September 28, 2023
When your organization is frequently overwhelmed with a large number of invoices to process manually, relief cannot arrive soon enough. When the team is treading water and occasionally sinking below the surface, AP automation can be a lifeboat, although it is more like a cruise liner; it can meet all your needs in one convenient location, and it will help your team to navigate the waves of uncertainty.
With certain long-term benefits of AP automation, there are five big improvements, which can be realized immediately: time and cost savings, data accuracy, improved visibility, and compliance.
Time savings
Trading manual data entry in AP for automation, invoice processing time is slashed significantly. In 2023, the average time to process an invoice by hand was 10.9 days[1]. After automating the invoice process, the turnaround time decreases to 3.7 days, reducing the time spent by almost two-thirds. When employees are freed from the confines of continuous data entry, they can focus on the bigger picture, adding real value to the organization.
[1] Ardent Partners ebook AP Metrics that Matter in 2023
Vendors, customers, and internal stakeholders will take note of this increased speed and rejoice.
Cost savings
Manually processing an invoice takes significant time, and time costs money. Where invoices are currently routed to multiple team members and then checked and re-checked for anomalies and errors before approval, straight-through processing in AP automation can reduce this costly cycle time by days, not hours. The average cost to process an invoice in 2023 was $10.18. The best automation reduces this to an average of $3.12. When looking for ways to decrease time and cost in AP, automation is a great place to start by using technology to work smarter, not harder.
Late fees and early payment discounts are keen examples for hard savings that improve days payable outstanding, while strengthening supplier relationships and improving order fulfillment.
Data accuracy
For years, optical character recognition (OCR) and machine learning tools have been used in invoice automation tools, however advances in AI and powerful new machine learning technologies have made OCR more accurate, more reliable, and a must-have in the toolkit for a best-in-class automation solution. By virtually eliminating human error, one of the costliest consequences of manual data entry, issues of lack of confidence in the data, along with time lost researching and correcting errors, are avoided and traded for trust in the numbers and the process.
Instead of re-work, AP can focus on value-added activities!
Data Visibility
Data is captured via advanced AI and machine learning can be displayed and presented in new and meaningful ways, providing near-real-time access to insights that were previously unattainable. Users will gain perspective on the big picture of accounts payable performance, determine opportunities for improvement and adjust the workflow accordingly. Al and machine learning algorithms quickly identify and classify data from different sources, including structured and unstructured data. Additionally, anomalies and outliers are quickly detected for data values that are unexpected or fall outside the thresholds of normalization. Review of past performance and prediction for future performance are easily determined by the machine instead of laborious hours of number crunching by analysts within the team.
Improved data analysis creates cash-flow opportunities with purchasing insights that can be very useful for management teams.
Simpler Compliance and Reporting
Automated accounts payable solutions create – and save – every action taken on an invoice. Historical references of who processed it, when each step was taken, and other details unique to that document are available. This feature leaves an easily followed audit trail, allowing for identification of speed bumps in the process, while also ensuring the team is following the correct steps toward approval and avoiding unneeded risks.
When able to monitor and report on the process easily, an impact of fraud is far less likely.
Overall, these benefits quickly strengthen the core of your team by centralizing your processes, encouraging employee collaboration, and improving visibility for cash flow, while saving your organization time, money, and hassle. With AP automation, Accounts Payable team members feel more empowered, proactive, confident in their work. Now AP has greater capacity to contribute to organizational success in new ways through data analysis and business forecasting, budgeting and planning, cash flow analysis, and improved vendor relationships and contract negotiations.