10 Key Benefits of Accounts Payable Automation

Efficiency and accuracy are paramount in today’s fast-moving business landscape. This is especially true for finance teams, who must carefully manage their company's cash flow, budgeting, and financial planning. Among their many responsibilities, managing accounts payable (AP) can be particularly time-consuming and prone to error.

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Filled with redundancies and repetitive tasks, accounts payable can quickly become a significant bottleneck for finance teams that refuse to upgrade their processes. Enter accounts payable automation software, a game-changer for companies looking to cut costs, optimize their processes, and better plan their payables.

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With that in mind, let’s explore the reasons why AP automation software is so crucial for today's finance teams and how it can transform your financial operations. Whether you're a CFO looking to improve your department's productivity or a business owner seeking better financial control, read on to discover AP automation software’s most popular benefits.

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What Is Accounts Payable Automation?

Accounts payable (AP) automation is the act of leveraging software to automate and optimize your accounts payables workflow. AP automation is a key pillar in the back office digitization movement. It helps propel organizations by streamlining manual processes, unlocking real-time visibility, and enabling data-driven decision-making.

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Companies that automate their AP processes can eliminate or digitize manual and paper-based tasks like capturing, coding, and routing invoices for approval, or authorizing and reconciling payments. In doing so, teams can convert their siloed AP process into a smooth digital workflow.

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A few of the most common technologies involved in AP automation include optical character recognition (OCR), machine learning, and robotic process automation (RPA). These technologies help to capture, process, and manage invoices, payments, and other related financial data. In turn, these tools free up time for AP employees to focus on more strategic, important projects.

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Manual vs. Automated Accounts Payable Workflows

In the world of finance, accounts payable (AP) management can be a complex and time-consuming process. This is especially true when dealing with a manual, paper-based system. However, the advent of accounts payable automation software has provided businesses with a golden opportunity to streamline their AP workflows, reduce processing times, increase accuracy, and ultimately save money. Let's walk through each step of the AP workflow, comparing the traditional manual process with an automated approach.

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Invoice Receipt and Capture

Manual Process: In a manual AP workflow, invoice receipt and capture typically involve receiving paper invoices via mail or email, manually entering invoice data into an accounting system, and then filing the invoice for future reference. This process is not only time-consuming but also prone to mistakes, which can lead to inaccurate financial reporting.

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Automated Process: An AP automation software automatically receives and captures invoice data, regardless of the invoice format. The software can typically extract essential details like vendor name, invoice date, amount, and more. This eliminates manual data entry, reducing the risk of errors and speeding up the entire AP process.

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Invoice Approval

Manual Process: Before the age of automation, invoices were typically coded or created by hand. This tedious process involved the redundant task of creating individual invoices for each client, sending them by mail and following up, collecting physical signatures, and much more. This can be a slow process, especially if approvers are unavailable or if the invoice gets lost in a sea of emails. This approach also creates ample room for human error and limits visibility into the status of different invoices.

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Automated Process: In one fell swoop, AP automation can reduce the costs associated with creating and routing manual invoices while also reducing the number of mistakes made. The software uses predefined rules to automatically route invoices to the appropriate approvers. Approvers can then review and approve invoices directly within the software, which tracks the approval status of each invoice in real-time. This results in a faster, more transparent approval process that frees up your team to focus on more mission-critical tasks.

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Payment Processing

Manual Process: In a manual system, payment processing requires staff to create and issue checks or set up electronic payments, then record these payments by hand in the accounting system. This process is labor-intensive and can lead to payment delays or errors.

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Automated Process: Automation software simplifies payment processing by enabling leaders to schedule and make payments directly from the platform. The software then automatically updates the accounting system, ensuring accurate and timely recording of payments.

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Audit and Reporting

Manual Process: Manual auditing and reporting require staff to gather and review all relevant documents, a process that can be time-consuming and error-prone. Beyond causing major headaches, creating reports by hand often leads to inaccuracies and outdated information.

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Automated Process: AP automation software maintains a digital trail of all AP activities, making audits a breeze. It also offers powerful reporting features, providing real-time insights into AP performance to help businesses make data-driven decisions.

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The 10 Key Benefits of Accounts Payable Automation

While manual AP workflows can be cumbersome and inefficient, AP automation software offers a streamlined, efficient, and accurate alternative. By automating AP processes, businesses can save time, reduce errors, enhance transparency, and focus more on strategic financial management. Keep reading to learn the top 7 benefits of AP automation.

