For the fourth consecutive year, data shows finance professionals are underestimating what paying invoices is costing their business. As in years past, finance professionals are miscalculating the cost of paying invoices by a substantial margin, as only 13% of respondents reported estimating the cost to process and pay a single invoice at $10. However, according to American Productivity & Quality Center, the true cost of paying invoices is about $12.
While some costs are unavoidable, there are numerous costs accounts payable teams can avoid with the help of automation. Implementing a fully automated accounts payable solution affords businesses the following cost-savings opportunities:
The most time-consuming and tedious tasks in AP are typing and coding invoice data into your ERP or accounting system, managing invoice approvals via email, matching purchase orders to invoices, and signing checks. Each of these tasks, when manually, also increase the likelihood for error.
In our 2019 State of Accounts Payable survey, “reporting and reconciliation” was listed as the most time-consuming daily process for respondents. While there is an unavoidable time requirement for each of these pain points, the time spent and errors can be reduced through automation.
Human Capital Costs
As businesses grow, so do invoice volumes, which also results in a greater AP workload. Traditionally, teams added to headcounts in an effort to keep up, but this is costly and wholly unnecessary. According to the APQC research, labor costs typically consume 62% of total AP costs. Automation enables businesses to scale without a need for additional staff, allowing for the reallocation of resources to other areas of the business that can move the company forward, rather than simply keep things running.
While many finance teams are unaware of it, manual AP also disqualifies their business from benefits like early-pay discounts. In fact, a report from Sage showed as many as 25% of B2B payments in the middle-market are late. With the help of automation, AP teams can plan ahead and schedule payments with the visibility into vendor and invoice details as part of a larger payment optimization strategy to achieve greater command over cash flow.
How Automation Minimizes AP Costs
The accounts payable process is costly, but it does not have to be with the help of a fully automated AP solution. Automation creates efficiencies throughout the end-to-end AP workflow by eliminating time-consuming and error prone tasks throughout the process. For growing businesses in the middle-market, automation also provides scalability without adding to headcount by increasing productivity and also frees up time for more strategic initiatives.
Lastly, automating the AP process allows finance teams to think more strategically about when and how invoices are getting paid, which reduces the total costs of paying the bills.
Curious to learn more about how accounts payable automation can help your team leverage electronic payments? Contact MineralTree for a personalized demo.