6 Signs It’s Time to Automate Accounts Payable

Published on July 18, 2023
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It’s nearing the end of your payment cycle, and your financial staff — mainly those responsible for accounts payable (A/P) — are feverishly working on finalizing payments. But unfortunately, they’re so busy physically searching for, cross-checking, and verifying paperwork that they don’t have time to process your incoming bills.

Even more frustrating, they’ll need more time on the department’s strategic goals for the next week, like identifying early payment discounts among your suppliers or negotiating better payment terms. But since you’re planning a significant expansion in the next year, you need to make progress on freeing up capital. And you need to do so quickly.

If this scenario feels familiar, throwing money at it isn’t going to solve it. Instead, it’s likely time to automate your accounts payable processes, freeing up your A/P staff to focus on what matters. Still not sure if A/P automation is right for you? Here are 6 signs that your business may be ready to make the shift. 

What is accounts payable automation?

Accounts payable automation is achieved using specialized software to handle or manage many of the various tasks involved in paying bills or meeting other financial obligations.

Since accounts payable covers such a broad set of operations, businesses may employ several automation tools or, ideally, find a comprehensive platform (like Invoiced) that can cover the entire workflow from invoice to payment. Typically, these solutions will include software features that cover the following:

Why should you automate accounts payable? 

No matter how smoothly you try to run your operations, you’ll likely encounter all sorts of accounts payable challenges and inefficiencies. Automation can help your business overcome those issues — all while saving time and money. By deploying a comprehensive accounts payable automation solution, you can routinely:

  • Accelerate payment timelines: remove unnecessary delays with automated workflows and invoice verification
  • Eliminate manual errors: make transcription mistakes and miscalculations a thing of the past
  • Streamline reporting and auditing: easily find the details you need with centralized processes and metadata that follow every transaction.
  • Reduce fraud: restrict the number of staff and touches needed for your payment efforts and minimize the opportunities to manipulate financial data.
  • Scale efficiently: accommodate business growth and increased workloads using the same technology.
  • Improve job satisfaction: offload mundane and repetitive tasks to make your workers happier and keep them focused.

Worried that switching to an automated A/P system will be complicated? Learn how to automate accounts payable processes with our step-by-step guide.

Signs that it’s time to automate your accounts payable processes

1. You’re hiring

You may be looking for additional labor to support a new market that just opened up. Customers are finally recognizing the quality of your work and wanting more of it. Or recent regulations might be placing an increased reporting or oversight burden on your financial operations. If you are considering bringing on new A/P support staff, it might be time to explore automation in addition to or instead of hiring a new staff member.

With an automated platform, you can frequently handle processing increases without adding to your labor costs. You can free up your existing staff to focus more on cash flow management, supplier relations, and cost-saving endeavors rather than day-to-day operations.

Similarly, if your business is prone to seasonal fluctuations — concentrating most of your production in a handful of crucial months yearly — automation may prove a better alternative than hiring temporary staff. Routinely, your existing automation platform can easily navigate this transitory boost in workload, incurring only a nominal cost increase in energy use.

2. Your accounts payable processes drag on and on

The occasional late payment — while not ideal — isn’t entirely uncommon in the realm of business. But if finalizing transactions takes so long that you’re repeatedly missing financial deadlines, this can be a sign that it’s time to automate your accounts payable processes.

Delays can be attributed to the verification and approval stages within a manually-driven accounts payable environment. For every step in the process handled directly by a unique staff member, there will be a natural delay as each transaction is queued within the corresponding employee’s workload. And if any key approvers are stuck in a meeting, out sick, or on vacation, the progress of that transaction will grind to a halt. 

As an added consequence, late or delayed transactions will also make it impossible for your company to capitalize on any early payment discounts offered by your vendors, artificially inflating your operating costs.

An automated accounts process flow will keep the payment request (all of your payment requests) in tandem, moving through the process and requiring less human oversight.

3. You’re spending too much time correcting mistakes

No one is perfect, but humans are likelier to make errors than an application. We transpose numbers during data entry. We fail to carry the three in simple calculations. We forget how many emails we’ve sent and mistakenly submit duplicate invoices. We are imperfect and can often cause headaches, undermine business relationships, and waste additional resources.

With process automation, you can significantly reduce the likelihood of human error interrupting your tasks and shorten invoice approval cycles.

4. You’re talking to your suppliers a lot

You usually only need a few logistics conversations when things are running smoothly. Everyone knows what they need to do, and they just do it. But if you’re starting to receive some check-in notices from your suppliers, a trust issue has likely been festering in these relationships.

Admittedly, proactive communication is a clever play for accounts receivable (A/R), and your suppliers might simply be improving their A/R game. But more often than not, those frequent interactions indicate a concern on their part that you will be late with your payment or default entirely. Similarly, if there are frequent payment errors, they’ll definitely be reaching out at an increased rate to resolve those mistakes.

5. Your payments cost too much

High invoice processing costs are yet another sign that it’s time to automate your A/P processes, and any effective A/P department should be actively tracking their average per invoice processing cost. When that total is trending upward, you’ll want to act before the problem worsens.

Of course, this issue rarely occurs in a vacuum and is often tied to slow processes, frequent errors, or general process inefficiencies. But direct costs — and their steady increase — are relatively easy to monitor and provide clear evidence that something needs to change, making technology and automation discussions a little easier to have with management.

6. Your cash flow needs work

While some signs point to the fact that it’s time to automate your accounts payable process and focus on recurring interruptions to your daily accounting activities, it’s essential to remember that A/P is a much more complex operation. However, when done effectively — you can monitor, control, and leverage your company’s cash flow and overall financial health. If, during your A/P processes, you’re focusing too much of your time, energy, and staff on routine tasks, shepherding your cash reserves can quickly fall off the radar.

Unless you want to invest heavily in an AI-driven decision-making engine to control how and when you schedule your payments, cash flow management is where you want to support the skills, experience, and knowledge of your A/P staff. After all, it makes more sense for these specialists to focus on the big picture rather than searching for files, matching purchase orders, and processing invoices.

Automate accounts payable the easy way with Invoiced

Did any of these signs that it’s time to automate your accounts payable apply to you? Wherever you are on your automation journey, Invoiced is ready to help you take the next step in simplifying and streamlining your accounts payable operations. 

With the right platform, you’ll be in a better position to consistently pay your bills on time, effectively manage your overall cash flow, and keep staff focused on strategic goals.

Unlock the potential of A/P automation solutions for your business. Schedule a demo of Invoiced’s Accounts Payable Automation Software and make payments as painless as possible today.

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Published on July 18, 2023
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