One of the keys to a successful business is a robust and healthy finance department. A clean accounts payable bill of health depends on a few diagnostic check-ups. Control, streamlined processes, and flexibility are just a few of the “symptoms” to determine the viability of your current AP solution. We’ve highlighted a few of the pain points accounts payable departments face for companies to gauge their AP health and build a case for future payment automation.
Visibility is Key to Healthy AP
Many accounts payable departments are still manually managing workflows and processes. More often than not, manually managed invoice processes make it easy for one invoice to slip through the cracks. What exactly is driving up most invoice costs? The answer is simple—manual, paper-based processes.
Many finance departments have several ways of receiving and organizing invoices. They’re receiving invoices via fax, email, electronic, paper, or a combination of all four. Without a centralized hub, it’s easy for pieces of paper and scattered emails to lead to one invoice getting lost, causing all sorts of headaches. Two out of three surveyed companies reported wasting an average of one-to-eight hours a week handling invoice management problems in the AP department.
Typically, invoices are received after products have been purchased. As a result, there’s a lack of visibility into the budget and spend. E-invoicing forces the invoice to the front as a part of the payment automation process. With e-invoicing, extracted invoice details make payment management easier and more efficient.
Top performers are adapting to the Digital Era by implementing e-invoicing to electronically manage invoices in a cloud-based hub. E-invoicing is the first step in a paperless payment automation process to streamline payables from start to finish. E-invoicing stores all invoices in a centralized, cloud-based hub, regardless of how they’re received. If your business has implemented e-invoicing, you’ll find that tasks, like managing invoices and spend, are less painful without piles of paper in the way. Having visibility into invoices early on simplifies auditing, reporting, and budgeting.
Payment Automation is the Cure for Paper Problems
How is your finance department processing payments? PYMNTS.com reports that processing one paper check roughly costs $10. In addition to the high cost, results show that buyers who are clinging to paper checks are suffering from lack of payment process efficiency and late payments.
It’s no secret that paper checks are a top fraud vehicle. If your business is sticking to paper checks, you’re running a big risk. Many companies that stick to checks experienced attempted or verified fraud—much higher than wire transfers, credit cards, or ACH.
Deloitte predicts by then, the B2B payment market will reach $23.1 trillion.
Businesses are slowly, but surely, beginning to say “so-long” to paper checks in exchange for streamlined payment automation. Electronic payment methods are easier for organizations to manage with real-time payment routing updates, unlike snail mail.
The Digital Era is constantly evolving to make electronic payment automation processing safe and simple. The AP department is responsible for processing hundreds of payments monthly. To see how your business stacks up against the benchmarks, consider your payment volume. How many of these payments are paper-based—more, or less, than electronic payments? To determine the level of efficiency of your payment processes, estimate the time and money it takes to process manual and electronic payments, including cost, exceptions, and time.
Make AP Efficiency the #1 Health Objective
Reviewing and approving invoices can take days. For many companies, there are different approvers for each part of the payment funnel including invoice and payment amount. Manually approving payments and invoices can be tedious, especially when approvers are out of the office. Waiting on approvals slows down the payment process, which could lead to late payments.
To expedite approvals, organizations are leaning on AP solutions to automate manual approval processes by adding rules and restrictions to the workflow. These rules and restrictions eliminate the hassle of reaching out to an approver every month about the same dollar amount threshold.
Approvals can also be rerouted in the absence of the approver to keep the business running as usual. All approval options can be set during implementation for a smooth, streamlined process.
How quickly do your approvers give the go-ahead for an invoice or payment? Sometimes, it’s dependent upon when they’re in the office. Cloud-based solutions now provide flexibility for approvers to review and authorize on the go by simply logging in to a portal. Payment automation solutions include automated rules to expedite the current approvals process. Instead of chasing down approvers, there’s more time to focus on strategy and analyzing spend.
Don’t Catch the “AP Fraud Flu”
The finance industry continues to be a top target for scammers. There are countless sensitive documents that can compromise accounts payable processes. Tax forms and invoices are just a few of the documents containing confidential information that could compromise AP processes and finances.
The Robert Half and the Financial Executives Research Foundation (FERF) reports that to stay aware of suspicious activity, 72% of finance leaders are either currently using cloud-based technology or plan to. Finance departments are also including security measures within their AP processes with fraud monitoring such as “Positive Pay” to alert the department of red flags and suspicious activity during the automated payment process.
Businesses still holding on to paper-based processes are at risk for countless security and compliance problems. As a security precaution, finance departments should invest in solutions that put security first. Most cloud-based solutions have fraud monitoring, such as “Positive Pay,” to automatically send alerts for suspicious invoice or payment details.
AP departments that stick to internal, manual processes can easily overlook duplicate invoices, suspicious payments, and emails that could put the finance department at risk.
Questions to Approach Payment Automation
We’ve created a few questions to spark the payment automation conversation. Here are a few factors to consider with your teammates:
- How can you increase efficiency in the AP department to get the most out of your employees?
- What are FTEs spending most of their time doing on a regular basis? How could this be improved?
- How can you decrease your cost per invoice and exception rate to boost productivity and professional development?
- What can your AP department do to double the dollars without tripling the time?
- How can we benefit from payment automation? Is the reward bigger than the risk?