How accounts payable automation can accelerate business recovery

As businesses continue on the recovery journey post COVID-19, it will be important to work together as collaboratively as possible. In a practical sense, this can include building stronger relationships with your suppliers. It’s important to support your preferred suppliers as they, too, rebuild after COVID-19. Being able to do this relies on your cashflow being strong and well-managed, and on your ability to stay on top of your accounts payable (AP).

Why you should consider AP automation

Research has shown that, for 28 per cent of small businesses, more than 60 per cent of their invoices are paid late.[1] This can be costly for suppliers in terms of cashflow, highlighting the importance of paying invoices on time as a way to build strong relationships.

However, many small and medium business (SMB) owners are content to manage their accounts payable using spreadsheets or even paper-based tools. Some simply pay invoices as they come in and rarely double-check to see whether the invoice is accurate and legitimate.

Here are some of the issues you could be experiencing if you’re managing your AP processes manually:

• lost visibility into how much your business is spending on what, and who authorised it (experienced by 24 per cent of organisations[2])
• potential to fall victim to invoice scams where you pay fake invoices (or pay real invoice amounts to fake accounts)
• lost time and, therefore, productivity due to the burdensome nature of manual processes (51 per cent of businesses say invoice/payment approvals take too long, and 62 per cent say they have to deal with a high percentage of exceptions[3])
• risk of errors like double payments, missed payments, late payments, and payments for goods not yet received, all of which can compromise cash flow and budgeting
• inability to strengthen and improve supplier relationships, with all the benefits that can offer.

Managing AP manually typically takes longer than you think, and it creates ample opportunity for errors that can be costly for you and your suppliers.

Benefits of AP automation

Automating AP processes can deliver significant benefits for your business, especially as you look to carve a path to recovery by reducing costs, improving supplier relationships, and gaining more insight into expenditure.

Research has shown that the top 20 per cent of organisations with AP automation have reduced their invoice processing costs by five times and can process invoices 2.5 times faster than businesses with manual processes.[4]

A recent Ardent Partners survey on the state of e-payables revealed further benefits, which can include:

• less potential for error, which can save you money in incorrect payments and save you the time it takes to rectify those errors (30 per cent of survey respondents named reducing processing costs as a top goal for AP automation)
• increased ability to detect fraudulent or scam invoices so you don’t become a victim (20 per cent of survey respondents said they wanted AP automation to help improve visibility into invoice and payment data)
• on-time payments that let you take advantage of discounts (or at least avoid late-payment penalties) and build goodwill with your suppliers (27 per cent of survey respondents said their key priorities for AP automation included the ability to improve connectivity and collaboration with suppliers)
• dramatically reduced need for staff members to conduct admin work related to AP, which means they can focus on other tasks that can help your business thrive (47 per cent of survey respondents said eliminating paper and reducing manual tasks was a top priority)
• insights into spending patterns that can let you make smarter decisions about which partners you continue to do business with, and negotiate better terms, lower prices, or priority access to the products you need (22 per cent of survey respondents said improving collaboration with procurement was a top goal for AP automation, while 48 per cent said a top goal was to improve reporting and data analytics).[5]  

Strong relationships can be the secret to success

If you have strong relationships with your suppliers, you can gain several benefits, such as:

• preferential supply, ensuring you get what you need, when you need it, even if there are shortages
• preferential prices, which can mean you get the products and services you need at a lower price than your competitors
• discounts due to early or on-time payments
• better payment terms based on trust, e.g. 60 or 90 days instead of 14 or 30 days.

When you have a collaborative relationship with your key suppliers, you’re in a better position to negotiate. And, if a situation occurs where you can’t pay on time, your supplier may be more likely to give you more leeway than other customers who have a history of scattered or late payments.

A broader economic benefit

No business operates in a vacuum and the strength of the overall economy can contribute to your business’s ongoing success. Likewise, your business activities can deliver a broader economic benefit by ensuring payments continue to flow between business partners. Paying your suppliers on time and accurately means you’re doing your part to help the economy recover.

With better control over your AP processes, you can also have more insight and visibility into your cash flow, which is a crucial element of any business’s plan for recovery.

AP automation is essential technology for every SMB looking to emerge strongly from COVID-19. The benefits and cost savings can be substantial. The knock-on effects from implementing AP automation can stretch far and wide across your organisation.

For example, staff members who previously spent an inordinate amount of time shepherding invoices through a manual, paper-based AP process can now focus on activities that are more valuable to the business and more rewarding for them. This deeper engagement can lead to happier, more productive, more loyal employees, which can be critical for a small business’s success.

If you’d like to find out how you could accelerate your post-COVID-19 recovery with AP automation, contact Konica Minolta today.