Cure AP Pain with Automation Tools

Gain visibility, reduce fraud and lower costs

“I love matching invoices, executing payments, and wrangling paper checks!”— said no one ever.

50%: The percentage of payments still made by paper checks in the $25 trillion B2B payments market

Despite innovation in pretty much every other part of business, accounts payables systems remain antiquated. Inefficiencies and complexities dominate the AP process, creating one long, unending headache for AP managers and staff.

The cost of accounts payable

Manual based processes not only inflict pain on AP staff, they are also costly. Small to medium sized businesses spend an average of $16 to $22 per payment to manually process an invoice, while large companies spend around $9 per invoice . While some of that is postage and envelopes, a lot of that cost is hidden in administrative time, which keeps full time staff stuffing envelopes instead of working on higher priority initiatives.

When you compare this to how consumers are used to paying for things, B2B payments take painfully long to process and settle — 45 days on average. Businesses large and small lock up cash flow on both the payments and receiving end; cash flow that could be otherwise deployed.

“But don’t we want to pay slowly?” you might ask… Here’s a common misperception about the value of the “float”earned by accounts payable when payments to suppliers are delayed by an extra few weeks. The amount earned – a fraction of a percent – is minimal for all but the largest companies – but whether large or small, companies actually earn far more from their accounts payables by paying quickly if their suppliers agree to accept an interchange fee. Given a choice of waiting 45 days or paying a small transaction fee to get immediate cashflow, most suppliers are happy to switch to a faster, paperless solution. And smart CFOs have learned that by automating the payment part of their AP they can earn significant revenues on their AP payments.

Automation tools possess the potential to lower costs, increase visibility, reduce fraud and streamline processes.

Innovation drives accounts payable automation

Accounts payable automation describes a variety of strategies designed to improve payment processing through technology. It includes everything from cloud computing and data analytics to algorithms, data validation, online invoicing and receipt. Data analytics and workflow platforms help streamline the entire AP processes.

All of these can help reduce administrative time, paperwork and headaches. But so far the missing piece has always been the actual payment process, where companies running AP automation software still print and mail physical checks.

Now, with platforms like Finexio that address payments execution, there is a full end-to-end solution for AP managers. From invoice scanning with optical character recognition, through pre-defined approval routing to supplier onboarding and now, payment distribution, AP systems can now be configured to truly automate accounts payables.

When AP automation tools integrate with other finance apps, even more efficiencies are achieved, and managers gain further visibility into the entire AP ecosystem and where further improvements can be made.

Leverage automation for efficiencies

Your accounts payables department, finance functions and entire organization will benefit from adopting AP automation tools. Advantages include:

  • Reducing paper invoice volume
  • Cutting invoice approval times
  • Raising visibility into liabilities
  • Increasing AP staff productivity
  • Lowering AP processing costs
  • Improving regulatory compliance
  • Decreasing late payment penalties and interest

And now, with the addition of the automated payments from platforms like Finexio, you can also add:

  • Provide more options to suppliers for how they receive payment
  • Create new AP revenues from rebates and discounts
  • Improve supplier relationships with faster payment times
  • Reduce administrative time spent processing payments
  • Eliminate check fraud
  • Real-time reporting and analytics

Benefit from rebates, minimize fraud

Adopting payment automation AP tools not only reduces the costs of issuing payments, but also generates rebates that offset payments costs and provide incremental revenue. An automated system also makes it much easier to stay on top of early payment discounts, creating more financial rewards for timely payments.

AP payment automation drives improved oversight because only authorized individuals can access data. Additionally, digital payments aren’t susceptible to check fraud and can be tracked through electronic payment trails with improved internal audit controls. These systems help repel fraud from both outside and inside, through tools such as segregation of duties.

Vendors are likely to be pleased by the adoption of automation tools because they create shorter payment cycles and offer different methods of payment. Instead of waiting weeks for a paper check to arrive, suppliers are paid through a single interface by virtual card or ACH. Suppliers are a critically important corporate partner, and they appreciate clients who help them maximize their cash flow.

Adding payment automation to full-cycle AP automation

Payments are the last mile in AP systems that suffers from a lack of automation. In an economic era where time is money, it makes no sense to let AP languish in a technology no-man’s land… or to have an AP automation system that still requires the use of costly manual paper checks.

By adopting AP payment automation tools like Finexio, integrated with your existing AP automation system or accounting software, you set your organization up for success, gain valuable insights, save money and increase efficiencies. What’s not to like?

i “New Opportunities in B2B Payments,” Mastercard, 2018
ii “These Stocks are Sitting on a $1 Trillion Opportunity in Payments,” Investor’s Business Daily, Nov. 10, 2018

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