The adoption of automation technology in the accounting world continues to trend up as business leaders are finally recognizing the value of streamlining one of the most integral departments. Although Covid-19 spurred a wave of software purchases to help accountants get by, IoFM reports that a mere 27% of finance departments are automated from end-to-end.
One of the steps in the AP process most commonly left behind in these partially automated systems is Payment Automation. Although entering data through OCR or automating approval routing is important, it is startling how many companies continue to hand-write checks and manually enter instructions for ACH or wire payments for every individual invoice.
Payment automation operates as the final stop along the invoice automation journey. It takes an invoice that has already been approved for payment and then intelligently confirms the accuracy of the data, checks against duplicates, and then automatically initiates a payment to the supplier based on the preferred payment information stored under that vendor’s account.
Automating your vendor payments process is an essential step towards completing an effective end-to-end AP automation process and can offer your organization a range of benefits both tangible and intangible.
1. Save Money
There are so many areas in which accounting departments that do not have automation hemorrhage money. Manual processes always result in expensive mistakes and missed opportunities. Automating b2b payments can save your organization money through:
- Eliminating costly mistakes that can result in duplicate payments, overpayments, or late fees
- Gaining access to early payment discounts
- Utilizing electronic payment types with lower fees
- Reducing material costs for paper-processes
- Refocusing labor hours normally wasted on data entry
2. Improve Efficiency
Everyone knows time is money. But time saved is also time that can be spent on more impactful work. It’s no secret that manual tasks, especially those within accounting, demand a lot of employee time and attention.
Even as the invoice exits the approval process there is still a lot of data entry that must take place to get payments out to vendors. The more steps that are automated in your accounts payable process, the faster the invoice cycle time will be and the more time your AP team can spend on future-facing objectives.
Higher efficiency also means more control over when you pay your vendors. You can meet a deadline for an early payment discount for a specific vendor if you want, but if you’d prefer to ensure that all payments to a different vendor go out on a certain date, you can set those parameters as well.
3. Increase Visibility
One of the most important responsibilities of a modern AP department is to maintain control and visibility over all the financial transactions that take place each day. That’s why it is so important to have an automated system in place that not only records data but also offers a real-time look into the status of invoices in progress.
Payment automation reporting tools can ensure that industry regulations and compliances are being consistently met. Being able to provide comprehensive paper trails for each and every transaction also guarantees that you are as prepared as possible when the next audit rolls around.
4. Optimize Cash Flow
The simple truth is that the better your data, the stronger your decision-making. Payments are a prime indicator as to the state of your organization’s finances as well as available capital.
In recent years business leaders have come to heavily value payment automation as a strong point of analysis when predicting future cash flow. Electronic payments in particular make it easy to capture financial data that can empower leadership to make confident and informed decisions.
5. Strengthen Vendor Relationships
Partnerships are built on trust and few relationships are more important for businesses to maintain than the relationship with their suppliers. Utilizing a vendor portal, your team can provide suppliers with visibility into the status of pending invoices. This can directly provide the information they need to post the remittance information into their receivables system, resulting in fewer supplier inquiries that must be fielded by your team.
Although visibility is nice, at the end of the day your suppliers just want to get paid on time without any difficulties. Processing payments with the help of an automation solution means faster invoice processing cycles so you can consistently pay your vendors on time and without the risk of errors bogging things down.
6. Enhance Security and Fraud Prevention
Unfortunately, cyber-threats and fraud attempts are on the rise and paper checks are an easy target. Checks are notoriously unsecure especially when processed through the mail as they can be easily exploited by bad actors through forgery, theft, counterfeiting, or as a building block of a data attack.
According to a 2019 JPMorgan and AFP Survey, 81% of companies were targets of payments fraud, often in the form of receiving a fake invoice, and these instances are only increasing in an uncertain economic climate. Fortunately, accounts payable automation software is able to validate invoice and vendor information automatically to catch most instances of fraud before they can cause a problem.
Not only are digital payments a more secure way to transmit funds, but when you have a system that regularly processes payments with trusted vendors automatically, it becomes significantly easier to detect instances of foul play and take steps to protect your finances and data.
7. Assist Employee Retention
In the wake of the Covid-19 pandemic, companies are reeling from a trend that is being called “The Great Resignation”. In a study conducted last summer, 95% of surveyed workers are considering changing jobs. (Source: thebestschools.org) With so many industries expanding remote opportunities and with a surge in burnout due to pandemic pressures both at work and at home, workers are leaving their old jobs for new opportunities at unprecedented rates.
Although the reasons for this boost in employee exodus vary, personal fulfillment and job satisfaction are major contributors, as people want to feel like their education and experience are being utilized and valued. Handwriting checks for most of the day is just not going to cut it.
High turnover can be devastating to operational efficiency and hiring and training new workers is not cheap. By automating the rote tasks that no one wants (or needs) to do, you can show your team that their expertise is valued, and empower them to do work that actually makes an impact.
If you'd like to take a deeper look at what DocuPhase’s Vendor Payments Solution can offer your team, schedule a call with our team today!