AP automation can significantly improve the efficiency, flexibility and profitability of almost any business. But there are still a lot of holdouts—businesses still receiving and entering paper invoices, manually routing and processing approvals, cutting paper checks and updating their accounting systems.
For a variety of reasons, it can be difficult to convince some executives to make the investment in AP automation. Their resistance may come from lack of awareness of how existing AP processes really work, the actual risks and costs associated with existing processes, and how much (or little) a hurdle deploying and adopting AP automation really presents.
They understandably want to know exactly how it will make the business better, and not worse, and that the benefits will be clearly worth their while.
There are several critical points to highlight when making the case for AP automation. First and foremost, it is essential to keep the focus on how AP automation will help the business meet its goals vs. just making the finance team’s life easier.
With that in mind, here are some of the major areas to highlight about how AP automation will improve the business:
Time and Cost Savings
There are hard and soft costs in AP. While checks have hard costs (such as stamps, paper, and ink), softer costs such as time management and the strain on vendor relationships can be more difficult to calculate and compare.
Automating AP streamlines the process, so finance teams are not bogged down with processing invoices, matching them with purchase orders, tracking approvals and cutting checks. This frees them up to spend more time on tasks that help the bottom line while also optimizing cash flow and improving vendor relationships. Some companies report time savings of as much as 80% when automating their AP processes.
Reduced Security Risks
Companies who choose not to automate payments face increased security risks from fraud. Nearly 3 out of 4 companies (71%) were targeted for a payment fraud attack in 2021 according to the Association of Finance Professionals, and checks (66%) were by far the leading payment type targeted.
Security risks also extend to confidential payment details, posing a threat to your organization as well as the relationships you have with vendors.
Reduced Errors
Manual data entry and manual processes are much more prone to human error, creating time delays, rework requirements, and potential vendor frustrations. With automation many of these missteps simply cannot occur. Leveraging securing digital payment options in an automated platform can also reduce risk associated with fraud.
Support for New Hybrid and Remote Work Situations
As the world of work changes, the way finance teams interact does as well. With AP automation, people and papers do not need to be in the same physical space at the same time. Invoice capture, approvals, and payment initiations can all happen electronically and remotely.
Offsetting Hiring Challenges
Companies in many industries have seen a number of employees leaving their jobs. Hiring to fill those roles has been a huge challenge, and increased demand and inflation have made it even more expensive. When employees leave, their knowledge may also go with them—putting the rest of the department in a bind.
AP automation keeps this information within the system. This makes it much easier to scale to meet demand without needing to increase headcount.
There are several critical points to highlight when making the case for AP automation. First and foremost, it is essential to keep the focus on how AP automation will help the business meet its goals vs. just making the finance team’s life easier.
Taking Full Advantage of Payment Discounts
AP automation enables businesses to be more precise about when they make payment to vendors so that they can take advantage of early payment discounts. It also can open the door to valuable virtual card rebates. In some cases, these savings total more than the investment in the automation platform itself.
Improved Vendor Relationships
By using an AP automation platform, vendors get paid faster and experience fewer delays and hiccups. The visibility provided by such AP automation can also make it so that vendors get all of their questions answered immediately by logging in instead of playing a game of phone or email tag.
Improved Cash Flow
Because an AP automation platform makes it possible to strategically balance payment mix and schedule exactly when payments will leave the corporate bank accounts, it allows organizations to hang onto cash longer and optimize their cash flow.
As detailed above, there are a lot of advantages to be gained from automating an organization’s AP processes. Each business may value different aspects, but overall, they make a business more efficient, more agile and more profitable.
If you need to make the case, the points above are a good starting point to helping others see why it is so important to the business.
Elizabeth (Elle) Kowal is Chief Operating Officer at MineralTree, a company focused on creating frictionless accounts payable (AP) and payment processes. She has spent over 18 years in banking, finance, payments and business technology providing solutions for organizations of all sizes.
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