Efficiency Unleashed: The Power of AP Automation in Manufacturing
The manufacturing industry continues to face many challenges in the aftermath of a global pandemic. Rising inflation, disruptions in the supply chain, mounting security concerns, and the struggle to recruit and retain skilled employees are among many obstacles the industry is currently experiencing1. Even so, manufacturers have leveraged new technologies to streamline operations and emerge stronger than ever in the age of doing more with less.
Automation has emerged as a powerful force in the manufacturing industry, producing significant advantages. Presently, 50% of manufacturing factory workers say their organization is eager to embrace new technology such as Big Data, Robotics or Artificial Intelligence, or Augmented Reality2. By automating repetitive tasks, companies can unlock numerous benefits, including higher productivity levels, less human error, insight into valuable data, and the creation of more jobs3. Combining these advantages allows manufacturing companies to increase production capabilities while reducing costs, giving them a competitive edge.
As modernization takes on a broader role in manufacturing, it’s going beyond the shop floor and into the back office. Finance teams are embracing automation to make their Accounts Payable (AP) operations leaner, faster, and more secure. With tedious manual, paper-based tasks eliminated, AP teams can save thousands of hours annually, empowering them to focus on supporting business growth rather than getting bogged down in paperwork.
The Importance of AP Automation in Manufacturing:
Data shows that manufacturers contributed $2.90 trillion at the annual rate to the U.S. economy in Q4 20224, illustrating why finance automation is so critical in this industry. Manual invoice and payment processing is filled with pain points that make it difficult for AP departments to get ahead. Challenges include:
- Error-prone data entry.
- Lack of visibility into invoices and their status.
- High volumes of paper checks.
- Late payments and late fees
- Significant security risks.
By streamlining processes and eliminating bottlenecks, manufacturing companies can once again focus on growing their bottom line by leveraging these 6 benefits of AP Automation:
The cost of a fully manual Procure-to-Pay process quickly adds up when considering the various expenses. For instance, it takes an estimated $12.90 to process one paper invoice manually5, and the average cost of a paper check ranges from $1-$266. These prices also do not include additional charges like envelopes and postage, toner, check printers, maintenance, or bank fees. You must also include the labor costs associated with these manual tasks. Invoice Automation reduces costs by 60%-70%, and Payment Automation reduces costs by 80%-90%.
2. Increased efficiency:
Typically, 84% of the typical AP practitioner’s day is spent on tedious manual7 tasks like keying invoice data, pushing paper, fixing typos, chasing down information, and responding to calls and emails about the status of supplier invoices and payments. Electronic invoice and payment processing save an estimated 80% of time, allowing your team to focus on other strategic initiatives and high-value tasks.
3. Greater security:
In 2022, 65% of organizations reported they were victims of attempted or actual payments fraud8. Despite the push to go digital, many manufacturing companies still use paper checks to pay their vendors. Checks are especially vulnerable to fraud as they contain sensitive banking information that could be easily “washed” and then forged by bad actors.
4. Enhanced visibility:
Best-in-class Invoice Automation offers greater visibility through digital archiving, giving you instant access to all invoices and approval statuses. This is instrumental in monitoring cash flow, which is especially important when considering the fiscal health of your business. Better visibility is especially important during times of economic uncertainty.
5. Real-time data insights:
Leading invoice and payment automation platforms offer enhanced features, including robust data analytics and real-time dashboards. This allows finance leaders to access comprehensive invoice and payment history with the click of a mouse. This instant access will enable decision-makers to make well-informed choices at a moment’s notice.
6. Improved supplier relationships:
Late payments strain vendor relationships and often result in missed benefits9. For example, 59% of suppliers reduce or halt discounts when paid late, while 62% withhold ordered goods or services until invoices are settled. Streamlined invoice processing enables faster payments, ensuring vendors are paid promptly and maintaining positive relationships.
Paymerang understands that manufacturing finance professionals are grappling with fewer resources in today’s unpredictable economy and tight labor markets, creating an immediate need for AP Automation. As such, implementing Paymerang takes less than 10 hours, and it seamlessly integrates with leading industry ERPs including Deacom, Jobboss, Jobboss2, Macola, DDMSPlus, E-Automate, M1, MAX, Great Plains, and Business Central.
To learn more about Paymerang’s streamlined AP Automation solution, schedule a demo now.
1Austin Nichols Technical Search: 8 Challenges the Manufacturing Industry is Facing in 2023
2Epicor: Voice of The Essential Manufacturing Worker
3Forbes: Why Manufacturing Automation Should Dominate The 2022 Business Agenda
4National Association of Manufacturers (NAM)
5IOFM: The True Costs of Paper-Based Invoice Processing and Disbursements
6Check Issuing: The Cost of Issuing Checks (A Guide for Businesses)
82023 AFP Payments Fraud and Control Survey