Make room for automation! A new McKinsey Global Institute Report estimates that automation may be responsible for raising productivity globally by 0.8 to 1.4 percent each year!
If that doesn’t sound impressive, consider then the steam engine. It only elevated global productivity by .3 percent.
An automated accounts payable department helps businesses gain efficiencies.
10 steps to get the most out of your current workflow
- Paying over half your invoices by check?
According to a 2015 report by Goldman Sachs, checks are still the most common form of payment, with 50 percent of U.S. businesses using paper checks to pay vendors.
Both ACH and virtual cards are preferable as they offset the administrative time investment, reconciliation costs and the fraud risk presented by paper checks. And imagine, no more check processing fees! But no automation workflow is complete until you send all payments electronically.
- Stop writing checks for small dollar payments.
Payments below a certain value should not be made with a paper check. Why? The costs of processing that check may exceed the value of the payment amount. Paying these with a virtual card instead will help improve the speed and reduce the cost of these payments.
- Promotion? Demotion? Transfer?
Keeping up with permission levels and ensuring a payment does not get stuck on someone’s desk who is out of the office is one of many benefits of automating the approval processes. The right approver at the right time is crucial to making payments on time.
- Transmitting ACH payments electronically?
You’re half-way there if you’re sending ACH payments electronically! Take the next step and speed up the payments process. Hand off remittances to a payments provider for automation. You’ll save time, vendors will get paid faster, and you won’t waste another day issuing remittances manually.
- Bill recurring customers automatically.
This is another small change that has huge impact on your AP’s budget. Automate recurring invoice payments. No need to waste time managing this process manually.
- Escheatment issues stemming from uncashed checks?
Flag suppliers with repeat occurrences of uncashed checks and consider paying those same suppliers via ACH or card. Better yet, a payments processor will automate the entire process on your behalf.
- Avoid fees on off-cycle checks or emergency payments.
AP expenses can nickel and dime a company’s budget. Set a proactive standard for your department by tracking down suppliers who request off-cycle or emergency checks frequently. Did you know that instead of charging a fee for these checks, you can setup card-only payments to avoid future issues?
- Duplicate payments negatively impact cash flow.
Duplicate invoices are commonplace in a manual AP workflow. The many points of contact and approvals before an invoice makes it through the pipeline can result in oversights. The key to getting the highest efficiency from your workflow is preventing problems before they happen.
- Automation can only go so far.
It’s true that automation won’t fix all your AP’s problems. Instead, it’s how people use automation that makes the difference between massive savings and missed opportunity. Automation, after all, is just another tool in AP’s toolbox. Set yourself up for success by ensuring your staff has everything they need. Ask questions. What’s the biggest pain point? Is legacy technology holding you back, or an AP process that’s only partially automated? Never assume a current solution is working well.
- Review your supplier master record.
Moving AP’s productivity forward requires proactive supplier data management. This can be one of the most time-consuming activities for AP which is why it sometimes gets overlooked.
Best practice: Review your master vendor file yearly. This screening ensures that old vendors are removed or archived along with outdated entries and other inaccuracies.
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