Published by Gary Roy Markham on Jan 27, 2021
The current business climate makes it necessary to utilize digital solutions. Multiple departments - including finance, legal and human resources - have benefited from digital transformations. Perhaps it is time for accounts payable (AP) departments to follow suit.
In 2015, the Aberdeen Group estimated that the average cost of processing an invoice hovered around $16, with a turnaround time of 10 days. This is a significant - and unnecessary - investment of time and money for a single invoice.
The Aberdeen Group followed up their 2015 study with another one in 2016. This study identified paper invoices as the reason for accounts payable inadequacies. Lost or misplaced paper invoices can substantially increase invoice processing times. Ironically, the study further reported that 25% of participants still used paper invoicing.
Luckily, automation can eliminate instances that back up invoice processing cycles. In their 2017 report, McKinsey estimated that 50% of manual processes can be automated. This can be achieved through the implementation of technological solutions that use AI and machine learning to streamline business processes.
Automating invoice processing cuts down on the time it takes to approve the invoices - which is critical considering manual processing can take weeks, or sometimes months. This is largely due to the various people involved in the approval cycle, and the subsequent back and forth pending approval. Luckily, automation can streamline the entire invoice processing cycle, from order generation to vendor payments.
Solutions such as ExpenseCore use machine learning (ML) to improve AP processes. Invoices - regardless of format - can be converted into digital data which is then processed through rules-based automation workflows. Rules include things such as “if invoice >$ pay automatically”, or “if invoice <$, require supervisory approval”. By using rules-based automation, AP departments dramatically reduce the time and cost of processing invoices. Furthermore, solutions like this can eliminate the risk of manual errors by triaging invoices to supervisors when needed, and by ensuring that guidelines are applied in the review of all incoming invoices.
The most efficient way to introduce AP automation is by pairing it with other changes to business processes. Technological transitions, more often than not, have to contend with human unwillingness, so employee training is a crucial component of technological renovation. If AP automation can be introduced alongside other business changes, it is less of a hassle to train employees.
AP automation has great potential, and can be the driving force behind optimizing accounts payable processes. Companies of all sizes can benefit from AP automation, as it allows them to identify more business growth avenues and redirect their employees towards high value tasks. Furthermore, AP automation saves time and money on a day-to-day basis.