Expenses are inevitable for any business. Business integrity depends on optimising cash flow, keeping accounts up-to-date, and financial records accuracy, besides making timely payments. But such processes incur overhead costs. Did you know investing in accounts payable automation tools such as SAP Concur will reduce invoice approval from 17 days to four days and reduce the overhead cost from roughly $130 to just $4?

Accounts payable (AP) is the business function of processing and paying invoices. Here are ten compelling ways how automation reduces overheads and delivers other benefits for businesses.

1. Reduced Processing Time

Manual accounts payable processing is time-consuming. 

The first step in accounts payable is verifying the invoice. The accounts payable team follows up to check if there are any complaints or stop-payment requests. The invoice needs approval from the concerned authority, which could be a department head, manager, or supervisor.

Verified bills need cross-checking. The executive in charge reconciles the invoice with the vendor statements and other records. Any discrepancy gets noticed at this stage. Finally, the accounts payable team confirms the payment mode and makes the payment.

Manual verifications, double checks, and corrections are slow, tedious and resource intensive. Most companies deal with large volumes of invoices. Repeating the process for each invoice takes up the time of multiple executives. 

Automating accounts payable reduces processing time. The spin-off benefits include:

• Improved process efficiency, leading to speedier completion of tasks.
• Freeing up the executives’ time for higher-value tasks. 
• Better supplier relationships. Faster cash flow to suppliers improves their commitment to the company. It also helps to negotiate better deals during the renewal. 

2. Enhanced Accuracy

Manual accounts payable processing is error-prone. Mistakes may occur during data entry. Some invoices may sometimes slip through the cracks and remain unpaid until the vendor makes a follow-up.

Businesses with complex invoicing processes find identifying and rectifying errors difficult and time-consuming.

Automating the process eliminates the scope for mistakes and ensures accurate financial records. The reconciliation occurs in the blink of an eye, with no scope for errors. 

Accounts payable through automation

• Improve the company’s image. Payment errors are unprofessional and make suppliers wary of doing business with the company.
• Preempts conflicts. Mistakes in accounts payable may not be deliberate. But not everyone will tolerate mistakes. The company can avoid costs and time countering legal claims or complaints resulting from delayed or wrong payments. 
• Improve efficiency. Automation streamlines the enterprise’s financial records. Process efficiency improves, and the enterprise saves waste from correcting errors.
• Improve decision-making. Accurate cash outgo gives a correct position about the company’s cash flow and profitability at any time. Managers can make informed decisions related to financial matters.

3. Reduce Compliance Risks

Automating the accounts payable process ensures compliance with legal and regulatory requirements. 

Automating accounts payable makes compliance with laws and regulations easier. For instance, the Payment Card Industry Data Security Standard (PCI DSS) requires businesses to protect sensitive financial information. Automating the accounts payable process enables better security controls. The risk of data breaches reduces. 

The US Sarbanes-Oxley Act (SOX), 2002, mandates enterprises to set-up internal controls to ensure financial record accuracy. Automating the AP process can help businesses improve compliance. 

Compliance with legal and regulatory requirements

• Reduces the risk of penalties and fines.
• Makes a strong statement about the company’s integrity, improving investor confidence.

4. Audit Trail

Automated accounts payable systems make all approvals and payments traceable. 

The clear-cut audit trail of all transactions improves financial transparency and makes it quick to detect fraud. 

The automated system:

• Captures information, such as the personnel approving the invoice and the payee’s account details. Tracking fraudulent transactions or correcting errors becomes easier. 
• Enable implementing control measures such as segregation of duties and dual approvals.
• Flag suspicious payments for immediate follow-up.

The audit trail makes it easier for auditors to track and report financial transactions. The overheads related to finance and accounts are reduced.

5. Better Insights

Automating accounts payables offers businesses real-time visibility into their financial position. Tracking and reporting on financial transactions become easier. Decision-making improves, and business executives can identify areas of improvement easily.

The best automation suite:

• Offers the complete picture of the company’s financials. Most companies struggle to capture all invoices and expenses. Many miscellaneous spending often evades the traditional budgetary and procurement process. Identifying such expenses manually involves spending considerable people-hours and resources on unproductive work. Automating invoice payables closes the gaps.
• Match purchase orders, invoices, and payments to uncover errors or issues. The executives get clarifications and can do follow-ups to settle the issue before releasing the payment.
• Enable performance management based on results. Managers can use dashboards that pull accounts payable data to analyse the performance of employees or teams.

The latest accounts payable systems co-opt Artificial Intelligence and deliver better insights. The suite may, for instance, schedule payments to sync accounts receivables to optimise cash flow. It may offer analytics insights on the best time to release the payment. For instance, it may highlight applicable discounts on early payments. A comprehensive suite suggests better deals for similar services. The company may use such insights to renegotiate the contract or switch partners.

6. Streamlined and Standardised Workflows

Enterprise efficiency depends on consolidating accounting records and ensuring easy search. Manual processing makes it impossible to achieve such ends.

Automating accounts payables consolidate and standardise workflows. The tool scours records and applies techniques such as character recognition to capture expenses. Integrating spending data in one place boosts productivity, process efficiency, and analytical insights.

Best-in-breed accounts payable software such as SAP Concur offer:

• Automation of the end-to-end accounts payables process. The suite automates capturing invoices, auditing, approvals, and pay-outs.
• Flexibility to design and implement workflows that align with the business’s specific needs. 
•  Application of Artificial Intelligence to derive enhanced insights. 
• Easy scale-up to match invoice spikes during busy times or when the business grows. Adding staff to scale up manual processing is not always viable.
• Easy search and retrieval capabilities. 
• Easy integration with other enterprise systems.

7. Improved Cash Flow 

Automating the accounts payable process requires upfront investment but reduces costs. The savings on data entry and paper-based records allow the company to recoup the investment quickly. Tools such as SAP Concur help businesses streamline the end-to-end process of an invoice and reap substantial savings. 

The success of any business during today’s turbulent times depends on adequate controls. Automating accounts payable allow enterprises to have effective controls over their spending. They also get rich insights to improve their efficiency and competitiveness.