If You Think Manual Work is the Biggest Challenge for AP Teams, You’re Wrong
February 9, 2021
Estimated Reading Time: 4 minutes
Even by 2020 standards, the volume of paper in accounting is bonkers. In the US alone, 75% of invoices were paper-based, and a whopping 80% of firms paid suppliers via hand-written checks.
While remote work challenged many businesses to take the digital route, stats indicate that a majority of accounts payable (AP) teams are still struggling with archaic models. Companies are typically taking up to four weeks or more to pay vendors – unnecessarily incurring late payment fees and breaking down supplier relations.
The need for change is clear, and accountants around the globe agree. A survey of more than 3,000 finance leaders indicates that 82% see tech investment as critical in order to keep up with the market demands.
As automation platforms take the lead in closing this gap, here are some ways that companies can use AP solutions to improve their purchase to pay (P2P) process.
Pull out all the stops – on your PO process
40-60% of purchase orders (POs) get modified after they’re submitted to the vendor. This means there’s a high chance that an invoice will not match the initial PO.
Beanworks has built-in fast-track approvals. Once the manager receives a notification that a purchase requisition has been made, they can simply review and approve or deny the request. If a requisition is rejected, the approver is required to leave a note explaining why.
A cloud-enabled PO process provides spend visibility throughout the company, so you can track budget based on department, vendor, employee, project, or however you set your controls.
“There was a lot of back and forth – it was not ideal.” – Jose Breton, CAO at Brickell.
Boss your costs
The cost to manually process an invoice is significantly high considering time, resources, and labor. Levvel Research notes that the average cost to process one invoice can be up to $15. When processed electronically, that cost comes down dramatically to $5 or less. Over manual invoice processing, that’s a cost savings of 60-80%.
Going paperless reduces time as well. It enables finance teams to use their AP employees’ time for strategic work rather than repetitive functions like approval follow-ups and data entry, which are better accomplished by automation.
How Much Does it Really Cost to Process an Invoice?
Happy AP, happy vendors
Vendors want to get paid faster, but a business wants to hold on to its capital longer. And if it chooses to pay its suppliers quicker, there should be some incentive. Both sides are looking for visibility into cash flow, improved management, and control of their working capital.
Levvel research blames a lengthy approval cycle for businesses missing vendor discounts. Ultimately, 81% of such cost savings opportunities are lost. AP automation takes a holistic approach to the P2P process giving both buyer and seller speed, visibility, and data that is necessary to help satisfy their different goals.
Approvals? There’s a Beanworks app for that
An informal approval process also holds your AP behind. With automation, each request is instantly routed to managers and flagged at every step of the process. Reminders are generated if a request lingers too long with an approver. And as long as managers have their phone with them, they can approve invoices and employee expense reports from anywhere. Some companies like Athabasca Catering use the Beanworks AP mobile app to approve invoices and employee expenses.
A robust P2P solution offers on-demand reporting capabilities. Beanworks gives a 360° AP automation experience which means all AP is stored on a single platform. Its global search feature allows companies to track any invoice, PO, payment, or expense-related data in real-time.
Brickell Biotech, a US-based pharmaceutical company was documenting invoice and purchase order approvals through email. “There was a lot of back and forth – it was not ideal,” says Jose Breton, CAO at Brickell. Now managing invoices, PO’s and payments through Beanworks, they’ve recovered 99% of their time back on approvals.
Fend off fraud
According to the Association of Certified Fraud Examiners, the average amount of time required to detect billing, expense reimbursement, and check-tampering fraud is 24 months. Since AP is one of the most critical business processes which involves huge cash flows, it remains an area prone to fraud, cash leakage, and inefficiencies. Controls such as customized approvals are one way to keep a check on the cash flow. Beanworks also flags discrepancies like duplicate payments online so you don’t have to spend hours scouring through them, or worse missing them altogether.
Connected to the cloud
The last step of the AP cycle is the release of payment. Some automation solutions will let you choose how you want to process payments – ACH/EFT, virtual credit cards, or checks. If the payment is processed through the cloud or your financial system, payment-agnostic AP platforms will automatically push the approved invoice or payment information into your system.
Upgrading your purchase-to-pay process with AP automation software is an investment in your company’s current and future competitive advantage, profitability, and growth.
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