3 Pitfalls of Not Using Winter Break to Start Automating AP before 2023
As economic uncertainty lingers, finance leaders at higher education institutions are adjusting their 2023 budgets accordingly. While cutting resources or laying off staff during tough times is standard, colleges and universities must find new ways to combat economic uncertainty and optimize their budgets in case of a recession.
Historical data shows that higher education institutions are the first to experience budget cuts during a recession1. As a result, colleges and universities – especially public ones that rely on state and local funding – commonly experience higher tuition costs to offset budget declines2. Adding to the challenges institutions are experiencing are declining enrollment and record-high levels of student debt.
In 2021, 74% of higher education professionals reported that financial constraints were the biggest challenge impacting education3. Fiscal limitations have impacted education for decades and will likely worsen, given the current economic crisis. Without realizing it, higher education Accounts Payable (AP) departments still relying on manual, paper-based accounting processes for things such as vendor payments are adding to these financial constraints.
Preparing for financial hardships can be intimidating, but there’s one simple step any organization can take to navigate the unknown: embracing simplified technology. Modern technologies like Accounts Payable Automation can help organizations increase efficiency by automating repetitive and time-consuming tasks. If you don’t take 5 hours out of your schedule to implement a best-in-class AP automation solution before students return from winter break, you run the risk of falling into these 3 major pitfalls in 2023:
- Losing valuable time and money
Time and money are of the essence, especially during seasons of economic downturn. First, consider the time spent on tedious and time-consuming manual AP processes. Around 84% of a typical AP Specialist’s day is spent on manual, repetitive tasks4 such as keying invoice data, pushing paper, fixing typos and other mistakes, chasing down information, and responding to inquiries about the status of invoices and payments. Then, consider the expense of paper processing. It takes an average of $12.905 to manually process one paper invoice and issuing one paper check costs between $1 to $26 with an average of about $6 per check6. Also, with so much focus on manual tasks, AP staff can’t serve students effectively. Best-in-class AP solutions streamline the invoice-to-pay process, saving organizations thousands of hours annually with an average of 80% of time saved on processing. Users also enjoy a 60%-70% cost reduction on invoice processing and an 80%-90% cost reduction on payment processing.
2. Increased fraud vulnerability
Did you know that the education industry is the most targeted industry for a fraudulent attack7? Using paper-based practices can increase your security risks, which could be costly for institutions of any size. According to a recent Association of Certified Fraud Examiners report, companies lose roughly 5% of their revenue to fraud each year8. Implementing AP Automation offers greater protection and increased security to help you mitigate the risk of fraud.
3. Failure to make strategic, data-informed decisions
CFOs must be prepared to make strategic decisions at a moment’s notice. Without visibility into cash flow and access to enhanced, real-time data reports, organizations lack valuable insights into finance operations. Leading AP Automation software provides tremendous insight into payment history reports, archived documents, payment status reports, and document management and retention software. These capabilities enable you to problem solve, better understand performance, and improve processes that aren’t working.
Implementing AP Automation is quick and easy, and best of all, a cost-effective decision. Higher education AP departments that have automated AP see reduced costs from paperless processing, enhanced fraud protection, and anytime access to robust data that drives decisions. With time savings, staff now have time to focus on strategic initiatives for their students, like improving student retention and completion, campus diversity, equality, and inclusion; and fostering a sense of belonging on campus.
1Bipartisan Policy Center
3The Association of American Colleges and Universities (AAC&U): 2021 Report Identifies Top Challenges and Strategic Priorities for Colleges and Universities
4IOFM: How End-to-End AP Automation Drives Efficiency and Business Growth
5IOFM: The True Costs of Paper-Based Invoice Processing and Disbursements
6Check Issuing: The Cost of Issuing Checks (A Guide for Businesses)
7Baker Hostetler 2021 Data Security and Incident Response Report
8Association of Certified Fraud Examiners (ACFE): Occupational Fraud 2022: A Report to the Nations