Capital management is a constant challenge for all types of businesses, requiring them to invest vast sums to manage cash flow, accounts payable (AP), accounts receivable (AR) and other related tasks.
Problems range from incorrect invoices to lack of cash on hand to late payments — either from customers or to vendors — all of which demand considerable time and labor to correct. In fact, 49% of the invoices produced by businesses in the United States go on to become overdue, as reported in the “AP Automation Tracker,” a PYMNTS and Beanworks collaboration.
Get the report: AP Automation Tracker
Late invoice payments have become widespread throughout during the pandemic as businesses face economic struggles, reduced cash flows and other complications.
One of the major culprits in these complications is a reliance on paper payments and manual processes. These old-fashioned methods can be time-consuming and costly in terms of labor, bank fees, check printing and postage.
Improving the Billing Process
The costs of these delays and errors are leading many businesses to develop or purchase advanced technological solutions to fix them. Some of the most promising solutions leverage artificial intelligence (AI), machine learning (ML) or some other form of automated software, both to reduce the incidence of complications and to address those that do arise.
For example, automation means that recurring payments such as utilities or rent can be set up to pass through from invoice to payment with approvals of the purchase order already in place, Beanworks CEO Catherine Dahl told PYMNTS in a recent interview.
“You should be able to take the invoice all the way through to payment and have one person at the end make sure that ‘yes, all the dots lined up,’” Dahl said. “There are dashboards on a daily basis where the accounting team is managing the process, but they’re not doing the process.”
Read more: AI-Powered Payments Platforms Put Paper Processes on Watch
AP digitization and automation improves the billing process in a number of ways, making billing cheaper, faster and more accurate.
Improving Firms’ Bottom Lines
The most sophisticated AP automation systems leverage AI and ML to predict when payments need to be made and process them automatically, resulting in a more efficient accounting department. Ninety-one percent of CFOs say accelerating payment digitization has made their payment operations more efficient.
Faster and more accurate AP directly translates to improved capital management, which can ensure timely paychecks and AR reconciliation as well as a host of other business improvements. Ninety-six percent of CFOs believe optimized AP/AR processes are highly important to maintaining healthy balance sheets.
Although most businesses still rely on cash and checks to pay vendors and suppliers, they are slowly reducing that reliance. For example, 68% of companies report using automated clearing house (ACH) payments more frequently since the outset of the pandemic.
Digitization and automation can have significant impacts on firms’ bottom lines, reducing processing costs per invoice as well as delivering the downstream benefits of improved capital management, better cash flow and timelier payroll.
What’s more, automating AP systems can help businesses of all types reduce errors and delays and allow accounting staff to focus on the bigger picture to benefit the entire company.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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