Let’s do a quick and informal (but easy!) math calculation. Assuming your organization processes 500 invoices a month, that’s a total of 6,000 a year. With an estimated average cost of $12.40 per invoice, that means the annual cost is $74,400. However, that is just the standard accounts payable obligations such as labor, overhead, technology, and document storage.
That rough estimate doesn’t include additional expenses you run up through late payment fees, the loss of early payment discounts, and of course expenses associated with any erroneous, duplicate, or outright fraudulent invoices slipping through.
That's quite a bundle of cash to do business as usual.
Unless, that is, you choose to implement accounts payable automation. A state-of-the-art platform for AP automation will streamline the entire invoice workflow process and yields astonishing benefits almost immediately. Just for starters, the average processing cost per invoice drops by an average of 80% to around $2 per document. That’s roughly $62,000 in rapidly achieved savings.
Fast and Faster Accounts Payable Automation
The great news? That’s just the tip of the iceberg. Once you get rid of as much paper as possible, the cycle times to process an invoice also plunge, from approximately 12.9 days to 2 or 3 days, possibly even less (think hours). In fact, plenty of companies that have implemented AP Automation report being able to pay their bills the same day.
As a result, they never miss an early-payment discount and they never incur late fees, which can over time not only accumulate but irk vendors and potentially land you on some gray to blacklists. It goes without saying that any kind of vendor issue is a bad idea when supply chains are already shaky.
Cost savings and speed aside, just at a glance accounts payable automation takes both the stress and the guesswork out of the finance function. Companies that still rely on paper-based, manual processes have no efficient way of keeping track of where invoices might be in the approval process. Consequently, they must physically track them down, find out if they have been approved, and forward them to the appropriate manager. That not only takes time but also raises the team’s workload.
Now’s the Time to Get Started with Accounts Payable Automation
Gaining benefits and eliminating headaches are just some of the basic reasons that more and more companies are realizing that now is the time to get started on their digital transformation journey. Their end game: getting rid of envelopes and piles of paper, saying good-bye to folders full of documents sent between locations, and of course no longer managing spreadsheets or cutting and mailing paper checks. Its all within reach, thanks to powerful cloud-based solutions such as Yooz. And its worth it.
Cloud-based services make up one of the fastest growing segments for IT spending because they provide companies of any size in any industry with the most modern and powerful tools to better run their business. This means remining both competitive and resilient even in the face of unknown disruptions.
As market researcher IDC writes in its most recent “Worldwide Semiannual Services Tracker,” cloud-related services spending has been the main growth accelerator since 2020 globally. IDC expects the sector to keep growing close to 20% this year and another 15% to 20% over the course of the next three years.
Add to that the fact that investments in shared cloud infrastructure will grow 25.5% this year alone, it becomes apparent that organizations will have plenty of choices to pick a cloud-based AP automation platform that suits their needs and will grow with them.
Think End-to-End: Picking the Right Platform for AP Automation
How, then, do you pick the right AP automation solution for your company that checks all the boxes? And which platform is the right one to streamline your individual AP workflow from purchase to payment without making any compromises when it comes to customization, flexibility, scalability, and onboarding? One which also has airtight security and compliance?
Answering those key questions is not simply about picking a software package and flipping some on-switch. It’s about choosing a partner with a service offering that empowers your entire organization to successful navigate its digital transformation and offers multi-level support: individual answers when you have individual questions.
That’s harder than it looks, especially when too many companies get stuck in the land of the digital dilemma. While they do realize they need to change and get rid of paper and do it fast, they manage to get stuck half-way across the journey to a fully digitalized and automated future.
Why Sudden Remote Was a Wake-Up Call
The pandemic has proven to be a wake-up call for many companies as they suddenly were confronted with empty offices and remote working arrangements that were often cobbled together on the spot. Unopened mail piled up, deadlines went by, late fees accumulated, and cash flow became a worrisome topic for too many vendors. Lots of challenges, yes, but there are also plenty of solutions offered by smart automation to tackle and solve them.
Market researcher Ardent Partners succinctly sums up the changing landscape in its report “AP Pulse on the Midmarket in 2022”:
“Paper and manual invoice processing remain a problem for many mid-market enterprises. Not surprisingly, nearly 70% have prioritized AP automation in 2022. The result of this attention was a 48% increase (since last year) in appreciation for AP’s value to the overall enterprise. Sixty-eight percent of mid-market enterprises now view AP as “exceptionally or very valuable” and recognize the critical part it serves as an operation supporting enterprise objectives and as a ‘hub’ of intelligence.”
So what are the top priorities for AP professionals are this year? Implementing automation and eliminating paper invoicing while reducing manual tasks are the two top-ranked initiatives, followed by the wish to improve AP reporting and analytics. Both are necessary to satisfy the increasing organizational demands to generate real-time operational data and strategic, financial intelligence that can support decision-making far beyond the finance function.
Automation is Part of the Vaccine Solution
What other factors are behind the push to implement AP automation this year? To put it simply... Cash. Since cash is the lifeline of every organization, there is noticeable appreciation of the direct link between B2B payments and overall cash management. Enter Covid-19 and a direct learning from two years’ worth of pandemic disruptions.
Nobody in the office meant work started piling up. This led to a looming cash crunch while invoices went unpaid and staff was reduced to a skeleton crew. As a direct result companies began to explore B2B payment solutions to reduce costs, improve efficiency, and gain better control over their finances. Implementing AP automation with a cloud-based solution accomplishes all the above and does so with amazing speed.
