What are the benefits of accounts payable automation?

    Digital technologies such as intelligent data capture can transform invoice processing.

    Here are five ways that accounts payable departments benefit from automation:

      1. 1. Significant labor savings:  Manually processing invoices results in high labor costs: mail opening and sorting, keying of invoice data and general ledger information, matching of invoices and purchase orders and/or proof-of-delivery documents, physically routing of invoices to approvers, responding to supplier inquiries, inputting of invoice information into a system of record, and paper storage and retrieval. Automated accounts payable solutions reduce staffing costs by automatically classifying documents, extracting invoice data, matching invoices with purchase orders and/or proof-of-delivery documents, and posting and archiving approved invoices and data.  Best-in-class organizations can reduce their invoice processing costs by 82 percent compared to peers, in large part, by eliminating manual processes with data capture automation, per Ardent Partners. 
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    2. 2. Increased staff productivity:  Seventy-three percent of finance leaders believe automation is improving their function’s efficiency and giving employees more bandwidth for value-added tasks, per the Oxford Economics study “How Finance Leadership Pays Off,” sponsored by SAP. Automated accounts payable solutions reduce menial, repetitive and time-consuming tasks such as invoice data-entry.  With fewer workers needed for invoice data entry, accounts payable staff are freed to help analyze data on operational performance, working capital and corporate spending, and to help in budgeting, planning and forecasting.  Their talents and expertise can be leveraged to benefit the organization in a more strategic capacity. 
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    4. 3. Faster invoice approval:  Accounts payable automation streamlines the most time-consuming steps of processing invoices, including invoice validation, invoice data capture, matching of invoices and purchase orders and/or proof-of-delivery receipts, and the upload of information on approved invoices to an ERP system. The technology eliminates time-consuming manual tasks and allows buyers to customize workflows to meet the specific needs of their business process.  Automation frees staff to focus on true exceptions and on more fulfilling and valuable activities such as data analysis, working capital management, and budgeting, forecasting and planning.  It also provides accounts payable departments with the ability to manage higher volumes (from growth or acquisition) without adding staff.
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    6. 4. Fewer payment errors:  Manual invoice processes increase the chance of errors because of mis-keyed data, and no validation of data. The problem is compounded when invoice errors are detected late during the processing cycle.  Detecting errors late in the processing cycle is big reason for delayed approvals, resulting in late-payment penalties and missed early-payment discounts.  Automated accounts payable solutions boost accuracy without manual intervention by capturing invoice header and line-item data automatically and validating invoice data early in the process against information stored in systems of record.
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    8. 5. More early payment discount opportunities:  Automated accounts payable solutions accelerate invoice approval cycle times which, in turn, enables organizations to capture more early payment discounts. Organizations with automation can process invoices in less than half the time of average companies (3.7 days versus 8.8 days) and in less than one-third the time of laggards (3.7 days versus 14.3 days), PayStream Advisors reports.  Faster cycle times open the door to more opportunities to capture early payment discounts.  Eighty percent of suppliers offer discounts in exchange for faster payment; the earlier the payment, the larger the discount on the invoice amount.  Organizations that take advantage of just a discount term of 1/10 net 30 earn an annualized 18 percent return – a lot more than they can earn from a typical interest-bearing bank account.  But most organizations capture less than 21 percent of all early-payment discount offers, and 12 percent of businesses are unable to capture any early-payment discounts, per IOFM.  Slow cycle times are to blame.  Automation creates more early-payment discount opportunities through faster invoice approval cycles.     
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    These are five of the biggest benefits of accounts payable automation.