8 minute read
5 ways automating accounts payable can benefit your business
Editor's note: This article was updated on November 11, 2022, from its original publish date of April 13, 2022.
B2B payment automation is a top payment trend in 2022, and an increasingly urgent priority for businesses of all sizes. There's a good reason for that: It's one of the easiest and fastest ways to optimize your workflow and cut costs. And for more and more companies, the automation of accounts payable (AP) is a key area of focus during the process. AP departments are particularly ripe for modernization. Even at companies that have embraced automation for purchase orders and invoices, AP departments are often still grounded in legacy manual processes. Over 50% of B2B payments are still paid with checks.
With so much to gain from AP automation—increased efficiency, lower costs, more flexibility—it's no wonder that companies are eager to make the switch. And the shift to hybrid work has only accelerated the trend. As a result, the AP automation market is projected to reach $4 billion by 2025. Even the US Federal Reserve has staked its claim to go digital with its B2B payments.
The signs are clear. To keep pace with an increasingly digitized business landscape, now's the time to automate AP at your company. Plus, there are other big advantages to automating AP processes. Here are five key ways it can benefit your business.
1. Improved business performance
By replacing paper checks and postage with digital processes, the costs associated with manual processing and materials are greatly reduced—not to mention the environmental impact. And faster payment turnaround times mean a faster, more reliable cash flow.
The average paper invoice costs about $10.08 and requires 8.3 days to process, while the average automated invoice is processed in 2.9 days for $2.18. 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 checks by 10-50% equates to $1.3-$58.3 billion in business savings across the industry each year.
These time savings free up your finance department to focus on what really matters—like budgeting, analyzing metrics and finding new ways to reduce costs. Automating AP offers a more efficient, more effective payment process. All of which make your entire system more scalable for the future.
2. Reduced errors
Costly errors can plague manually driven accounts payable departments. For example:
- Mistakes can arise from incorrect data inputs, like overpaying and making duplicate payments.
- Human errors can lead to invoice exceptions—discrepancies between the data on the invoice and the data associated with the order. These discrepancies can add up when invoices go missing, are entered incorrectly or when someone inputs the wrong number in a supplier code, zip code or purchase order.
- Discrepancies can go unnoticed because of a lack of appropriate checkpoints.
Accounts payable automation reduces—or even eliminates—these types of manual data entry and verification errors.
3. Better supplier relationships
Nearly 71% of finance leaders say relationships with vendors are more important this year. By automating B2B payments, businesses improve transparency with their vendors. They get their payments faster and can log in at any time to view their accounts. Which means fewer lengthy calls to the help desk and less uncertainty around payment status.
It all adds up to better supplier relationships. That's why Bob Cortopassi, president at Global Payments says, "Vendor management is one of the biggest benefits of digital B2B payments."
4. Rich business insights with real-time analytics
The best automated AP solutions make use of sophisticated machine learning and AI algorithms to deliver real-time data analytics. That means insights that may have taken your finance department weeks or months to generate manually are now available with a click of a button, helping you visualize new ways to cut costs and drive efficiencies.
"It's yet another benefit of automation: once you digitize the data, the inputs and outputs become usable information. With machine learning, we can mine that information to realize efficiencies you would have never seen before," says Andrew Mathieson, chief enterprise initiatives officer at Global Payments.
5. A more flexible and better-connected workforce
Automating AP means your team gets access to the information they need to do their jobs effectively, whenever and wherever they need it.
This added access and visibility helps ensure business continuity even when employees can't be in the physical office, and it makes it easier for others to step in when needed. For example, if someone is out of the office, another employee can manage your AP workflow remotely without missing a beat.
With a more efficient, flexible and better-connected workforce, you can handle more projects with fewer resources. Nearly two-thirds of businesses that automated accounts payable are now processing more invoices and payments with the same-size team.
Payment automation: a big opportunity for businesses of all sizes
Whether you're an enterprise or SMB, AP automation can deliver benefits you don't want to pass up.
"B2B AP automation allows businesses to manage their workflows quickly, securely and efficiently, while reducing friction, increasing cash flow and improving relationships with vendors," says Brian Greenhan, Head of B2B Solutions at Global Payments. “It's a big win for businesses of all sizes and across all industries."
B2B AP automation allows businesses to manage their workflows quickly, securely and efficiently, while reducing friction, increasing cash flow and improving relationships with vendors."Brian Greenhan, Head of B2B Solutions at Global Payments
Ready to take advantage of AP automation for your business? Our MineralTree accounts payable solution can help you get started in no time. Or if you're an issuer, check out our TSYS commercial solution.