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A common objection to deploying an accounts payable automation solution is that current manual processes work. This resistance to change often comes from a belief that software implementations are risky.

In fact, the cost and risk of doing nothing is far greater and longer lasting than that of deploying a best-of-breed automation solution. And while manual processes work to the extent that suppliers eventually get paid, it’s worth looking into what these processes cost an organisation.

Here are three areas where manual processes come up short versus automation:

1. Cost of processing

Manual workflows are slow, and errors can happen at any human touchpoint in the accounts payable process causing re-work and payment delays.

The longer it takes to approve an invoice, the higher the cost of processing as measured by the amount of time an employee spends on it. According to the ATO, it can cost businesses up to $30 per invoice to manually process paper and emailed PDF invoices.

Automating accounts payable ensures invoices are processed quickly and reliably, which brings down the cost of processing each invoice. It also means early-bird discounts can be accessed, and that duplicate payments are not paid, reducing the overall supplier spend.

Manual processes are expensive because they don’t work well. In contrast, an AP automation solution delivers efficiencies and cost savings from go-live. For businesses processing a volume of invoices, this typically means a return on investment is generated very quickly.

2. Risk management

Invoice fraud happens regularly and is a particular threat for firms that have not automated their accounts payable. Perpetrators – who could be cybercriminals, vendors or even employees themselves – capitalise on poor processes and a lack of proper oversight across the function.

A software solution protects against the processing of fake or inflated invoices by running automatic compliance checks on every incoming payable. These safeguards include:

    – Confirming the supplier is set up in company systems

    – Validating that their ABN is legitimate

    – Cross-checking payment details with those held in the supplier master data

    – Verifying the supplier is registered for GST if it’s on the invoice

    – Checking the invoice matches the purchase order and the goods received.

Where manual processes predominate, these security measures may not happen consistently; for example, they may be overlooked when the workload is heavy, or the team is short-staffed.

With automation taking care of invoice processing, this frees up time for accounts payable staff to counter the threat of business email compromise attacks. It means that if they receive any changes to payment details over email, they have capacity to verify these instructions over the phone or in person before actioning them. Further, any sudden and urgent payment requests are more likely to look suspicious and are less likely to be carried out without question.

Suffering a fraud can cause reputational damage as process failings come to light. Aside from this though, long payment times characteristic of manual processes also hurt a company. This is especially true now that large organisations need to publicly report on their payment times. Many see poor accounts payable performance as not only unacceptable, but also unethical.

3. Generating growth

Manual processes hold employees back from developing in their careers because they need to spend so much time managing invoices. Likewise, these outdated practices prevent the accounts payable department from achieving its potential as a strategic business unit.

Automation provides data insights that can inform decision making and help generate growth. This enables more rewarding work for accounts payable staff; for example, rather than administrating invoices, they can:

    – Advise on when to time payments to optimise working capital

    – Manage supplier relationships

    – Identify where savings can be made

    – Make changes to continuously improve the procure-to-pay cycle.

In addition to helping to generate growth, automating accounts payable also supports business continuity as all activity is digitised and available online. This facilitates on-time payments in most circumstances.

Risk of a software implementation

While major software implementations are, of course, not risk free, there are ways to mitigate this risk. Perhaps the most effective way is to work with an experienced AP automation solution provider who:

    – Offers a highly configurable out-the-box solution,

    – Has extensive experience, and

    – Has ideally integrated with your finance system previously.

Conclusion

Manual processes significantly increase an accounts payable department’s costs and exposure to risk. While there are risks in deploying new software, these can be carefully managed; doing nothing is certainly not a safe option!

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