Why you should automate your AP processes
Maintaining a manual AP system is no less than a hassle and a difficulty. Any business’s financial process involves complications and needs to be done with utmost vigilance. The matter becomes convoluted if the process (like keeping up with the accounts payable) involves an outside party.
If you make one mistake while processing accounts payable manually, you will have to bear an additional cost, deal with lost time and effort, and even lose the supplier for paying the wrong amount. Manual processing can lead to cash flow system disruption and even fraud.
The accounts payable processing needs to be automated to handle the cash flow and other accounts efficiently without any errors and avoid these issues. Whether you’re a big corporation or a small business, you can benefit significantly from an automated AP system and streamline your business. Keep reading to know why you should look into automating your AP processes.
Saves money by cutting costs
Businesses do not often consider the cost associated with processing payments. You may think it is a simple process with not much hassle that you can handle manually. However, significant costs are attached to processing accounts payable through manual effort.
Paying the due amount through checks handled manually can cost about $5. It may not seem like a big amount, but when you add it up for hundreds of accounts payable, especially for big companies, the number can end up in the thousands.
One invoice can also cost up to $10. If you accumulate the amount for all the accounts payable in the company, the number will again rise to thousands of dollars. Moreover, the recurring process of accounts payable for a company means the firm will need to handle checks and invoices annually.
There are overhead costs of maintaining a manual accounts payable system as well. You need to hire and pay employees to look after the accounts and do the processing. You have to increase their remuneration by a certain proportion annually. Moreover, hiring new employees and training them also costs more.
You can significantly reduce these costs if you switch to automated AP processing. You only need an annual subscription to keep hold of your accounts payable and a few people to look after it, and the business can save the rest of the amount. The subscription costs are drastically lower than continually handling AP processes manually.
Increase in precision and accuracy
Human error is common in any scenario. A number would be misplaced or replaced with another while manually typing the accounts payable information. Even when you double-check the information or someone else checks the data and proofread it, it can still end up having errors because human work is prone to mistakes and errors.
Your company can end up to big disasters, upsetting many clients when you cannot pay the correct amount on time. It will also cost you more, as paying the wrong amount will lead you to process the payment again and again.
Automation can save a lot of this hassle as it involves computerized checking and human re-checking to ensure accurate data. The automated system will ensure there are no mistakes. And if there are any, the system will correct them automatically.
Moreover, the invoices and payments to be made in the AP automated system will systemize and standardize the work so multiple teams can work on it from different computers. The data still holds the same for each one. Hence, automating the AP processes will keep the work accurate.
Increase in team productivity
Menial and mundane tasks can be one dull aspect of working in a corporate environment. If an employee has to do the same kind of work over again, they will soon become bored and lag. Manually doing tedious tasks can also lower productivity.
Moreover, human resources are among the most important resources for the company’s growth. You shouldn’t waste them on doing repetitive and mundane tasks like putting in data when you can automate these tasks.
Automating AP processes will spare a big portion of the employees. You can now engage these employees in more important tasks and activities you can’t automate easily. You can put this collective brainpower to solving issues and conflicts, work on backlogs, handle the budget, deal with suppliers, and more. This will increase the team’s productivity as they now work on better tasks.
Get more discounts on early payments
On credit payments, most suppliers offer between 10-20 percent discount for those who pay before the deadline or within certain days. This tactic is usually applied to collect more payments and reduce the number of bad credit accounts.
This discount system on accounts payable benefits the business and the owners as you can collect big discounts and save money by paying on time. It can be intricate to keep up with discounts, deadlines, and schedules to pay the due amount if you handle the AP processes manually.
By automating the AP processes, you can avail as many discounts on early payments as there are offers. The automated system will help you keep up with the deadlines or early payments without constant manual checkups. Even basic automation of AP processes can help you save money through discounts.
Automating the AP processes offers several benefits. These include fewer human errors and more accuracy in standardized data across all platforms. Big savings opportunity would also come from employee reduction to operate the AP system, reducing overhead costs. Moreover, the team can free themselves of menial tasks and work on more important things in the company, increasing productivity.
There is no doubt that digital systems are faster, thus, will save a lot of time. Besides these benefits, there are more reasons you should automate your AP processes. Automation is the future, and it rapidly takes over the business world.