The finance department has a lot of responsibility. They manage the organization’s assets and liabilities. And without proper cash flow management, any business is doomed to fail. Although most organizations have invested in robust financial ERP systems and controls, there’s often a gap when it comes to invoice processing.
Traditional paper-based invoice processing involves everything from opening the mail to entering data, coding, and verifying information against invoices. Waiting for a human to handle each step of the process is anything but efficient. Frankly, it can be absurdly slow leading to a bottleneck of supplier invoices awaiting manual intervention.
Beyond the mountain of paper piling up, touching an invoice this many times causes a few extra problems. Firstly, it’s expensive and sends transaction costs skyrocketing. Secondly, it introduces the opportunity for keying errors, which delay payment cycles further. Thirdly, invoices can be lost, misplaced, or duplicate payments can be submitted. All of these outcomes erode profitability.
The hard truth is that suppliers don’t know the details of what happens inside your AP department and how long your process is. What they really care about is being paid accurately and on time. In fact, many vendors even offer dynamic discounting to entice customers to pay early, which is a win-win. After all who doesn’t want to take advantage of free money?
Surprisingly, 25% of discounts are missed because of slow payment processes. And it’s no wonder when the average time it takes to process a paper-based invoice is 27 days – without any glitches, exceptions or approval delays. At that rate, it’s no wonder discounts are missed and in some cases, late fees are incurred, eroding profits even further.
Progressive organizations that want to boost profitability are turning to AP invoice automation to get invoices in and out faster and with total accuracy. It’s a wise move that enhances efficiencies, while reducing processing costs and offering better visibility. On top of strengthening vendor relationships, it delights AP staff who enjoy watching the volume of tedious, repetitive data entry shrink, while they shift their focus to other strategic priorities.