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Benefits of AP Automation

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedJun 20222 min read

If you need to improve cash flow, one of the first things to look at is operating costs. AP automation offers a way to boost efficiency while reducing in-house expenses, saving time and money during the invoicing and payment process. What is AP automation and how does it work? Here’s a look at the benefits of AP automation.

What is AP automation?

The term “AP automation” refers to accounts payable software that moves your vendor invoicing process online or in the cloud. It enables faster, automated AP workflows with less manual input from your accounts payable department. Rather than tracking and filing paper receipts or forwarding invoices to various email addresses, you can manage the full cycle using software.

What are the benefits of AP automation?

Before we delve into the cost-saving benefits of AP automation, here are a few additional reasons why you might want to consider onboarding this type of software.

It reduces the chance of human error that comes with manual data entry.
It sifts through and organizes data from accounts payable documents, creating insightful reports.
It helps your business attract top accounts payable professionals who are used to the latest systems.
It frees up employee time for more complex tasks.
It helps you organize vendor data and maintain stronger relationships with suppliers.

Although upgrading your systems requires some initial investment, the result is a reduction in overall operating costs. To visualize this, think about how many invoices your business processes each week, and how much time is spent on this task. By automating this process, you’ve freed your employee to handle more cost-effective challenges.

How does AP automationreduce operating costs?

Surprisingly, almost half of U.S. businesses still process invoices and payments using manual accounts payable systems. Yet there are clear financial benefits to AP automation. For example, according to theAmerican Productivity and Quality Center, the top 25% of businesses surveyed spent $2.07 processing each invoice. By contrast, the bottom 25% spent nearly $10 per invoice. The top businesses used automation; the bottom quarter typically didn’t.

Goldman Sachs research found that automated invoicing slashes costs by two-thirds in comparison to manual invoice processing, primarily due to the cost of labor. The cost of supplies is significant as well, with paper and postage costing an average of $1.55 for each paper check sent out. By automating your payments, you eliminate the time and cost associated with paper check processing.

AP automation allows businesses to process invoices more rapidly, ensuring on-time payments and helping prevent late payment fees. You’ll have a better chance of collecting early payment discounts, while maintaining stronger relationships with vendors. It’s easy to verify whether an invoice has been paid using automatic search terms.

Automated software also provides financial insights using a data-led approach. The best AP software offers user-friendly dashboards where AP professionals can track spending, employee reimbursements, outgoing payments, and outstanding invoices all at once. This helps with budgeting, decision making, and operational cost management.

Is AP automation software right for you?

Cutting out the time and cost of manual processing, AP automation software can save your business money. Automation reduces invoice processing costs while helping your business go paperless. At the same time, it cuts payment transaction and invoice fees – all of which spells significant savings.

Businesses can automate accounts payable by paying invoices, both recurring and one-off, with ACH debit providers like GoCardless. This ensures the payment goes out automatically, on the day it’s due, without any need for added processing. Paper checks take longer to process and often involve added fees, making ACH debit the more cost-effective option. Combined with AP automation software, automated payments like these offer an additional way to save time and money.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.