Why Has Accounts Payable Been Slow To Automate?
Accounts payable is a key department in every business, but despite how important their work is, the field as a whole has been slow to shift towards automation. This isn’t just about job preservation or lack of motivation, though. No, the main reason that accounts payable have lagged behind other fields in this area is that there’s a lack of standardization and industry oversight – but there’s good news: standardization is on its way.
Manual Versus Automated Invoicing
Before you can sell your CFO on automated invoicing, it will help to examine just why making the transition to automated processes is so important. Is manual invoicing all that difficult? The answer is more complicated than just yes or no. Rather, the real problem with manual invoicing is that it’s extremely labor intensive and prone to errors.
In a simple schematic developed by Business Insider, manual invoicing took eight steps from generation to payment, with countless layers of human involvement, while automated invoicing was only a four step process. In other words, manual invoicing represents twice as many opportunities for human error, delays, and other issues, compared to the automated process, with no losses in terms of quality.
Assessing The Advantages
Given the many potential problems stemming from existing accounts payable processes, it obviously makes sense to move to an automated system. To this end, a number of industries, including healthcare companies, are actually working to develop a standardized invoicing format. What’s more, it’s harder to enforce standardization when businesses continue to rely mew on manual invoicing than if they were to take the leap and embrace automated invoicing, despite some uncertainty.
A paperless accounts payable process is the first step towards standardization and a process that will increase on-time payments, boosts working capital, and emphasizes efficiency and accuracy at every step. More importantly, though, automated accounts payable makes it easier for businesses to ensure that they’re in compliance with all regulatory practices. Regulatory breaches and mistakes can put your entire operation at risk, so initiating a process that automates the various regulatory requirements – which can be burdensome, particularly if you work with different industries or countries – is an important safeguard.
Enhancing In-House Security
Finally, and also of enormous benefit to your company, shifting your accounts payables processes to an automated system is the ideal way to strengthen in-house financial security. Since there’s less individual interaction with invoices, there are fewer chances for payables fraud and similar acts of malfeasance. Payables fraud is precisely the type of white-collar crime that can drag down a small business with weak oversight, but it’s much harder to interfere with automated systems.
Research into automated accounts payable processes show that it has the potential to reduce the number of staff needed to process an individual and drop nearly three days from the generation to payment cycle. It should come as no surprise, then, that most companies are excited about the prospect of adopting an automated system. Now it’s just a matter of financing and integrating those systems at the individual business level and getting excited for the results.