Top 5 Benefits of AP Automation in Procure-to-Pay (P2P) Process

A typical Procure-to-Pay (P2P) process in an enterprise encompasses a series of steps involved in sourcing, purchasing, receiving, and paying for goods and services needed to run the business efficiently.

Finance leaders of today understand the constant hustle of the accounts payable teams in managing purchase orders and handling invoices. The data input, validation, and approval workflows in accounts payable processes often involve multiple stakeholders, resulting in tasks that consume a significant amount of time and are often out of sync with the other finance processes.

The solution, thankfully, is at our fingertips - Embracing the power of accounts payable automation!

The advantages of an automated accounts payable process are abundant and capable of ushering in a profound transformation. Clear delineates five compelling avenues through which automation can dramatically elevate and enrich your AP process. So let's delve deeply into these five compelling advantages.

Substantial time and cost savings, and thus greater productivity 

One of the primary advantages of automating the AP process is its capability to reduce manual workload and lower labour costs. Manual operations account for a substantial share of the costs tied to AP processing. These entail tasks like retrieving documents in various formats, scanning them, manually inputting data, locating lost invoices, reconciling supplier and purchase order specifics, reconciling input tax credits for GST filings, and various other related activities.

By reclaiming this time, the team can take a proactive stance in tackling invoice backlogs or refocusing on compliance-critical initiatives. These may involve ensuring compliance, optimising strategic supplier spending, maintaining accurate accruals and budget management, actively managing cash flow, and conducting accurate budget forecasting.

Accelerated approval process, leading to overall faster invoice cycle time

Dependency on paper-based processes creates hurdles in acquiring and sharing information, resulting in prolonged decision-making and approval timelines. With a manual process, it's challenging to have real-time visibility into the status of invoices in the approval pipeline. If an approver is unavailable or out of the office, it can create bottlenecks in the approval workflow. There may not be a straightforward way to reassign approvals to another individual in a timely manner. Approvers may need to manually sign documents, and keeping track of changes or comments can be challenging.

With an automated workflow, this is a thing of the past. Streamlining the accounts payable process through automation involves enabling digital access to invoices, electronic routing, and approvals, minimising errors, providing real-time visibility, and supporting mobile accessibility. It further provides a digital audit trail for secure invoice and approval tracking, enhancing transparency and accountability in the AP process. 

A cloud-based AP solution simplifies the invoice approval process for approvers, enabling them to access and review actual invoice images from any location and grant approval with a single click

Enhanced insights and reporting capabilities for more informed decision-making

In addition to simplifying the process, automation can also provide new insights for an organisation. Automation optimises the accounts payable workflow, leading to financial data that is not only more precise and prompt but also adaptable. This improved data serves as a foundation for enhanced insights and reporting, enabling organisations to make informed choices and enhance their overall financial effectiveness. There is better visibility of the KPIs for the leadership to facilitate decision-making more effectively.

Strategic planning and enhanced security measures, leading to improved cash flow 

AP automation empowers businesses with greater control over their cash flow, opening doors to strategic cash management for an organisation's benefit. Generating monthly, quarterly, or semi-annual reports becomes a seamless process, and these reports can be produced and reviewed in real-time.

This enables management to pinpoint cost-saving opportunities and capitalise on them by prioritising invoice payments strategically, thus allowing businesses to plan for cash surpluses or shortfalls and make informed decisions accordingly.

Moreover, digitising the AP process often includes robust security features that helps prevent fraudulent activities, such as duplicate payments or unauthorised transactions. In summary, AP automation enhances cash flow by expediting invoice processing, reducing errors, providing visibility and control, optimising payment timing, and strengthening vendor relationships. This, in turn, allows businesses to manage their cash resources more effectively.

Smarter AP processes to take advantage of early payment discounts 

Many suppliers offer early payment discounts, and businesses equipped with substantial automation can take advantage of these. 

A conventional AP mechanism could lead to a late payment penalty, which not only adversely impacts financial performance but also creates uncertainty for suppliers. Additionally, it can tarnish the organisation's reputation.

Smart AP processes ensure that invoices are processed quickly and accurately, and also enable notifications or alerts when an invoice is eligible for an early payment discount. This allows businesses to identify invoices that qualify for early payment discounts and take advantage of them before the discount expiration date. Besides significant savings, early payments facilitate better supplier relationships, which, in turn, results in more favourable dealings in the long run.

Perhaps the most compelling advantage of AP automation lies in the freedom it grants. It frees your team from the drudgery of manual tasks, liberating their potential for more strategic endeavours. It frees your organisation from the risks of errors and compliance issues, ensuring financial stability. Most importantly, it frees you to focus on what truly matters - the growth and success of your business.

So, as you contemplate the future of your financial operations, remember that AP automation isn't just a technological leap; it's a leap towards a brighter, more efficient, and more profitable future for your business. Embrace it, and you'll find yourself not just saving time and money, but gaining the competitive edge that can propel your organisation to newer heights.