Accounting departments are in love, and they’re not afraid to shout it from the rooftops. AP automation is changing their lives for the better. This is a relationship that will endure.
What is so attractive about AP automation? For starters:
- Lower invoice processing costs: Automation reduces the average cost to process an invoice. The average cost to process an invoice from receipt to approval in a semi-automated system is $16.67. If you process 1,000 invoices a month, that’s $16,670 per month. With a fully automated AP system, the cost averages $3.34. So those same 1,000 invoices now cost you $3,340 (Aberdeen Group 2016).
- Increased staff productivity: Accounts payable clerks working with a high level of automation on average can process more than four times as many purchase order-based invoices per month as accounts payable clerks working with a low level of automation (Institute of Finance and Management).
- Faster cycle times: Businesses with automated solutions can process invoices in less than half the time of average companies (3.7 days versus 8.8 days) and in less than one-third the time of laggards (3.7 days versus 14.3 days), according to PayStream Advisors.
But these departmental benefits are just the tip of the iceberg for a corporate enterprise. Accounting departments are crazy about automation for four primary reasons:
- Less keying and paper handling: Automation enables accounts payable departments to extract header and line-item data from invoices received in any format, from any location, and seamlessly post the data on approved invoices to downstream systems. Automating invoice processing greatly reduces the manual keying and paper shuffling required of the accounting department, freeing accountants to focus on value-added tasks such as analysis.
- Improved accuracy: Resolving invoice errors in a manual, paper-based accounts payable environment requires time-consuming data-entry, paper shuffling, and back-and-forth calls and e-mails on the part of an accounting department. Automation eliminates the back-end burden of invoice errors on accounting by extracting data from invoices, validating extracted data with information from enterprise resource planning (ERP) platforms, general ledger (GL) solutions and other downstream systems, and performing duplicate payment detection.
- Fewer supplier inquiries: Accounting departments are overrun with calls from suppliers regarding the status of invoices and payments. Automation relieves this burden by providing an automated confirmation that the supplier’s invoice was successfully received, enabling suppliers to view the status of invoices and payments via an online portal, and improving the percentage of invoices paid on-time through the elimination of manual processes.
- Streamlined audit and reporting: Generating reports and fulfilling audit requests are a snap in an automated accounts payable environment. A complete audit trail is maintained for each invoice, each user’s activities within the system are automatically tracked, information on invoices and related documents are digitally stored per the buyer’s business requirements, all invoices and documents related to a business unit or other criteria can be instantly retrieved, and users can provide auditors with view-only access to the system to retrieve invoice data.
These are the reasons that accounts payable departments find strong support for their automation initiatives from the accounting department. What do you love most about automation?