business."
"In the digitization of B2B payments, we're driving efficiency, eliminating waste, and unlocking hidden value in your business."
Andrew Mathieson, Chief Enterprise Initiatives Officer at Global Payments
Businesses interested in the benefits of an automated AP solution can contact us to discover how our solutions can help.
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