Manual no more: The benefits of Accounts Payable automation for business success

• Efficient accounts payable (AP) processes help businesses reduce costs, increase efficiency, and eliminate risk.
• Manual accounts payable processes lead to inefficiencies and inaccuracies.
• AP automation offers an answer for the pain points that plague AP teams and employees alike.

When economic uncertainty arises, organizations in every sector scramble to stabilize their spending. Today, with 77% of CFOs predicting a recession in 2023, many leaders are doing just that.

One way to weather the storm is by automating accounts payable (AP) — an essential function that can make or break your profitability.

In this blog post, we’ll explore how AP can drive or detract from your organization’s success — and how automation can help.

The impact of accounts payable on organizational success

Accounts payable plays a vital role in making your organization successful. Here’s how a well-managed AP function aligns with three key performance indicators (KPIs).

1. Reducing cost

Profitability is always a top priority for businesses. Amid economic instability, when revenues fluctuate, managing costs becomes even more important. This is where accounts payable comes in.

Finance executives are keen to reduce invoice processing costs — in fact, nearly 45% cite this as their greatest AP-related pressure . Digitizing AP eliminates hard costs like paper and postage. For companies that process an average of 500 invoices monthly, automation helps them save up to $120,000 per year.

Automating vendor payments can also allow payers to enjoy early payment discounts .

2. Increasing efficiency

Automating repetitive manual processes makes the entire organization more productive — from accounting teams to employees who spend time filing invoices or expense reports.

In fact, 88% of small businesses report that automation helps them compete against larger businesses .

Workers are hungry to do interesting, challenging work, and they look to tools and technology as key factors when considering an employer. Automation reduces manual, paper-based tasks so they can focus on the higher-value work they enjoy.

Greater efficiency also helps employees lead more fulfilling lives outside of work. Automation allows workers to complete more tasks in less time and avoid overtime spent keying in invoices — so they can spend more of their free time doing the things they love.

3. Eliminating risk

Minimizing your organization’s vulnerability to fraud is an essential part of the AP process — and automation can help.

Automating AP drives transparency and stronger controls from end to end. Finance leaders gain confidence that the right approval processes are in place. A complete audit trail provides full visibility into what happened and who was involved at every step.

From avoiding regulatory penalties to limiting the risk of fraud, AP automation keeps organizations profitable and businesses successful.

How manual AP processes hold your organization back

When you think of the costs of conducting AP manually, you might picture massive filing cabinets, or tediously processing invoices by hand.

In reality, these frustrations are just the beginning. Ultimately, manual AP processes prevent businesses from stepping into a more productive and cost-effective future.

Accounts payable has historically been a paper-heavy process (think invoices, purchase orders and checks). This was the status quo until computers became ubiquitous. But even as companies grow increasingly digital-forward, paper-check payments still make up 40% of transactions . But using physical documents puts your organization at a major disadvantage.

Physical documents are easily lost, causing inaccuracies and inefficiencies. According to the Association for Intel Information Management , 7.5% of documents get lost and 3% are misfiled — meaning that more than one in 10 hard-copy documents is missing or difficult to find.

Manual data entry is time-consuming and costly. 76% of office workers spend up to three hours per day on data entry. It’s little wonder that 71% of organizations say manual data entry and inefficient processes are their biggest challenge .

Manual AP is prone to error and fraud. Multinational corporations and small-to-medium businesses alike face risks when they fail to automate AP. To ensure accuracy, consistency, and security — whether within one small business or across multiple entities — you must be able to trust your AP.

On top of these challenges, physical documents also prevent remote work, increase fraud vulnerability, and are more susceptible to damage. Manual processes for accounts payable simply can’t support the needs of a modern business.

Targeting AP pain points with automation

What can organizations do to set up accounts payable for success and step into a new way of doing things? Automation is the answer.

Here are four examples of how automation addresses common AP pain points.

1. Purchase order automation

Automating the purchase order (PO) process simplifies and clarifies every part of the purchasing cycle. With the help of the Sage AP automation solution , you gain more control over spend through budgetary controls based on department, project or vendor — whichever constraints are right for your company.

Automation allows you to transform your approvals process. By overseeing cash flow and outstanding approvals, your AP team can speed up the process and keep teams in the loop with real-time order updates. Over time, you’ll identify bottlenecks in the PO process — including any approvers who are holding up orders — and create a better experience for everyone involved.

Automation also reduces data entry by allowing you to create purchase requisitions directly in the software.

2. Invoice automation

Invoice automation uses AI technology to capture invoice line item details, such as description, unit cost and quantities. Say goodbye to the human error common in manual processes — and say hello to data entry reduction of over 80%.

Invoice automation lets you simplify the approval process by automating approval channels and by routing invoices based on virtually any of the fields you might find on an invoice: location, department, project or vendor.

When you need to find an invoice, automation streamlines your search. Just type the details you know — whether the vendor name, GL code, invoice number or legal entity — and Sage AP automation will help you find what you’re looking for instantly. And because all AP data is stored for seven years, unruly filing cabinets are a thing of the past.

3. Payment automation

When using manual processes, you run the risk of paying vendors more than once or paying them an incorrect amount. Not so with payment automation, which flags duplicate entries.

With all upcoming payments saved in just a single dashboard, your team gains full visibility into the approval process and upcoming payment status with minimal hassle, since payment data is automatically synced to your Sage 50 system. Plus, because the software matches every payment to its corresponding invoice automatically, invoice automation makes manual audits quicker than ever.

Sage AP automation allows you to pay vendors using your preferred method, including payment by wire and most other methods.

4. Employee expense management

Odds are, if you asked your employees about their biggest headache related to accounts payable, they’d respond, “the paperwork.” Automation gives your employees mobile access to upload receipts and create expense reports anywhere, from their kitchen counter to the airport — literally taking paperwork off the table.

Digital access speeds up the rest of the process by allowing employees to create their reports online and immediately route them to approvals. After an expense is approved, AP teams can reimburse electronically as well, smoothing over payment delays — another typical employee complaint.

Save time for employees, too, through automatic general ledger (GL) coding. You can set up customized expense receipt categories to map GL codes automatically in the backend for the accounting team. The AP team gets the information they need, and employees don’t have to track down GL codes.

With AP automation, everyone wins

Investing in AP automation means investing in the success of your business. By eliminating manual processes that bog down your employees and your AP team, you’ll save time and costs that go a long way under any market conditions.

Quadient AP is reshaping accounts payable with leading automation tools. Learn more about how Quadient injects modern finance teams with the efficiency they need, and request a demo today.