An Accounts Payable Automation solution has the capacity to transform an entire AP department. On average, manufacturers typically manage a minimum of 3,000 invoices per month from numerous vendors. Each invoice is manually verified to confirm that the products ordered on the invoice matches the purchase order and that the price paid is correct. With an automated tool, this time-consuming and error-prone task can be removed from your company’s accounts payable process.
How Does an AP Automation Solution Work?
If you're using Electronic Data Interchange (EDI) software, you first need to scan your invoices before they are processed. However, an accounts payable automation solution, allows the software to OCR the invoices so the computer can extract the information and automatically transfer the data into a spreadsheet or another preferred output location in your workflow.
Benefits of Accounts Payable Automation
Automating your accounts payable can have tremendous advantages in terms of efficient resource allocation. An automated invoice processing system can dramatically reduce processing time by as much as 80 percent with significantly better accuracy than a human.
For an organization that processes 3,000 invoices per month, automated invoice processing can bring the cost per invoice down to just $6. That’s a savings of over $800,000 per year in labor, creating a clear ROI for accounts payable departments.
Through streamlined invoice processing, accounts payable staff can redirect its efforts that would otherwise be spent on processing invoices to higher value tasks that require attention and cannot be automated. AP departments can also be eligible for early payment discounts.
An early payment discount is a favorable credit term offered to companies in exchange for expedient payment. For example, many suppliers will offer a 1-2% discount per month when payment is made within 10 days of receipt.
Over the course of a year, the cost-savings can mean thousands of dollars in savings. In addition, it presents the opportunity for AP firms to negotiate more favorable terms with vendors, even if the relationship has been strained in the past.