Accounts payable is kind of by definition a cost center. What could be more of a drag on the bottom line than the cost of actually paying your bills?
You have probably already heard me tell the tale of how adding automation to your back office invoice processing can save you time (and hence money) by making your administrative staff more efficient. This also has the added benefit of improving accuracy and preventing costly rework. In fact, using a manual process, it costs on average $14.38 to intake, validate, approve, and pay an invoice, whereas a company that is using automation slashes those costs to only $2.52. Saving those overhead costs is great, but what if AP could also ADD money to your bottom line?
First, let’s set the stage: Companies today are waiting longer and longer to be paid. Management of cash flow is critical. In fact an entire banking sub-industry has emerged – think things like lines of credit, loans against accounts receivable and other creative cash advance solutions. All of that comes with a cost. A painful and sometimes quite hefty cost. There is no doubt that companies are willing to pay to improve their cash flow. So how can your AP department take advantage of this situation and use it to add profit to your company?
Simple. Take advantage of early pay discounts.
To mitigate the need to take on hefty debts, more and more companies are offering discounts to their customers for doing nothing more than paying their bills just a little bit faster. Pay your vendors at Net 10 instead of Net 30 and you may be able to save 1%, 2%, or even as much as 3% off your bill. Your company has already planned for the full expense, so that savings – pure profit.
Easier said than done you say? Then I have a question for you – what technology are you using to add automation to your AP processing to speed the procure to pay timeline? Without automation, AP departments average 10.6 days to process an invoice. Taking advantage of favorable Net 10 payment terms becomes a non-starter. Companies that use automation by adding a technology like Semantik Invoice to their ecosystem average only 3.1 days to complete that same process. No escalations. No emergencies.
Another hint – do you ever get invoices that are incomplete? Where you spend time tracking down missing info like project number or PO? With a technology backed AP process you could reject those invoices immediately – and not even start the “payment clock” until they are submitted correctly with all required info. No more scrambling – let your vendors do the legwork instead of putting this on your employees.
Want to schedule a quick demo of what an automated AP solution might look like for your company? Drop us a line and we’ll get it set up.
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