Paper still dominates the AP ecosystem, with 72.4 percent of today’s AP professionals receiving invoices by mail and 43.8 percent by fax. There appear to be signs that many firms are ready to abandon paper-based invoices, however. The Next-Gen AP Automation Tracker’s Deep Dive outlines how automated solutions can reorient AP departments into revenue generators and support firms in their efforts to attract and recruit top talent.
Consumer payments have increasingly shifted toward digital methods, but accounts payable (AP) departments and B2B payment processes have remained dependent on cumbersome, paper-based practices. This could shift, however, as more AP professionals and business leaders realize automation’s potential return on investment (ROI).
Solutions that quickly deliver digital invoice data and enable electronic workflows and payments are available, but a surprisingly large share of the industry relies on legacy practices. PYMNTS research found 72.4 percent of AP professionals receive their invoices via postal mail, while 43.8 percent receive them via fax. A notable 80.8 percent of firms still make payments using paper checks.
Additional PYMNTS research found that firms believe implementing automation could significantly improve their operations, particularly their B2B payments. A survey of 400 financial decision-makers showed many expect automation to earn a strong ROI for their organization: 84 percent of respondents believe B2B automation could reduce error rates and 81 percent believe it could reduce costs.
These insights indicate that many AP professionals are ready to embrace automated solutions’ potential, with 54.3 percent saying they would like to use these solutions to get access to automated order matching. The following Deep Dive outlines automation’s benefits, its potential ROI for implementing organizations and how these solutions can recruit millennial workers.
New Working Capital Optimization Opportunities
AP professionals who process invoices manually find the paper-based task to be prone to errors. The process can also be costly: A recent study found the cost to process a single invoice is $10.08, and that processing that invoice takes an average of 8.3 days.
Automation does more than lower costs, however. It helps organizations realize early payment discounts, avoid unnecessary late fees and earn cash rebates on AP spend through virtual card and premium ACH programs. These rebates signify a new source of cash for businesses and help turn AP departments into profit centers.
Those that process many invoices each year can also save by minimizing the risks of human error or fraud, as both can result in financial and reputational damages while taking significant time and attention to resolve.
Embracing automation can make firms flexible enough to restructure their staff allocations, too. Companies adopting such technologies can reassign workers to revenue-generating tasks instead of needlessly draining their hours on manual data entry, approvals and check printing.
Recent data found that highly efficient AP departments implementing AP automation spend an average of 2.9 days processing invoices at a cost of approximately $2.18 per invoice. This translates to significant savings for those that process thousands of invoices annually. AP automation solutions will help these departments scale to handle additional volume as companies grow organically or through acquisition — and without needing to add to the permanent or temporary in-office head count.
Reinventing the AP Wheel
Automated AP solutions offer firms a compelling case for significant ROI, but they also provide a chance to reassess their AP departments’ overall missions, transform their internal perceptions and increase top talent recruitment. Realigning the traditional AP department requires a new perspective on personnel, and companies that implement automated AP tools could gain an advantage in their ability to hire millennial talent.
Recent research indicates the millennial generational group, those between 22 and 37 years of age, will be reflected by one in three U.S. workers by next year and make up 75 percent of the U.S. workforce by 2025. Millennials are tech-savvy, having grown up in the age of connected technology, and may learn needed modern skills more easily.
The generation also appears ready to spurn business-as-usual practices, as many mission-driven workers are already becoming known as “AP activists” focused on modernizing the departments. Sixty-six percent of millennial financial decision-makers would consider using other commercial banks with better services — a sign that this demographic is more prepared than other age groups to embrace more efficient solutions.
Adopting automation will help organizations transition away from postal mail, fax machines and paper invoices and payments in favor of digital solutions that enable working capital optimization and improved security. A mixture of cost-saving, discount capturing and rebate-generating opportunities make a strong financial case for implementing such solutions. These positives only scratch the surface of potential ROI as firms that choose to pursue the technology experience the true benefit: transforming AP departments into profit-generating centers that attract millennial talent who will innovate for them. AP automation is not just about today’s cost savings but tomorrow’s organizational transformations.
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