Wouldn’t it be nice to get rid of paper? At least to eliminate most of it? Think of all the purchase orders, invoices, expense reports and checks going through the hands of your accounts payable team. The sorting, scanning, and entering, stapling, and archiving. Not to mention shipping the invoices between locations or departments and retrieving them for audits.
Now, imagine the savings in time and money that come by handling all those documents in an electronic format that intelligent software can read, understand, and automatically process with far fewer errors and other hiccups.
That’s the promise of a Paperless Accounts Payable solution, an end-to-end digital processing system handles invoices from purchase order to payment. It provides businesses of any size and in any industry with unmatched speed and savings while not compromising on accuracy, security, and compliance. Since all these steps happen in the cloud, an organization can unlock significant gains in productivity and even turn a classic accounting cost center into a source of new revenue and financial intelligence.
Why Payment Software Is a Key Part of a Paperless Accounts Payable System
Many businesses have already taken the first steps toward a B2B paperless accounts payable system, for instance by scanning invoices. But the real benefits, including substantial cost savings of 80%, only accrue if an organization modernizes its entire AP workflow from end-to-end. This means that using a payment automation solution to do away with any need for paper checks is the last and crucial step in modernizing the AP workflow end-to-end.
Here’s how market watcher Levvel Research describes the status quo in its 2021 Payables Insight Report:
“How organizations receive their invoices is highly indicative of how automated they are. While it’s largely the choice of the supplier, companies must be aware of the effect it has on them. Invoice receipt method has a large impact on the overall performance of AP departments: it influences invoice cycle time, exception rate, cost per invoice, and discount capture.”
Each method, Levvel’s experts point out, comes with a set of advantages and disadvantages. Paper, though, is the most dated of the options, as it means suppliers submit their invoice via mail or fax. Both methods slow down the process and make dealing with errors difficult and tedious.
Payment Automation Makes Paper Invoices and Paper Checks Obsolete
Paper invoices are hands down the costliest of all the methods. A manually processed invoice can cost upwards of $12 a piece, compared to around $2 or less if a company partners with an end-to-end AP automation platform provider such as Yooz.
Organizations have for years relied on technology to reduce the importance of manual labor, but they are often stuck with piecemeal approaches that they cobbled together over time and that only address part of the workflow from purchase to payment.
An AP tool that uses Optical Character Recognition (OCR) does a good job of imaging and digitizing invoices, but there is still some labor required to scan the invoices into the system. Ideally, a company should aim to receive as few paper invoices as possible.
And indeed, paper invoice volume has in fact decreased, with larger enterprises leading the way. Today, not even SMEs receive most of their invoices in paper anymore. According to Levvel Research, roughly one in four invoices arrive on paper and 40% via email.
An Intelligent Platform Streamlines the AP Workflow
The result is a tangible improvement in efficiency. “Email represents an easier, faster, more accessible way to send invoices using the internet,” report states. But email still has its shortcomings: it is more prone to fraud, maintains many of the frustrations of paper, and, most importantly, is an unstructured invoice format.
Even a PDF attachment requires conversion to a digital invoice. That’s why Levvel and other experts advocate for structured invoices - EDI, XML, and those submitted via supplier portal - as the most cost efficient, fast, and secure way to receive invoices.
Having an intelligent platform in place that can capture each invoice, extract all relevant information, GL-code it, match it to a purchase order and then route it for approval is a crucial improvement toward the goal of achieving smooth payment automation. The mantra for 2022 should be: no paper, no pain - whether it’s an invoice or a check.
Put another way, ask yourself this question: How many people and how many steps are required to get a payment out today? Why not aim to reduce it to just one person and one click?
Bye-bye Errors, Delays and Fraud: How Payment Automation Delivers
It’s not a lofty goal but entirely achievable if an organization embraces intelligent AP automation that’s end-to-end. In Levvel’s words:
“AP software reduces time, errors, and paper by moving the process into a centralized, online platform that is accessible by employees at different locations and seniority levels. The ability to manage AP in a singular location reduces confusion about where an invoice is in the approval process. Reducing the time wasted on typical tactical AP tasks makes employees more productive and allows them to focus on more strategic efforts.”
