AP Automation

Making a Business Case for AP Automation

February 15, 2022


Estimated Reading Time: 3

While there are lots of practical reasons to make the shift from manual to automated accounts payable processes, such as greater fraud protection and real-time expense management of the AP workflow, for many companies a fundamental question remains: “How much will it cost?” 

Fortunately, building a robust argument for AP automation is easier than ever. A quick visit to Beanworks’ Return on Investment (ROI) calculator can provide you with an almost instantaneous view of how the solution will benefit your specific situation. However, it’s helpful to take a closer look at each factor that can help establish the financial basis for making the change.

Save money through AP automation

Making cents

According to Goldman Sachs, businesses in North America spend an estimated £187bn annually on AP processing. That number skyrockets to a staggering £510bn when factoring indirect costs like short-term credit and fees for cross-border transactions. Much of that, states the investment banking firm, is tied to manual, paper-based processes that command hefty price tags when accounting for time, money and impact on operations. 

Small businesses account for roughly 80% of spending on AP processing. 

Adopting an automation solution can reduce the overall cost by approximately 75%. A simple demonstration of this can be seen when looking at processing costs. Levvel Research has found that manual operations can run as high as £15 for a single invoice. The price tag can be less than £5 when automation is introduced. 

While a difference of £10-£12 may seem insubstantial at first glance, the numbers quickly add up. Assuming 500 invoices a month, a company would spend around £90,000 each year without using automation. Given an estimated rate of £4 per invoice, the annual total would be £24,000, which produces £66,000 in savings, or roughly a 74% reduction in costs. 

How are you spending time? 

When examining the financial impact of an operation, it’s also worthwhile to look at the time investment involved. While a new software will require a few hours for installation and training once it is in place, the amount saved through automation quickly surpasses the value of the initial time investment.

According to HomePoint, a Beanworks customer, they were able to drastically lower the time it takes to process their accounts payable.

“We save between three and five minutes per invoice in processing by removing the administrative work and email routing.” Sarah Rehbein, AP Manager at Homepoint

Similarly, Radisson Blu states that they have reduced their AP processing time by 50% since adopting Beanworks. 

How do they manage to get back so much time in their day? With an automation solution, tedious tasks like filing, manually inputting data and making photocopies become a thing of the past. There is also less downtime spent waiting on approvals and payment requests, as the software automatically routes them to the right spot in the workflow and sends out reminders until the issues are resolved. 

Good intentions  

Everyone means to pay their invoices on time, but in reality, it doesn’t always happen. The impact of manual processes can cause delays, with Goldman estimating that 5% of invoices are 30 days past due. 

Their research further shows that delayed payments cost businesses in North America around £25bn annually in late fees — an important factor to consider when deciding whether automation is right for you. 

There are also hidden repercussions. Late payments can damage vendor relationships. Automation software helps maintain the partnership between you and your suppliers by facilitating on-time or early payments, ensuring that you are continually able to meet customer needs. 

Beanworks’ newly launched AnySync now enables integration with all financial systems. To learn more about how a solution like Beanworks can impact your business, sign up for one of our free weekly webinars  

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