A business with no debts at all is hardly a business. A business with heaps of outstanding debts to pay, on the contrary, is at the mercy of economic downturns and risks being financially unstable.
To evade these extremes and find a balance in between, companies need to keep a strict tab on their accounts payable process, i.e., management of money they owe to their suppliers or creditors. Though they have been largely relying on manual labour to perform it so far, with the emergence of AP automation, things have greatly evolved. “How exactly?” You ask. Let’s deduce…
AP automation, in simple terms, is the process of using technology to automate the accounts payable process, which includes the following stages…
When technology gets involved, these tasks become easier to perform and less prone to errors. This not only saves time but also allows companies to manage their finances in an effective manner, making AP automation the need of the hour.
There are sundry ways in which AP automation tools help businesses better manage the money they owe to their vendors or creditors. Some of them are listed below for your understanding…
With AP automation, the time required to process invoices gets reduced by half, and so do the efforts that go into manually entering data. This significantly lessens the workload of accounting teams, leaving them with enough time to focus on the more strategic aspects of their work. They also get to spare themselves of the trouble of routing for approvals and following up on them post.
Statistically speaking, businesses across the globe have managed to save 50% of their time by deploying automation tools to handle their accounts payable process.
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When businesses rely on manual labour to manage their accounts payable, things become a little expensive to handle. From procuring documentation supplies, including papers, postage, or storage, to hiring the right set of people to perform the varying tasks, they are required to invest greatly in a host of things.
With help from automation tools, however, these costs can be minimized to a great extent. These also help businesses avail of early payment discounts, which can lead to additional cost savings.
Suggested Read: The Importance of AP Automation in Cash Flow Management
When something is done manually, the chances of it being replete with errors increase manifold. The same goes for the management of the accounts payable process. Errors can be made while entering data or processing invoices. These errors can cause unnecessary delays in payments, leading to trust issues and late payment penalties.
AP automation can reduce these risks by using advanced tools and mechanisms to perform invoice capturing, matching, routing, and more. Not only will this lead to fewer mistakes, but it will also optimize the way in which businesses manage their finances.
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With accounts payable automation tools, businesses get to view the status of their invoices and payments in real-time. Owing to which, their cash flow monitoring capabilities become more efficient. They also get to monitor spending patterns, so well-informed decisions can be made whenever required.
As per a report by Medius, over 74% of businesses believe that automation tools give greater visibility into cash flow.
The relationship a business shares with its vendors is bound to strengthen if debts are paid on time. AP automation, by simplifying the accounts payable process and settling payments in a timely and effective manner, helps businesses achieve the same without much hassle.
This not only reduces the probability of disputes but also leads to a significant increase in business opportunities for the companies in question. It’s like a win-win situation for both the stakeholders involved.
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When businesses automate their AP processes, they automatically increase the security of their financial operations. These tools come equipped with sundry security measures such as encryption and authentication that safeguard financial data against frauds like swindling, embezzlement, and more.
These also perform audit trails that keep track of each transaction taking place, so no fraudulent activities take place.
AP automation tools are programmed to grow with your business. With an increase in transactions, their ability to manage them soars too, without needing additional staff or resources.
This scalability makes certain that your accounts payable process remains effective at all times. Talk about working under pressure!
Since every transaction that takes place using automated tools gets recorded, businesses find it easier to comply with the regulatory requirements put in place.
With 24/7 access to AP data, both meeting legal standards and responding to audit inquiries become hassle-free too.
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We live in a world that believes in working from home or on the go. To keep up with that, it is essential for businesses to have a centralized dashboard of sorts, so geographical constraints of any sort do not halt the work.
Automation tools facilitate the same by letting finance teams access and process invoices anytime, anywhere. This makes certain that payments are always made on time, come what may.
Here’s a step-by-step guide to effectively implement AP automation for better accounts payable management…
Conclusion
All in all, businesses that invest in AP automation are bound to see a significant change (for the better) in their management of the accounts payable process. With technology taking the centre stage, not only will the process become more efficient and accurate, but it will also lead to strategic financial management and gains for businesses looking to grow and expand their reach.
In the ever-changing landscape of business, it is, in fact, the only way organizations can attain sustained financial health and operational excellence. So, what are you waiting for? Be it Clear AP, Tipalti, Stampli, or Zoho Books, Choose the best accounts payable software for your business today itself.
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