Timely payments are key for companies looking to meet their objectives, as late or missed payments can seriously compromise expansion plans and harm vendor and business partner relationships. AP departments are central to reviewing and approving invoices to ensure payments are made on time, but recent analysis suggests that many such offices use inefficient, old-school practices that can cause invoice approvals and payments to stall. A good portion of these issues can be traced back to paper-based, manual work and human error. A simple mistake, such as incorrect information entered into an accounting system, can result in delayed payments, or even payments made to the wrong organizations.
Companies can alleviate these troubles and better manage their AP operations with solutions that automate every step from invoice receipt to payment. These tools can streamline processes, reduce costs, improve payment security and create new working capital optimization opportunities. The following Deep Dive explores how automating the entire invoice-to-pay process can transform AP workflows.
Automating the Invoice-to-Pay Process
AP processes are notoriously paper-dependent, with PYMNTS research finding that 80.8 percent of surveyed professionals still use paper checks to make payments. Checks may be a popular payment method, but that does not mean users are satisfied with them. Only 63.5 percent of AP professionals were “very” or “extremely” satisfied with checks — well below the average satisfaction rate of 69.3 percent for all payment methods. How businesses pay invoices is only part of the story, though, as many firms also receive invoices in old-fashioned ways. Of those surveyed, 72.4 percent reported receiving invoices in the mail and 43.8 percent via fax machine.
Such methods often cause issues and are overly complicated, so it is not surprising that many organizations are prepared to retire these practices in favor of smarter, more efficient accounts payable (AP) solutions. Invoice automation systems help departments by expediting the invoice-to-pay process through the automation of workflows and invoice receipts, enabling faster invoice approvals. Virtual cards and ACH can improve payments, which can be made through a single solution that integrates with firms’ ERP systems.
Such solutions provide more streamlined workflows through dashboards that AP professionals can use to study payment activities, gain access to real-time reporting tools and receive updates on any relevant rule changes. These tools also give firms greater transparency and insight into both PO and non-PO invoice processing, enabling them to make more informed decisions.
Recent data indicates most AP leaders understand exactly how such insights can improve their operations, as 64 percent believe greater access to data and financial intelligence will help them demonstrate their strategic capabilities. Information like this can also help businesses understand their cash flows and cash management issues, with 64 percent of AP leaders citing as much. Automated AP solutions are also capable of reducing fraud risks, and 58 percent of leaders believe enhanced data insights can help their organizations remain compliant with regulations and identify areas of concern.
Improving the Payables-to-Payments Workflow
Organizations looking to have efficient AP processes should find automated solutions that can integrate with their ERP systems. This ensures that vendors’ payment information is kept up-to-date and that important invoice and spend data is synchronized.
Multiple electronic payment methods, including virtual cards and ACH, are also important for AP automation projects. The flexibility such payments offer helps AP departments pay vendors in their preferred methods and ensures maximum rebate and payment automation. AP departments that work with solution providers to drive vendor acceptance of virtual cards and premium ACH payments can more easily secure available rebates that can be applied back to the business. These cost-saving and cashback opportunities can transform AP organizations into revenue-generating departments.
Old habits are still very much at play in AP departments, but this does not have to be the case. Automated solutions that quickly digitize invoice data, streamline approvals, enable the switch to electronic payments and create rebates and cost-saving opportunities can transform AP organizations’ roles.
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