5 Reasons Investing in Accounts Payable Automation Is a No-Brainer

Unsure of whether automating your AP processes is right for you? Not sure what to do first?

Automation really is the way forward for most businesses. Running your own business can be overwhelming. There are so many different things you have to do and it can be really tough to keep on top of everything. That's where automation comes in and makes your life a whole lot easier.

In the past, automation felt quite prohibitive to many small businesses due to the complexities involved in setting them up. In recent years, however, things have changed. The market demanded software that can be integrated with other platforms and this need for seamless integration changed from a desirable feature to a must-have.

Thankfully, accounts payable automation followed in these footsteps. So, we'll share several reasons why you should invest your time and budget in automating your accounts payable processes.

Chapter 1

What does accounts payable automation actually mean?

Before we dive into all the reasons why you should consider investing in accounts payable automation, let’s take a quick look at exactly what this is.

Accounts payable is the process in which your business pays the money it owes to its suppliers. Usually, this money would be paid manually to suppliers by individuals within the company (or even yourself, depending on how large your business is) which opens up room for late-payments and human error. Automation of the accounts payable process means that this money will automatically be paid when it is due. So, instead of having an individual pay this money, software packages can do it for you. Ensuring that payments are always made when they are due – never forgotten about, never paid late and never missed.

Chapter 1

Reason 1: Don't let errors become your worst nightmare

As we mentioned earlier, having your accounts payable process managed by humans opens up quite a lot of room for error. This can be even more problematic if there are multiple payments to be made towards a range of different companies.

Working with data usually comes with errors. In fact, according to the Data Warehouse Institute, data entry errors in procurement, supply chain and other areas such as account payable cost US businesses over $600 billion annually.

As well as the manual data entry issues, if your company is dealing with lots of invoices on a monthly basis, there is the increased chance that some of these will be missed and not paid. Not paying invoices on time can have a detrimental effect on your business’ credit score as many credit bureaus use payment behavior as a key component in developed your credit score. A poor credit score can affect how other companies perceive your business and could impact interest rates when applying for funding.

Automation ensures that there will be no errors when inputting data, and no room for forgetting about payments.

Chapter 1

Reason 2: Reduce costs and save money

A huge part of running a business revolves around minimizing costs. It is something that almost all businesses are constantly looking to do, and another huge reason to automate your accounts payable process.

The account payable process is a time consuming task that requires a lot of effort and focus. This process is exacerbated if you are dealing with large number of invoices on a monthly basis. By automating this you can save yourself time (if you are doing this yourself) or money if you are employing staff to do this on your behalf. This time could be focused on other areas instead.

Chapter 1

Reason 3: Forge better relationships with your suppliers

Maintaining a good relationship with your suppliers is essential, and one sure-fire way to do this is to ensure that you make all your payments on time. Accounts payable automation software can ensure this, and improve relationships with your suppliers at the same time.

Before taking on a new supplier, it is recommended that you carry out your due diligence and credit checking your supplier before entering into a contract with them. The same will be said for companies that you are looking to supply your goods or services to. As stated earlier, a poor payment record can have a detrimental effect on your credit score and as such, if they see your credit score isn’t as good as your competition, they may look to source their products or services elsewhere.

Making payments on time will improve your relationship with suppliers and have a favorable effect on your company’s credit report, which is a great reason for investing in accounts payable automation.

Chapter 1

Reason 4: Make your team more productive and effective

As we have said time and time again in this guide, accounts payable is incredibly time-consuming when done manually. It takes time to print invoices, fill them out with the correct information and then direct the cash to the right companies. The amount of time that comes with this is likely to have a huge impact on your productivity.

A lot of people are misled to believe that automation and AI in business is designed to replace people. However, this isn’t the case. In fact, most of the time, automation is introduced to help make life easier for employees. Accounts payable automation is designed to make life easier for those in the accounting department. Freeing up your accounting team to focus on other tasks can boost productivity and profitability as they can spend their time either in prioritizing cash collections or setting better terms for new or existing clients.

With accounts payable automation software, your accounting department can view and approve invoices with the click of a button, making the entire department more efficient and productive.

Chapter 1

Reason 5: Keep a better eye on the competition

Back at the start of this guide, we mentioned that automation is the future for most businesses. That wasn’t a prediction, it was more of an observation.

Now-a-days an increasing number of companies are introducing automation to some aspect of their business. So, introducing automation to your accounts payable process allows you to reduce overheads which in turn will help your business remain competitive.

In the modern day, you cannot remain static as a business. You have to be constantly evolving and developing if you want to remain competitive and successful.

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5 Reasons Investing in Accounts Payable Automation Is a No-Brainer

Unsure of whether automating your AP processes is right for you? Not sure what to do first?

What does accounts payable automation actually mean?

Reason 1: Don't let errors become your worst nightmare

Reason 2: Reduce costs and save money

Reason 3: Forge better relationships with your suppliers

Reason 4: Make your team more productive and effective

Reason 5: Keep a better eye on the competition

Get your free trial of Creditsafe

See how Creditsafe can improve your cash flow with robust credit risk intelligence

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