Automated AP (Account Payables) To Deliver on the Promise of Augmented Bottom Line
Author: Pramod Alluri | | January 19, 2023
Accounts payable processes refers to various procedures that enable businesses to manage their payment obligations efficiently and effectively. Accounts payable act as a general ledger that can showcase all credit purchases as well as various services that your business is required to pay to creditors or suppliers.
Furthermore, accounts payable act as a short-term liability in your business’ balance sheet. Therefore, it is crucial to keep track of individual accounts and payments to help facilitate positive relationships with vendors. However, as the amount of payment-related data that modern businesses are expected to keep track of increases at an exponential rate, it can be extremely difficult to monitor and track account payables processes.
Therefore, automated accounts payables processes can be extremely beneficial for helping businesses streamline and optimize various accounts payable processes and significantly increase your bottom line. Recent studies have shown that integrating automation into an organization’s invoicing and accounts payable processes can reduce average expenditure by up to 90%.
What is Accounts Payable Process Automation?
Accounts payable process automation involves reducing the amount of human interference and manual processes by automating repetitive and time-consuming tasks. This is typically through integrating accounts payable automation software with an online business network that can digitally connect trading partners.
Automated AP systems can significantly improve the efficiency and effectiveness of payments made to suppliers and vendors by streamlining manual processes such as invoicing, data entry, documentation and much more. Therefore, this can facilitate better visibility and governance over important organizational financial data.
One of the biggest challenges that modern businesses currently face is inefficient account payables processes due to manual procedures, human error and potential discrepancies in financial analysis; all of which can be eliminated using automated AP. Your business can also utilize automated AP to manage payment approvals as well as automatically generate and send invoices to suppliers, vendors and relevant stakeholders.
Benefits of Account Payable Process Automation for Bottom-Line Growth:
1) Increased Transparency and Visibility
Automated AP systems can help your business easily monitor various accounts payable processes while still retaining control over your financial data. Automation can help significantly improve the transparency and visibility of business processes and organizational workflows.
Improved transparency and visibility can be extremely transformative for improving productivity in the long run by increasing employee engagement, facilitating improved supplier communication, processing payments more efficiently and much more. These systems can also enable suppliers and vendors to check the status and payments themselves using a cloud-based portal.
2) Faster Approval Processes and Payments
AP automation can significantly speed up various organizational payment processes. Automation can help simplify various authorization and approval processes which typically delay account payables processes. Automated AP can not only ensure that invoices are created much faster but can also process payments much more efficiently. Furthermore, these tools can be used to record payment-related documentation in a timely manner as well as automatically process overdue payments.
3) More Efficient Invoicing
Traditional account payables processes usually involve a significant number of invoices awaiting approval confirmations at the same time. However, this can create bottlenecks in various business processes and may ultimately affect your organization’s relationships with suppliers and vendors. Therefore, automated AP can help ensure that invoices are automatically generated and approved with minimal time delays. Recent studies have shown that AP automation can result in approximately 18% fewer days payable outstanding (DPO); thus leading to more timely payments, better supplier and vendor relationships and ultimately transforming your business’s bottom line.
4) Optimized Working Capital Management
As vendor and supplier relationships become increasingly complex, accounts payable processes must be approached more strategically by modern, data-driven businesses. This approach involves much more than simply ensuring that invoices are processed and received promptly. Automated AP can help focus on management and emphasize the importance of optimizing account payables to free up net working capital to fuel organizational growth.
Transform Your Business’s Bottom Line with Automated Account Payables:
Automated AP can be extremely beneficial for helping your business increase transparency and visibility, streamline and optimize payment approval processes, facilitate more efficient invoicing and optimize working capital management.
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