Accounts receivable refers to all the money a business should receive from its customers. Check out How AR & AP automation improves productivity.
Three key benefits of automated accounts receivable
- Value staff: When talented staff have the right tools to do their jobs, expect them to achieve even greater success. When the repetitive manual tasks are automated (like issuing reminders), valuable staff time is freed up for duties that require a more personal touch. That’s more time for phone calls to debtors, dispute resolution and customer service.
- Collect money faster: Your average collection time improves drastically when you move through the invoice-to-collection process efficiently. Automation can issue new invoices, chase overdue payments, and accept online payments. The end-to-end nature of automation clears the backlog along every aspect of the AR spectrum.
- Reduces costs: An inefficient accounts receivable system wastes human labour on routine tasks – businesses that access finance to overcome cash flow shortages are paying fees on loans and bad debts need to be written off the ledger. Your business shouldn’t be incurring more costs to simply get paid.
The benefits of automating accounts payable
We’ll tackle accounts receivable next. But let’s start with AP automation technology, which can be a huge help to most businesses.
Here are five clear reasons why.
1. More accurate invoices
“To err is human, to forgive is divine.” It’s perfectly natural for humans to make mistakes. And as a result of human nature, your accountants have to check invoices again and again to correct them. Which may leave them tired and grumpy, and is certainly not a smart use of time.
It’s been reported that 40% of businesses know that their “correct” invoices sometimes have missing details and mistakes. While often ignored, this can affect the company reputation negatively, and leads to past due invoices going unpaid. And it can be a potential legal liability.
But robots aren’t humans, and don’t make the same basic errors. If you have an automatic accounts payable system, you’ll avoid most of the typical errors that come with manual data entry. And if these do slip through, the system makes it simple to spot mistakes and correct them without much effort.
Accounts payable tools let you feed all the data in one place. So even if you have different teams entering data, they all follow the same steps. This means a clear and streamlined system, consistency in your AP process, and flawless invoices for your finance team and accountants.
2. Digital records as a default
When the accounts payable process is managed manually, you almost always end up with mountains of paperwork. Of course, this is all a legal requirement, and needs to be stored correctly and easy to find.
The trouble is, paper gets lost easily, physical records get moved, and we still have basic human mistakes to worry about.
On the other hand, if you can automate AP, you can easily keep track of all your business activities and keep records safe inside your software. Every file is stored in the right place and can be accessed instantly from anywhere in the world.
Plus you’ll have added extras like a record of the person who approved the purchase and a digital history of each action.
Again, this is a big time-saver – you don’t have to walk to a filing cabinet or room. It saves physical storage space, and you won’t need a filing clerk to manage that space. Which is frankly pretty old fashioned in 2019.
And most importantly, digital file storage is becoming the norm today. So there’s no reason not to make this change for invoices and accounts payable.
3. More efficient employees
Humans are prone to mistakes, mistakes take time, and too much time spent on a particular task disrupts the whole company. Employees end up dedicated to the wrong tasks, mostly as a result of other people’s errors.
By automating your accounts payable process, you free them to invest their effort into real work. The result is more productivity at the individual and company level.
And efficiency is key in accounts payable. The less time they waste on pointless tasks, the more time they have to look for discounts from vendors and to find other ways to save your business money. Which is the mark of a high-functioning AP team.
Additionally, they’ll be able to look for accounts payable process improvement ideas to help your business flourish.
4. Better workplace collaboration
One clear benefit of automated accounts payable management is that every department involved in capturing and approving invoices can access these important files at the same time. The moment an invoice has been entered into the system, your team managers can see and approve it, the finance team can review the data, and your payments processor can prepare what’s necessary.
This easy accessibility gives birth to real-time collaboration on shared documents, getting clarification, confirming details, and coping with inaccuracies. It also makes life easy for remote workers, as accounts payable can basically be done from anywhere.
This leads to fewer disputes and frustrations around what can be a difficult process. Your work environment will be much happier, which allows employees to work peacefully and contribute more to building a thriving business.
5. Streamlined processes
Perhaps the clearest benefit of automation is just overall smoother processes. People can’t forget or skip steps, and everyone has the same workflow for processing and paying invoices.
And while normally we’d assume that more thorough processes are slower, it’s the software that does all the heavy lifting. And the software is faster than humans will ever be.
But faster doesn’t mean less secure. You might assume that, if everything happens automatically now, you lose oversight. But AP managers can still review every single invoice along the way. And more importantly, you have technology to double- and triple-check your work.
Which makes everything simpler, faster, and more effective right away.