Make No Mistake: The Ease of Accounts Payable Automation
What’s more, a cutting-edge platform will right from the start capture all invoices across a multitude of channels, from paper submissions and faxes to email attachments, photos of receipts to structured data files such as EDI. With a few tweaks that fit your needs, the capture rate goes up even more.
AP Automation also solves the problem of manual entry of invoice data. Instead of relying on the AP team keying in amounts, dates, and addresses (tasks which always comes with the risk of making mistakes) an automation platform like Yooz uses robotic process automation and constantly updated machine-learning algorithms. Together, they are able to correctly extract and GL-code all relevant data points, even performing three-way matching against relevant documents like a PO.
In an ideal implementation, humans are only called upon to review invoices ready for payment or deal with the few exceptions the intelligent system has flagged. Experts call that near-perfect world “straight-through processing,” where an invoice is received and approved with the payment ready to be approved and scheduled without any manual intervention. According to Ardent, roughly one-third of invoices will receive this touchless treatment in 2022, unchanged from the previous year. The fact that this number isn't significantly growing just goes to show how much room for improvement there is.
Permission Granted: AP Automation Comes With Smart Access Rights
Once an organization decides to automate its AP workflow, the team is able to retrieve all documents stored in the cloud. Anytime, from anywhere with a quick keyword search similar as to what we are used to using in any browser search. Of course, this always based on the access rights defined and fine-tuned by their organization.
This is especially important in today's economy because it means that authorized staff can check where a document is in the approval process and then electronically forward the invoice to the appropriate person to approve and move along to the next stage with a few clicks without any delay. Even from their mobile device on the road or while working remotely.
In addition, having this level of detailed digital trail for access rights and audits has important implications for data security and your overall business processes. Without paper documents lying around that need to be properly safeguarded, organizations don’t have to worry anymore about sensitive information falling into the wrong hands.
Secure in the Cloud: How AP Automation Safeguards Documents
Instead of trying to keep track of every little paper, management can rely on secure cloud storage where the AP department assigns specific permissions to employees with secure log-ins to access documents. Even better, managers can see a history of who accessed which documents in case any questions arise. That’s good news for any compliance expert.
Choosing a platform such as Yooz for straight-through processing comes with additional benefits. Freed from performing the repetitive tasks of the old world, your staff can now focus on value-added activities such as querying invoice data for business insights and using them to curate relationships with your key suppliers.
It’s a breath of fresh air that will quickly boost job satisfaction and can even become a valuable asset to attract and retain talent. After all, who doesn’t want to be part of a forward-looking AP team that thrives on financial intelligence to grow?
Play Favorites: Tweak Vendor Relations With AP Automation
If you are empowered to pay vendor invoices on time every time, you are in a great position to approach them and negotiate more favorable terms and also offer strategic insights to other departments. Both capabilities will make a difference for your organization’s bottom line.
In the old world, invoice exceptions and vendor inquiries are huge time and cost sinks, according to Ardent reports. Based on their survey of thousands of mid-market enterprises, exceptions due to missing information in an invoice is the number 1 challenge AP teams face in their daily work. In 2022, almost one in four invoices are flagged for bad or missing data and need special handling.
An end-to-end AP automation platform is the best way to remove this bottleneck, serving as a gatekeeper and making sure that an invoice contains all required data in the proper format and proper fields before it’s routed for approval.
The same goes for suppliers who want to find out the status of their invoice or payments. Ardent found that in 2022, a stunning one-third of AP staff time is spent (or wasted) on working directly with suppliers to fix invoice, processing, or payment errors. Ardent’s sombering take on this problem speaks volumes:
“For AP to move into its next phase of evolution, staff cannot spend this inordinate amount of time tracking down phone numbers, correcting erroneous contact information, and interacting with suppliers to lock down missing pieces of information and fix mistakes.”
Believe in Magic: Paying on Time with End-to-End AP Automation
Having an intelligent AP automation platform in place that works its magic from purchase to payment will tackle all of those challenges, and then some. First, streamlining the B2B payment process that still hamstrings a lot of organizations, preventing them from securely paying on time, every time.
A thoroughly modern AP solution should allow for onboarding vendors with a single email address and enable the team to schedule and execute payments with a few clicks, ideally by way of a virtual credit card which generates cash back with every invoice paid.
Finally, you should consider the question of how to connect to an existing financial software package or ERP system. Modern AP automation platforms will seamlessly integrate with those systems, allowing the AP staff to push invoice and payment info to the ERP’s database, automatically marking an invoice and its corresponding PO as paid. Yooz plays nicely with more than 250 ERP systems.
No Reason to Wait for Implementing Accounts Payable Automation
So, with all the possible benefits just waiting for any organization, why wait on implementing AP automation? There was never a better time to take the leap and pick an end-to-end platform that saves time and money, makes your staff and your vendors happy, and has all the features you need to weather disruptions and capture opportunities for organic growth.
All the functionalities to intelligently streamline your AP workflow are available now, in the cloud and on demand as needed, without the risk of vendor lock-in or big up-front investments. Waiting any longer to go digital means leaving money on the table and risking your competitive advantage.
Implementing AO automation now is imperative for staying relevant tomorrow.