Automating accounts payable can have several benefits for your business. Among them are reducing human error, lowering cost per invoice, reducing the OTC cycle and freeing up cash flow. However, there are some best practices that you should keep in mind first before making the switch. Let’s take a look at five of them.
Reducing human error
Human error costs the world $3 trillion per year. Most mistakes are not purposeful; they just happen. Despite this, humans are still capable of doing a great deal. While data entry and crunching numbers are essential tasks, they aren’t always the most efficient use of human brainpower.
Thankfully, automated systems can help reduce the risk of human error in accounting. These systems help reduce the time it takes for a business to process accounts. They also can eliminate costly errors and manual processes. By using intelligent purchase-to-pay automation software, you can ensure you won’t have to deal with human errors in your accounts.
Human errors can have serious consequences, affecting the integrity of your financial information. Even the smallest mistake can throw the entire bookkeeping process off course. When staff are entering details manually, they will almost inevitably make mistakes. These mistakes can range from wrong amounts to incorrect tax numbers. Automated systems with artificial intelligence can help prevent mistakes from occurring, making your business look more reputable to customers.
Reducing cost per invoice
Automating accounts payable (AP) can save companies a lot of money by reducing the time employees spend processing invoices. In addition, it can reduce the costs associated with infrastructure, such as accounting software and ERP systems. It can also eliminate the time and hassle associated with processing paper checks. As a result, AP automation can cut costs by up to half.
The cost per invoice is difficult to calculate because it is based on many factors, including labor, infrastructure, and physical goods. It can be further impacted by transaction fees. Fortunately, companies can reduce costs by automating their AP process to reduce labor costs, automating manual tasks, and phasing out check payments.
The cost per invoice varies from one organization to another. However, an average organization spends between two and ten cents on each invoice. Automating accounts payable systems can cut this cost to about $5.
Reducing OTC cycle
Automating accounts receivable processes can improve cash flow, speed up the accounts payable and receivable processes, and improve productivity. This can help you get your revenue to your customers faster. A faster OTC cycle means more profits and higher productivity. Automated accounts receivable processes will improve cash flow and reduce costs, all while improving customer experience.
Automating accounts reduces the time spent on accounting and financial reporting, and streamlines the entire process. By automating the process, companies can save anywhere from 60% to 80% on costs. Moreover, automated processes can improve cash flow and generate more liquidity. Automated accounting processes can cut down the OTC cycle process by eliminating the need for paper-based methods.
An order-to-cash process is a series of business procedures that span the entire sales cycle, from receipt of the sales order through payments and reporting. When done well, optimizing the order-to-cash process can boost the efficiency of your entire business. Several measures can indicate inefficiencies in the OTC cycle, including the balance of accounts receivable ledger, aged debt, days sales-out, and days sales outstanding.
Freeing up cash flow
Automating accounts can be a life saver for small businesses. It eliminates a lot of manual work and can help you forecast cash flow. It can also help you avoid making mistakes in customer billing. And automating financial processes can provide you with important data intelligence that helps you grow your business.
Automating accounts reduces inefficiencies by eliminating manual data entry and transaction time. It can also help you adopt key performance indicators and defined capital metrics. You can also create standard revenue and profit tracking reports to track how well your company is doing in terms of collections on bad receivables, days sales outstanding, and late payers.
Accounts payable is one of the most important aspects of cash flow management. Not paying your creditors on time can seriously harm your business. Automating these processes will free up your time to focus on other tasks. Cash flow projections work best when you have accurate data.