AP Automation: Unlocking Hidden Value for Finance Leaders
Thursday, Oct 31, 2024 8:13 am ET
1min read Finance leaders are increasingly recognizing the substantial benefits of accounts payable (AP) automation. By streamlining back-office operations, AP automation enables businesses to reduce costs, improve efficiency, and enhance vendor relationships. However, despite the clear advantages, opportunities remain for finance leaders to do more and fully capitalize on the potential of AP automation.
AP automation offers a range of benefits, with faster invoice processing and payment cycle time being the top priority for finance leaders, according to MineralTree's 2024 State of AP Report. This is supported by Aberdeen Group's findings, which show that AP automation can reduce days payable outstanding (DPO) by 18%, saving an average of 5.55 days. Additionally, increased team productivity and reduced costs are significant advantages of AP automation.
However, while finance leaders are automating some AP processes, less than 20% have achieved full automation. This presents a significant opportunity for businesses to expand the benefits of AP automation. Key underutilized capabilities include AI integration and digital payment adoption. Only 20% of businesses currently use or plan to use AI in their AP process within the next 12 months, despite the potential benefits of improved accuracy, fraud detection, and faster processing times.
To balance the benefits of full AP automation with the challenges of implementation and integration, finance leaders should focus on incremental automation. Starting with low-hanging fruits like invoice processing and approval routing, businesses can gradually achieve full automation while mitigating integration challenges. This approach allows finance leaders to prioritize integration with existing systems and consider AI solutions to enhance accuracy and efficiency.
AP automation can also significantly enhance vendor relationships by streamlining communication, reducing errors, and enabling faster payments. By automating invoice processing and approval workflows, businesses can eliminate manual data entry and minimize human error, leading to improved accuracy and faster payment cycles. This efficiency can help businesses build stronger relationships with vendors, as timely payments are crucial for maintaining vendor satisfaction.
In conclusion, finance leaders are gaining substantial benefits from AP automation, but opportunities remain to do more. By embracing full automation, leveraging AI and digital payments, and focusing on incremental automation, finance leaders can maximize the potential of AP automation to drive efficiency, reduce costs, and strengthen vendor relationships. As the global payments landscape continues to evolve, finance leaders must adapt and capitalize on the advantages offered by AP automation to stay competitive and maintain a strong financial foundation.
AP automation offers a range of benefits, with faster invoice processing and payment cycle time being the top priority for finance leaders, according to MineralTree's 2024 State of AP Report. This is supported by Aberdeen Group's findings, which show that AP automation can reduce days payable outstanding (DPO) by 18%, saving an average of 5.55 days. Additionally, increased team productivity and reduced costs are significant advantages of AP automation.
However, while finance leaders are automating some AP processes, less than 20% have achieved full automation. This presents a significant opportunity for businesses to expand the benefits of AP automation. Key underutilized capabilities include AI integration and digital payment adoption. Only 20% of businesses currently use or plan to use AI in their AP process within the next 12 months, despite the potential benefits of improved accuracy, fraud detection, and faster processing times.
To balance the benefits of full AP automation with the challenges of implementation and integration, finance leaders should focus on incremental automation. Starting with low-hanging fruits like invoice processing and approval routing, businesses can gradually achieve full automation while mitigating integration challenges. This approach allows finance leaders to prioritize integration with existing systems and consider AI solutions to enhance accuracy and efficiency.
AP automation can also significantly enhance vendor relationships by streamlining communication, reducing errors, and enabling faster payments. By automating invoice processing and approval workflows, businesses can eliminate manual data entry and minimize human error, leading to improved accuracy and faster payment cycles. This efficiency can help businesses build stronger relationships with vendors, as timely payments are crucial for maintaining vendor satisfaction.
In conclusion, finance leaders are gaining substantial benefits from AP automation, but opportunities remain to do more. By embracing full automation, leveraging AI and digital payments, and focusing on incremental automation, finance leaders can maximize the potential of AP automation to drive efficiency, reduce costs, and strengthen vendor relationships. As the global payments landscape continues to evolve, finance leaders must adapt and capitalize on the advantages offered by AP automation to stay competitive and maintain a strong financial foundation.
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