Archaic approaches to AP processing are expensive, inefficient and risk undermining supplier relationships. Although recent research has shown that most businesses have at least a partially digitised AP process, 47% of organisations haven’t digitised their processes at all.
In this blog post, we explore the true cost of inertia when deciding whether to transform your Accounts Payable (AP) process. We take a detailed look at AP automation costs, comparing them to the expenses businesses incur under more traditional financial management methods. We also cover how proactive stakeholders can motivate their companies to act on AP automation.
Why automate AP?
Automating AP is not as novel a concept as it might appear. Not so long ago, electronic data interchange (EDI) processing was hailed as the ultimate solution for AP departments. However, the reality was less than ideal, with processes still requiring error-prone human intervention.
Modern systems, like Total AP from Tungsten Network, help ensure maximum visibility across a wide range of suppliers. Manual intervention is minimal, reducing the need for finance departments to hire additional staff.
AP automation costs versus standing still
The best AP automation tools do represent a small investment for finance companies. However, the cost of doing nothing is significant. We’ve collected some of the top benefits forward-thinking finance and technology leaders are aiming to achieve with AP automation:
- Reduced cost of processing AP transactions
- Fewer mistakes and higher invoice accuracy
- Quicker turnaround times
- Increased departmental visibility.
Furthermore, the companies that have deployed the best AP automation enjoy a substantial advantage over other businesses. Companies with the highest degree of accounts payable automation saved up to 80% on processing costs compared to the average AP department. Automated AP departments were also much more likely to take advantage of early payment discounts, with the total number of savings leveraged reaching 31%, over double the amount in 2020.
Overcoming internal inertia: The finance leader’s persuasion toolbox
Persuading other senior leaders of the benefits of AP automation is critical to making the most the technology has to offer. In our experience, finance and technology leaders often find the greatest success by executing the following steps:
- Gain executive support: You’ll need the top finance leader to back your plan
- Document your existing processes: Record cycle times and costs
- Evaluate current operations: Explore opportunities for improvement
- Gather budgetary information: Assess the cost of potential solutions
- Document your business case: Put together your findings in a sound, defensible paper
- Internal alignment: Get both IT and finance departments to recognise the value of the project
- Secure approval: Then put your plan into action
Once you have approval, it’s a good idea to loop in an AP automation expert, like Tungsten Network.
The cost of doing nothing
Finance leaders can confidently spearhead successful AP automation projects, alerting key stakeholders to the cost of not moving forward with finance transformation. Although AP automation costs represent a modest investment, the potential savings are significant and well documented.
In short, AP automation represents an opportunity too good for proactive finance leaders to miss.
Discover more about AP automation with Tungsten Network
Want to learn more about how AP automation can save your finance department money and time? Download our full white paper here.
You can also get in touch today by requesting a call with us.