As a financial professional, you may have a general insight of what accounts payable (AP) software is and how it can benefit your business. But there may be key details you haven’t seen.
Here are five important insights — that you may not be aware of — that can make a big difference in your understanding of this market.
1. Cost Savings Tend to Be Underestimated
You’ve probably seen different numbers about the cost savings that AP automation can provide. What you may not know, however, is how often people underestimate the cost savings. This happens because estimators don’t always account for all the costly steps in the manual process, mainly labor.
They don’t factor in the costs of preparing, sorting and routing invoices for approvals. They leave out calculations for the cost for data transcription errors, duplicate payments and late payment fees.
It goes even further. Businesses tend to not add in the costs of office supplies needed to process paper-based invoices and payments.
According to a Goldman Sachs report, it costs a business $22 to pay a single invoice with a paper check. That’s about 10 times more than the estimated $2 to pay an invoice using AP software.
2. Time Savings Tend to Be Underestimated
Businesses also underestimate the time saving benefits of AP software.
For instance, finance pros account for the time saved to process invoices, but they don’t factor in the hours it takes to process paper checks and the time saved to send payments automatically.
The reason? The complexities of the check processing tasks aren’t fully appreciated.
Finance teams need to handle stacks of paper checks, run them through the printer, put stamps on envelopes and haul them to the post office.
That’s not all. Finance teams spend several hours consolidating invoices into a single file to make it easy for the CEO to approve. While that makes it easy for the CEO, it’s a laborious and time-consuming task for the finance team responsible for pulling all those invoices into one place.
3. Accounts Payable Software Includes Positive Pay
Occasionally, fantastic financial services fly under the radar. One prime example is Positive Pay, the highly effective automated cash management service that alerts bank tellers to fraudulent checks brought to them.
Using this service, a company shares with its bank a list of the payee, check number and dollar amount of every check it processes. When a person presents a check, the teller automatically compares the list to the check, flags any that don’t match and informs the company. At that point, the company instructs the teller whether or not to cash the check.
Another great feature of about Positive Pay is its services are part of AP software offerings. It all comes together in a bundled package of solutions.
Before Positive Pay existed, fraudsters more easily cashed fraudulent checks because the bank teller didn’t have the list to confirm which checks the company cut.
4. Accounts Payable Software Is an iPhone for Finance Industry
The iPhone changed much more than communications. It was an on-ramp to information and tools to simplify our personal lives. In a similar way, automated AP processing is like an iPhone customized for the finance industry that does much more than issue checks and make payments.
AP software also:
- Automates invoice approval and supplier payment processes
- Captures invoice data and embeds it into your accounting systems
- Automatically routes invoices for approvals and controls user access for specific types of invoice and payment information
- Provides better data security and cybersecurity protection than manual paper processes.
Think of AP software as an app that enhances your accounting system and amplifies your investment.
5. AP Automation Provides More Control of Finances, Not Less
The fear of losing control of their financial processes ranks high on the list of concerns finance pros have about automating AP processes. They have a tendency to believe that if they make the shift they won’t be able to access their invoice and payment data when they want to. They’re also concerned mistakes will be made they can’t see or track. Those mistakes compromise service to customers and potentially lose business.
The truth, however, is actually the opposite. Automation AP gives finance pros more control of their finances wherever and whenever to process an invoice, check the status of approvals or make a payment.
Diving into the world of accounts payable software can start to feel like you’re swimming in an ocean of insights, data, ambiguity and imprecision. There’s a lot to sort through and unpack. There’s a bunch of software and financial factors and benefits to consider.
So, before you make this move, it’s key to know all you can and find out the details that may not be so obvious and easily available. Along the way you’ll hear a lot of generalities that the software cuts invoice and processing time. But by how much? Generalities won’t cut it.
Find out the specific numbers for cost and time savings. They’ll be so much more valuable in assessing how this software improve peoples’ lives and helps businesses grow.
The key is to be open to all you can learn about this software beyond the obvious and general claims. Pursue the details, the numbers, the specific benefits, the nuances of the technology. Then finally, you’ll be liberated from manual AP processes and enjoy more time to make shrewd decisions that help your business grow stronger in 2021.
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