Why 71% of AP Departments are Automating in 2020 and You Should Too
If it feels like processing payments to suppliers is taking longer, you are not imagining things.
One-third of accounts payable practitioners are working longer hours these days, according to the Institute of Finance and Management (IOFM). In fact, eight percent of accounts payable practitioners are working an additional two hours or more per day, which is saying something when you consider the long days that most accounts payable practitioners logged before the move to remote work environments.
These longer days can be attributed to trying to address the challenges created by today’s reality. 25% of accounts payable leaders say they are struggling to mitigate increased fraud and compliance risks. 22% of accounts payable leaders say their department has experienced a big spike in supplier inquiries regarding the status of invoices and payments. And 20% of accounts payable leaders say that paying suppliers on-time, while staff work from home, is a major challenge.
These sobering statistics illustrate the difficulty in adapting manual and semi-automated accounts payable processes to a remote work environment. Only 9% of accounts payable leaders polled by IOFM say their department is fully automated with few or no manual processes. 33% of accounts payable departments have little automation. And 14% of accounts payable departments process invoices and pay suppliers in a completely manual environment.
Manual processes create friction and inefficiency across the supplier payment lifecycle:
- Key information is not captured
- Data is poorly organized
- Information is not timely
- Systems are badly integrated
- Labor costs are high
As a result, paying suppliers requires accounts payable practitioners to spend most of their working day bogged down on countless menial, manual tasks that distract them from higher-value activities. Manual tasks such as:
- Supplier registration
- Supplier data validation
- Vendor record updates
- Tax form collection
- Sanctions screening
- Invoice processing
- Payment approval
- Support for a range of payment methods
- Remittance delivery
- Currency conversion
- Payment reconciliation
- Tax reporting
This list goes on and on.
On top of these manual tasks, accounts payable practitioners also must be mindful of dozens of business rules, policies, regulations, and auditor guidelines governing how suppliers get paid.
The challenge of paying suppliers becomes even bigger as a business grows.
Growing businesses may have many different systems to integrate, complex processes to try to navigate and manage, and far flung accounts payable teams working across multiple sites.
All told, 84% of the typical accounts payable practitioner’s time is wasted on manual activities, IOFM benchmarking data finds. In fact, most accounts payable managers spend more of their day on transaction processing than on the managerial tasks that they were hired for.
No wonder that accounts payable has a reputation as a tactical back-office function.
Businesses have had their fill of accounts payable inefficiencies.
71% of businesses plan to automate their accounts payable function further in 2020, according to IOFM. Even businesses that are largely automated plan to deploy more technology. Only 6% of accounts payable departments have thrown in the towel and say they have no plans to budge from their outdated, manual processes.
Automation eliminates friction across the accounts-payable lifecycle. Invoices are aggregated onto a single platform. Invoice data is effortlessly extracted, validated, and matched against purchase order information. Invoices that require review or approval are digitally routed based upon pre-configured business rules. Approved invoices are seamlessly uploaded into an ERP. And a single file is used to pay suppliers in their preferred method. And payments and invoices are reconciled in real-time.
In an automated accounts payable environment, staff only need to intervene when necessary. The result is a function that delivers better business outcomes today, and greater scalability in the future.
This frictionless process is a far cry from the inefficiencies accounts payable is accustomed to.
Importantly, eliminating inefficiencies in the accounts payable lifecycle enables businesses to avoid costly late payment penalties, create more opportunities to capture early payment discounts, enhance visibility into cashflow and spending, strengthen supplier relationships, protect against fraud, and do more with far less.
Automating payments to suppliers is just what businesses of all sizes need in turbulent times.
Ready to eliminate inefficiencies in the way your business pays its suppliers? If so, Paymerang wants to speak with you. Contact us at firstname.lastname@example.org to arrange a no-obligation product demonstration.