Is your business ready to make the first step into understanding how to automate the accounts payable process? This blog article highlights the questions you need to ask to understand if you’re ready for accounts payable automation.
When organisations receive thousands of invoices every year, imagine the size of the accounts payable team to ensure all invoices are correct and paid. Some businesses don’t need to imagine it, because it’s their reality.
For decades organisations have relied on manual and paper-based accounts payable processes. Whilst accounts payable may not be as profitable when compared to sales revenue streams, it does play a significant role in improving a businesses’ cash flow. Streamlining the process by using accounts payable automation can lead to a paperless and hassle-free solution. As a result, this can bring multiple benefits to an organisation.
Accounts payable automation – key questions for your organisation
1. Does your organisation suffer from data entry errors when processing supplier invoices?
A report from the Institute of Finance and Management highlighted the fact that human error is a constant threat in manual procedures. Typically, around 3.6% of supplier invoices include errors. Accounts payable automation can greatly reduce or eliminate data entry errors.
2. Have you accidentally paid an invoice before receiving the product or service?
Paying an invoice before receiving a product or service can be cause for concern. What if the product or service doesn’t arrive, or isn’t correct, it leaves your business with little bargaining power if something was to go wrong. How do you ensure that your businesses don’t pay the invoice a second time when the goods or services do arrive? This can also create more unnecessary manual admin work for the accounts payable team.
3. Do you regularly miss out on early payment discounts from suppliers?
An early payment discount is an incentive that reduces the value amount of an invoice if the customer pays it in advance of the due date. This process often involves the accounts payable team being manually organised to know what offers exist, when they expire and what they account for. Businesses without accounts payable automation often miss out on the benefits early payments bring due to the time limitation of manual processes.
4. Do you experience late payment fees from suppliers due to the slow processing of invoices?
Typically, a low, percentage-based late fee is used when a payment is overdue on an invoice. Late fees usually range from 1% to 2% monthly interest rate. During peak times some accounts payable teams can struggle to keep up and miss payment dates. AP automation can help businesses curve late fees with automatic reminders.
5. Are you constantly following up on queries manually or fielding supplier queries regarding late payments?
Do you know how much time your accounts payable team is actually spending following up on queries? It’s estimated that in the UK the average business has at least 217 invoices to process in one month. This equates to 12 hours a week spent dealing with late payment queries.
6. Do you receive, and pay, duplicate invoices from your suppliers?
Duplicate payment is a major financial drain for any business, on average 0.05% of invoices are paid incorrectly, with little or no chance of recovering the money. Accounts payable automation gives your AP team greater visibility over the payment process and decreases the likelihood of duplicate invoices.
7. Does your AP team spend most of its time investigating pricing and/or stock discrepancies?
AP teams are busy. In addition to paying for goods and services, they often spend time investigating pricing or stock discrepancies to answer queries. If an invoice lists the wrong price, it’s often your AP team who have to spend the time understanding and fixing the error.
8. Do you spend a considerable amount of time trying to work out what happened to invoices because your system can’t or isn’t sophisticated enough to do so?
If your system isn’t sophisticated enough to keep track of invoices it can often result in a embarrassing conversation with a supplier about whether you’ve paid the invoice or not. All of this manual chasing or trying to understand what’s going on wastes time which could be spent on more strategic tasks if your team use AP automation instead.
9. Do you want to improve your supplier relationship by providing a faster invoice processing/payment rates and better visibility?
Paper-based, manual processes lead to lengthy approval timeframes while documents are shuffled between departments. Ultimately this results in slower payments—often causing the supplier to chase the payment. Consequently, this can dampen the overall relationship between the two companies.
50% of organisations said their company takes too long to approve supplier invoices and payments. Are you ready to be one of the 50% that disagrees?
总结
These questions will have allowed you to understand if your organisation struggles with the manual processes involved in the accounts payable process. Fortunately, these challenges can be overcome by using accounts payable automation. In turn, this helps the team focus on more strategic goals and less manual admin-related tasks. You can download these questions for free to share with your business here 或 contact us to discuss how you can implement an accounts payable solution.
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