If you have started the AP workflow with less paper or - even better - already gone paperless, why then give up on the last few yards before the finish line? Paper checks are vastly inefficient, costly, and prone to errors and fraud. They cost money to handle and mail, they can get lost, stolen, or stuck in the mail if a disruption like a pandemic or severe weather hits.
Luckily, there is a better way to streamline the final stretch of the AP workflow with a payment automation solution. It’s an intelligent and secure way to pay your key suppliers in time and always keep them in your good graces to maintain a more robust supply chain.
How Payment Automation Empowers Teams with Real-Time Insights
What’s more, it gives your team and business partners real-time information about the status of their invoices and payments. It’s a great way to optimize cash management and gain valuable insights that can help other departments make better decisions.
Again, let’s turn to the experts at Levvel who studied this last part of the purchase-to-pay cycle in detail. As they explain, modern ePayments software is designed to move payments from a bank bill-pay tool or spreadsheets into a central platform for managing all supplier-related spend in one place:
“Leading ePayments tools are payment agnostic with the option of paying suppliers in ACH, wire, purchasing and commercial card, and even check-writing services, along with remittance information. The most advanced in this category also offer working capital optimization tools, with dynamic discounting and/or supply chain finance functionality. Leaders also have global payment services for currency conversion and cross border payments, which include fraud prevention, regulatory compliance, international tax requirements, and checking suppliers against ‘Do Not Pay’ lists.”
One Interface, One Click - Payment Automation at its Best
YoozPay is one example of a payments tool that’s integrated into an AP automation platform for maximum efficiency and savings. Once the system has extracted the key data, performed three-way matching for verification and then routed invoices for approval (or additional review) to the right people on the team, the only thing left is to initiate the payment, ideally in electronic form.
Your AP staff only have to select the invoices to be paid, total or partial amounts and choose between a manual or automated payment schedule. Vendors, on their end, are onboarded with a single email and one click to pick their preferred payment method.
If they choose to get paid by virtual credit card, both parties of the transaction stand to benefit. For suppliers, payment comes in instantly and they maintain full visibility into outstanding and settled invoices.
For the AP team, using a virtual card substantially reduces the risk of errors and fraud and creates a granular digital audit trail that will save them more time and money down the road.
Unlock New Revenue Streams with Payment Automation Software
What’s more, a payment automation solution such as YoozPay creates a new revenue stream through cash-back earned on each invoice paid. While an organization can already save thousands of dollars a year by automating the front part of its AP workflow, using virtual cards lets them up their digital transformation game even more.
Turning a traditional back-office cost center into a value driver just by automating your payment solution quickly pays off. A small to midsize company handling, say, 250 invoices a month can expect to earn back a four-figure amount annually just from modernizing its payment process.
In the final analysis, the benefits of using a solution for payment automation are substantial, according to the Levvel report. “ePayments functionality benefits staff-level employees by putting payments for all suppliers and payment methods in one place. Upper-level finance employees also benefit from increased discount capture, reduced maverick spend and fraudulent activity, strategically managed payments, and optimized cash flow.”
Change the Game, Boost Morale with Payment Automation
The benefits of paperless accounts payable, though, aren’t only about dollars and cents. Going the paperless route also boosts job satisfaction and retention rates - a key metric in times of the Big Resignation.
Any AP Team will be delighted by how easy it is to stay on top of their daily tasks. No more drowning in envelopes, invoices, and paper checks. No more battles with spreadsheets and no more playing phone tag with suppliers who want to know when they’ll get paid. And no more weekly or monthly races against the clock to lock in an early-pay discount or to avoid a late payment fee.
In short, payment automation makes the old saw of “The checks in the mail” a thing of the past. Instead, all the details AP staff want to know, and then some, are at their fingertips. Displayed in a single, intuitive browser interface that’s available either on the desktop or on their mobile devices. It makes getting things done easier than ever, wherever you are.
You could say that ditching paper checks simply checks all the right boxes.