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1. Time Efficiency: One of the foremost advantages of AP automation is the considerable time savings it offers. With automatic data capture and invoice processing, your team can say goodbye to tedious manual entry and focus on strategic tasks that add value to your business.

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2. Cost Savings: An automated AP process reduces operational costs significantly. By eliminating manual tasks and reducing errors, AP automation minimizes the cost per invoice and delivers substantial savings over time. It also helps reduce costly issues such as duplicate invoicing or late payments from clients. Finally, there’s the added benefit of increased productivity from your employees.

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3. Enhanced Accuracy: Manual data entry is prone to errors, which can lead to costly inaccuracies. AP automation software drastically reduces these errors, ensuring precise and consistent invoice processing every time.

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4. Optimal Cash Flow Management: With real-time visibility into your AP operations, you can better manage your cash flow. Many AP automation solutions provide instant access to crucial financial data, enabling you to make informed decisions about payments and budgeting. Unlike other AP automation software, Centime's AP automation solution includes cash planning as part of the AP process to help you optimize cash outflows to preserve and extend working capital. Accounting departments can use this newfound clarity to prioritize activities that directly impact their cash flow.

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5. Streamlined Approval Process: AP automation software simplifies the invoice approval process with predefined rules and workflows. This means faster approvals, less paperwork, and no more chasing down signatures.

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6. Robust Compliance and Audit Trail: Keeping track of invoices and payments is essential for audit purposes. AP automation software provides a detailed electronic record of every transaction, ensuring a clean audit trail and making compliance a breeze.

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7. Strong Internal Controls and Security: AP automation tools, such as those offered by Centime, are hardwired with controls and protocols which help protect your company’s finances while eliminating the risk of fraud or a cyberattack. Additionally, an automated process puts everything into one single hub which increases accountability across your organization.

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8. Guaranteed Scalability: As your business grows, so does the volume of your invoices. Teams that automate accounts payable can easily receive, validate, and route invoices swiftly from one central hub. Gone are the days of scattered invoices and fragmented data. AP automation software can effortlessly handle increasing invoice volumes without the need for additional resources or staff.

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9. More Operational Flexibility: Automation enables hybrid and remote finance teams to stay connected. Regardless of scattered locations, the stage of AP automation keeps the rhythm of payments flowing without the need for physical sign offs. This helps businesses to seize new opportunities and orchestrate success on their terms.

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10. Better Vendor Relationships: By reducing errors and increasing visibility across the AP workflow, AP automation solutions also strengthen your strategic supplier relationships.

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AP Automation: Delivering a Faster, Safer AP Workflow for Your Team

By streamlining the accounts payable process, AP automation unlocks a world of possibilities. It optimizes cash flow by reducing manual effort and providing teams with better visibility to plan their cash needs. The centralization of processing eliminates errors and inefficiencies, saving time and granting immediate access to information. Furthermore, businesses can save money by reducing errors and late payment fees. This frees up resources to focus on growth.

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If you’re interested in exploring a solution for accounts payable then look no further than Centime, one of the best all-in-one solutions for cash management. Unlike other solutions, Centime AP is the only solution that actually helps you control your cash flow. While traditional AP automation platforms focus solely on invoice and payment processing, our platform enables teams to plan payments during the AP process, extend Days Payables Outstanding, and proactively manage cash flows.

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**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. The depositor may exclude banks from eligibility to receive its funds. IntraFi and ICS are registered service marks, and IntraFi Cash Service is a service mark, of IntraFi Network LLC.

^††3.5% Annual Percentage Yield (APY) as of 11/19/24. Deposit rate may adjust to current market rate and may change daily. Fees may reduce earnings.

*Centime is not a bank and is not authorized by any federal or state agency to engage directly in core banking activities.
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*All banking products and services available through Centime are provided by FNBO and are governed by the applicable agreements and related disclosures provided to you by FNBO. Member FDIC.
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‍*While Centime facilitates traditional banking activities (such as the acceptance of deposits or extensions of credit), these services are actually provided by our banking partner, FNBO.
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*Centime may provide support services to FNBO, as permitted by applicable law, to facilitate the delivery of its bank products and services.

**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network bank

10 Key Benefits of Accounts Payable Automation

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