What Is AP Automation and What Are Its Advantages?
From keeping track of invoices to issuing payments, the many components of handling accounts payable can lead to errors that rob your company of time and money. The struggle to streamline and simplify accounting practices is leading growing numbers of organizations to adopt AP automation.
By using automation to efficiently and accurately manage accounts payable, your business could improve cash flow, efficiently manage suppliers and boost productivity.
Quick takeaways:
- AP automation reduces risks, eliminates many manual processes, and helps organizations scale.
- The current unpredictable macroeconomic environment requires competitive enterprises to use new tools like AP automation to optimize cash flow, cut costs, increase working capital, and improve B2B relationships.
- AP automation, informed by organization-wide insights from business spend management and other enterprise software, solves real-world challenges involving pre-spend approvals, digital payments, and more.
- An AP automation solution can fit seamlessly into your existing processes.
Learn how Coupa offers an intelligent approach to effective accounts payable management that you can reap many benefits from.
What is AP automation?
Accounts payable automation is an advanced solution for saving your business time and money. Take tedious tasks out of the hands of your talent and let sophisticated software handle the routine aspects of accounts payable processes. The system allows your team to seamlessly submit invoices, approve expenses, and process payments on one platform while reducing manual errors.
Many companies are struggling to keep up with today's new normal of frequent, unpredictable macroeconomic shifts. Part of the problem is a continued reliance on manual processes in accounting. Even enterprises that take some steps to automate accounts payable frequently only address one facet of AP automation, failing to address root upstream and downstream issues that contribute to inefficiencies and challenges.
As information from MarketsandMarkets Research demonstrates, AP automation spending will only increase worldwide in the upcoming years. Every company needs to answer the question, "What are our AP challenges and how can technology address them?"
The answer: Organizations can use business spend management solutions to automate many AP manual processes. This increases efficiency and empowers teams to meet persistent, real-world challenges, including accelerating pre-spend approvals and managing digital payments.
What are the advantages of AP automation?
Consider the many benefits of A/P automation and how it can eliminate pain points in your organization’s finance management.
Better business relationships
The foundation of good business is strong relationships, and those relationships often hinge on payment handling. Simpler and more efficient payment processes thanks to automation save you and your suppliers time and money. Moreover, timely payments put you in a better position to negotiate favorable contract terms. A good payment history can also be a competitive advantage if you have a shallow supplier pool, or if your supplier pool suddenly dries up due to unpredictable macroeconomic factors.
In addition, AP automation improves communication between you and your vendors. You prevent or resolve miscommunications and build implicit trust. Since the software reduces the chances of errors or delays from the onboarding process onward, you remain in good standing and can become a preferred client, leading to additional credit, benefits, and support from your suppliers when you need it most.
Cost savings and improvements in cash flow
Paying invoices on time or early eliminates fees and bottlenecks in your supply chain, and staying ahead on your bills can lead to substantial savings. Tracking and benefiting from early payment discounts becomes a struggle without software that oversees timely and accurate invoice processing. AP automation programs open the door to boosting your bottom line from every angle.
Additionally, automation leads to reduced labor costs and minimizes other expenses. Employees become more productive, particularly in remote work environments, when they have more powerful automated tools at their disposal. Automation can also eliminate manual invoice and payment processing. If that weren't enough, digital payments via automated AP enable buyers to more strategically manage their cash flow, increase buying power with higher working capital, and quickly leverage rebates from their payment providers.
Time savings
AP automation streamlines the invoice processing workflow, from receipt to approval to payment. The correct documents can get to the appropriate reviewers with automated routing, and reminders ensure approval happens promptly. Quick processing means fewer opportunities for errors, and team members have instant answers to the status of invoices. This allows your team to focus on applying data to decisions instead of just spending their time gathering it.
Improved monitoring and insight
When you can review your payment cycle in an easy-to-understand dashboard, you can make better decisions and cogent analyses. A crucial principle of advancing your business is measuring every process. Without definable metrics, you can't improve your operations. AP automation offers the key to understanding where your accounting processes can improve.
End-to-end AP Automation software helps you to track:
- Costs of processing a payment or invoice
- Time spent handling inquiries
- Percentages of electronic invoices and touchless processing
- Average time to process an invoice or payment
AP automation connects you to the data you need for confident strategizing.
Less fraud
Nearly every business is a target for payment fraud. AP automation can flag suspicious transactions, such as duplicate payments and false billing. When phishing scams and unapproved vendors attempt to work their way into your pocketbook, your software can alert you to risks.
Keeping information in a secure online portal where vendors update and maintain their own banking and remittance information helps reduce errors while limiting billing and payment fraud. Digital supplier management also scales with your organization, letting you onboard, organize, and manage new suppliers efficiently without exposing your company to additional risks.
Automation and secure portals also have operational benefits. You can restrict approval workflows to responsible parties while distributing workloads efficiently across teams. Assigning various responsible team members keeps workers accountable and ensures unapproved individuals don't have access to sensitive information.
Simple integration
You don't have to completely overhaul your existing tech stack to implement AP automation. With the right business spend management platform, though, you can consolidate and eliminate redundant or underperforming tech, lowering costs, and creating a better end user experience.
BSM works with the technology you do decide to keep, offering ERP and off-the-shelf software integrations. You won't have to re-enter data or use multiple logins to access and transfer information. Such effortless assimilation increases your productivity, reduces errors, and lowers the overall cost of your technology and licenses.
How does accounts payable automation affect your "power of spend?”
Even as you anticipate the benefits of the data you gain by taking control of AP through automation, you should take a data-driven approach to adopting BSM solutions in the first place. If you do the numbers, you'll see just how much benefit these new tools could provide — that's the power of spend.
To be competitive in a constantly shifting environment, you need the capabilities of business spend management software, such as AP automation. Companies can start by measuring the cost and value of current systems and calculating the ROI of each procedure and methodology. A review of existing technologies can enlighten a management team as to what programs can enhance processes and lead to more accurate and strategic decisions.
Careful documentation of the new advantages can prove to stakeholders that investing in such tools is beneficial. Owners and shareholders should be aware of how automated solutions provide greater spend visibility and control during every step of processes, assuring them that they’re making the most of the responsible use of funds and ensuring a healthy ROI.
See what's going on with your business’s finances and spending. Take control of your key accounting processes. Reduce risks and improve vendor relationships in the process. That's how AP automation helps you see real returns by harnessing the power of spend.
Ready to get started with AP automation?
AP automation gives you total control of how you direct your spending and manage your cash flow. Contact Coupa to reduce manual AP tasks, get better visibility into spend, and put your working capital to work for you.
