The finance department is already a cost centre, as such adding extra software expense can be difficult to justify. It is important for the internal champion to build a business case for AP Automation. A recent study by Business Insider on AP Automation found that the $22 trillion US B2B payments market has been slow to digitize, with 36% of firms using paper invoicing, 47% relying on manual processes for approval, and 49% of payments made by check. The cost associated with these manual activities can be substantially cut through AP Automation.
The signs are point that there can be significant opportunities for digital transformation. Often the key to moving ahead with an AP Automation project is to build a business case. Here are a few of the items that could be included.
Cost Savings: There can be direct cost savings with AP Automation. This can be cost avoidance by not needing to hire, reduced overtime, or even in some cases reduction or redeployment of staff. Many suppliers offer quick payment terms that can mean significant savings. We have come across organizations that can’t process the invoice fast enough to take advantage of these discounts.
Productivity: Allowing the current team to do more with the same resources improves the team productivity. It can also free up team members to do more value added activities as you move away from the more manual tasks.
Scalability: If your organization wants to grow rapidly the processes and structure need to be set to do that. Being gates in growth due to a shortage of people can be a limiting factor. If you are able to automate manual accounts payable tasks this allows for this rapid growth.
Better Visibility: In a previous post we talked about working capital with a focus on the Accounts Receivable side. The other half of cash flow is Account Payable. If a company has a very manual process for AP it can be difficult to get visibility on your payables. This means challenging planning as you don’t have visibility on these future commitments. This can be compounded if the nature of your business has large purchases or expenses.
Protect Against Fraud: Business fraud is rising across the world. The more manual the processes the more opportunities for mistakes including fraud. Invoices digitization and AP Automation does not eliminate all types of fraud alone, but they provide more tools and processes to eliminate many types of fraud.
Improved Vendor Relations: Keeping your vendors happy is important to many organizations. Paying them on time and reducing their efforts around getting paid would be at the top of the list. The other unattended issue of poor AP processes could be that you exceed your credit limits with your suppliers. This means that products or services that are needed to support your business or customers could be held back. This can lead to significant issues for the organization including lost revenue or even increased costs.
If you would like to understand how OnePosting can help your organization with it’s AP Automation journey please book a meeting with one of our team members.