The way that most accounts payable departments process and post their invoices costs too much, creates too many errors, provides inadequate visibility, and frustrates suppliers and coworkers.
Senior finance executives consistently rank accounts payable as the most labor-intensive and paper-intensive finance and administration (F&A) function – ahead of notoriously onerous tasks such as accounts receivable, payroll, and tax and compliance reporting. What is more, senior finance executives believe that accounts payable is the function that could benefit most from automation.
Yet the solution – AP automation – is frequently cast aside for “competing priorities.”
Only nine percent of accounts payable leaders describe their department as being fully automated, according to the Institute of Finance and Management (IOFM). Fourteen percent of departments process and post the invoices they receive from suppliers in a completely manual manner. Thirty-three percent of accounts payable leaders admit that their department has little AP automation.
If accounts payable is so expensive, error-prone, and hard to track and report on, then why don’t more departments prioritize automation? The root of the problem is that many accounts payable leaders have succumbed to common myths and misperceptions about accounts payable automation.
Don't let these myths hold your AP department back!
It is time to dispel the six most common myths about accounts payable automation.
1. “AP automation is hard to deploy.” Resources are tight. And no one has the appetite for a long and risky implementation process or open-ended professional services engagements, no matter the long-term payoff. But automated accounts payable solutions have come a long way from those on-premises system deployments that kept everyone from IT staff to senior management on pins and needles until the installation was complete. Cloud-based accounts payable solutions can be deployed fast, with minimal IT involvement and little disruption to existing operations. Leading AP automation solutions seamlessly integrate with any legacy enterprise resource planning (ERP) or accounting system. Staff can be trained online while they work from home. System upgrades, security updates and bug fixes are the responsibility of the cloud-solutions provider. And best-in-class technology providers have a proven track record in deploying AP automation and offer experts who can guide you through the process.
2. “AP automation is too costly.” From hardware outlays and software license fees to system integrations and on-site professional services, the costs of traditional on-premises accounts payable systems add up fast, making the upfront expense of automation extremely hard. But cloud-based accounts payable solutions eliminate these costs, as well as unpredictable hardware replacement costs and ongoing maintenance fees, delivering a total cost of ownership that on-premises systems cannot touch. And leading cloud-based solutions come with fixed volume-based fees, enabling organizations to better forecast their expense.
3. “Our current processes work well enough.” In times like these, organizations need ways to improve efficiency and effectiveness. Accounts payable automation helps organizations achieve best-in-class results. Compared to their peers, best-in-class accounts payable departments (typically, those with higher levels of automation) spend one-sixth as much to process a single invoice, process invoices three times faster, and experience 57 percent fewer invoice exceptions. That is according to Ardent Partners’ 2019 State of ePayables Report. If your department wants to achieve top results, and keep up with its peers, it must automate. Automation also will be critical to being able to scale your accounts payable department fast and cost-effectively when the economy improves, without having to hire additional staff.
4. “Our staff won’t adopt AP automation.” Change can be hard. But when staff understand how an automated accounts payable solution will benefit their jobs and their organization, they will be more likely to adopt it. Engage front line staff early-on in the assessment of your department’s needs. Involve staff in the evaluation of prospective solutions. Include AP staff on your project deployment team. Enlist influential staff to train their peers and advocate for the new system. Ensure that training is hands-on so staff experience first-hand how easy the new solution will be. And never miss an opportunity to celebrate successes.
5. “Our suppliers won’t adopt AP automation.” If your AP department relies on manual and semi-automated invoice processes, your suppliers are probably not big fans of the way you are doing things. The supplier on-boarding process is long and onerous for suppliers. Suppliers can never be sure whether their invoice was received. Suppliers never know where invoices or payments stand in the process. Submitting tax forms and payables documents can be burdensome. And it is difficult for suppliers to research their invoice history. The self-service supplier portals built into automated accounts payable solutions empower suppliers by putting key information at their fingertips 24/7/365 and making it easier for them to do business with your organization. An automated accounts payable solution can help your organization attract and retain key suppliers and gain leverage during pricing negotiations. What is more, cloud-based accounts payable solutions that aggregate all paper and electronic invoices onto a single platform do not require any behavior changes on a supplier’s part. And submitting invoices electronically is significantly faster and cheaper for suppliers.
6. “Senior management won’t support AP automation.” If you have struggled to win senior management approval for accounts payable automation, you are not alone. The problem may have been that your proposal didn’t emphasize the benefits of accounts payable automation that senior management cares about most: liquidity management, cash flow analysis, and risk mitigation. Nearly two-thirds of accounts payable leaders believe their senior management is more receptive to accounts payable automation these days, IOFM reports. And the strategic standing of accounts payable is rising in the eyes of more senior managers. So, take your shot and show your bosses how automation delivers benefits far beyond your department.
Automation is long overdue in accounts payable.
Today’s cloud-based solutions are proven and deliver a compelling return on investment.
So, don’t let the myths above hold your department back any longer.
Contact IPS to schedule an online demo of our accounts payable automation solution today!