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Is Automating Your Business AP Process as Simple as Paying Your Personal Bills Online?

Is Automating Your Business AP Process as Simple as Paying Your Personal Bills Online?

If you’ve ever paid a personal bill online or signed up for reoccurring payments, then you understand the appeal and simplicity of automation in the AP process. You may even be wondering how to bring the same streamlined capabilities into your business.

If so, you aren’t alone. AP automation can deliver impressive results. According to Aberdeen Group, 46 percent of businesses in their survey have invested in automated payment systems.

The reasons are clear. Ninety-five percent of organizations that have achieved full or partial automation report being able to handle an increased volume of invoices.[i] However, when it comes to automating payments, what works for consumers isn’t always a good fit for your business.

If you’re thinking about investing in AP automation, you’ll want to understand the difference between business and consumer environments and how to select an automation partner who can meet  the individual needs of your company.

Understanding the Challenges to Business AP Automation

Business AP processes are far more complex than those of the average consumer. For one thing, when a business receives a bill in the form of an invoice, it needs to be tied back to contracts, purchase orders, statements of work and quotes. Business payments are also subject to an approval process, and for security reasons, that often means dual control is required. These are all added steps in the workflow that consumers don’t have to worry about.

Businesses often use multiple payment types as well, including checks, ACH and commercial cards. Depending on the size of the company, these interactions may be facilitated through different systems and by different teams, adding to the complexity of the payment process.

Lastly, because they deal in higher payment volumes and dollar values than the average consumer, businesses face added security concerns. All of these circumstances add up to a unique environment requiring dedicated AP automation solutions.

Should Your Business Consider AP Automation?

When considering AP automation, you’ll want to think about the state of your current function. Manual payment processes are time intensive, often resulting in errors and low efficiency. For example, 48 percent of AP organizations spend two to four hours each week enforcing invoice processing rules, according to a recent survey.[ii]

On the other hand,  organizations that use AP automation achieved nearly 7 percent greater accuracy than those that do not.[iii]  They also reduced Days Payment Outstanding (DPO) cycles by 17.5 percent and cut processing costs in half.[iv]

With AP automation, there are fewer manual steps to making payments. Business teams scan invoices, which are then automatically matched to purchase orders or contracts, before being submitted for approval.

Upon approval, the order to pay is sent and payment is made through the company’s method of choice. AP systems also monitor and report when payments are received before effectively closing out the invoice and filing data in electronic repositories.

Automating the process  allows a business to  track the invoice as it moves through various stages of approval and onto payment. The majority of AP professionals have found this level of visibility to be an asset to their work.[v]

Overall, automating your AP process may have a positive impact on your business by improving cash flow. Faster payments result in fewer late fees and interest charges. AP automation also gives you more control over the payment process, allowing you to time payments to your advantage and renegotiate service terms with vendors or suppliers. Receiving discounts for early payments can be a big help when it comes to accelerating cash flow.

How to Select an AP Automation Partner

When it comes to AP automation, there is no one-size-fits-all solution, so finding the system that meets your company’s needs is important.

For instance, a small business with a modest transaction volume may not need to support multiple payment teams and processes, but larger businesses will need a more robust solution.

You’ll also want to think about the future and your prospects for growth. A system that works for your small business today may not be nearly as effective when your company is a mid-sized or large-scale company.

When considering partners, think about the following points:

  • Ease of integration: Can the AP automation partner work with your existing systems and processes without requiring overhauls that may lead to down time and late payments?
  • Looking out for your needs: Is the partner offering a single product or can they deliver different solutions depending upon the size of your company, your transaction volume and budget? The right partner will want to customize the solution to your needs rather than asking you to adapt to a single solution.
  • How much flexibility do they provide: Is the partner able to work with multiple payment types, especially those you use most?
  • Partners with you: Select a solution provider that is willing to partner with you on the right solution for your business needs. A team that is willing to guide you through the process, and then offer ongoing support, will be one of your most valuable assets during your automation journey.

There is no doubt that automating payments is the way of the future for businesses. However, before you step into the world of automation, talk with your financial services provider about your needs. They can help you determine if AP automation is right for your business and help you find the right solution tailored to your environment.

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About the Author

Russ is the Senior Vice President of Corporate Treasury Services. He and his team are responsible for providing innovative payment solutions to commercial clients nationally. His responsibilities include managing customer relationships and developing new products that enhance client accounts.

[i] “2018 State of Accounts Payable Report: A Look at Current Accounts Payable Operations, Challenges, Visibility and Control.” Hyland, 2018. Web.

[ii] “2018 State of Accounts Payable Report: A Look at Current Accounts Payable Operations, Challenges, Visibility and Control.” Hyland, 2018. Web.

[iii] Keir Walker. “Reap the Benefits of Invoice Excellence with AP Automation.” Aberdeen Group, Feb. 2016. Web.

[iv] Keir Walker. “Reap the Benefits of Invoice Excellence with AP Automation.” Aberdeen Group, Feb. 2016. Web.

[v] “2018 State of Accounts Payable Report: A Look at Current Accounts Payable Operations, Challenges, Visibility and Control.” Hyland, 2018. Web.