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Family Business Center of Pioneer Valley

Family Business Center of Pioneer Valley

Reduce Costs and Business Risks with Accounts Payable Automation

By Allison Standish-Plimpton, VP & Senior Relationship Manager, Business Banking, KeyBank

As businesses of all sizes look for ways to optimize working capital and reduce the costs of day-to-day Accounts Payable operations, they are beginning to turn to AP automation. By automating payables, organizations are achieving faster payment processing, reduced reliance on paper-based processes, better vendor relationships and improved risk control. As with any new concept, there can always be trepidation and pessimism. And with budget, resource and time constraints, many organizations may look at automation as something they simply cannot take on now. However, ignoring or deprioritizing automation means your organization will continue to incur higher invoice and payment-processing costs, higher instances of fraud, and less control over your payables in general. Educating yourself and decision makers within your organization on the many benefits of AP automation is the first step to capturing those benefits and creating substantial value within your AP department.

Traditional paper-based, manual AP processes present companies with significant challenges, including high processing costs, sizable exception rates on invoices and inadequate controls to prevent fraudulent, late or inaccurate payments. Inefficient payment methods can result in lost access to early-payment discounts, and lack of detailed invoice and payment data deprives a company of control over and visibility into its payables.

AP automation is playing a major role in addressing these problems by:

  • Lowering invoice and payment processing costs
  • Reducing instances of errors, exceptions and fraud
  • Shortening invoice-to-pay cycle times (invoice receipt, approval and payment)
  • Increasing e-payment adoption through vendor enrollment
  • Offering 24/7 real-time visibility into all stages of the AP process

While each organization should develop an approach to AP automation suitable to its circumstances, there are best practices that can help implementation go smoothly. Be sure to incorporate the following steps into your automation initiative:

  • Talk to your bank: Take advantage of the knowledge and experience of a seasoned automation partner early on.

 

  • Gain executive support and approval: Make sure your top management understands the value and is committed to the success of AP automation and visibly promoting its importance.
  • Develop business case: Calculate the expected ROI for AP automation based on research that includes:
    • Documentation of existing processes, cycle times and associated costs
    • Computation of the reduced time and resources required in an automated environment
    • Identification of benefits associated with greater control, enhanced risk controls and improved payment analysis

 

  • Make AP automation part of an integrated strategic plan: Create a broad-based plan to improve all aspects of invoicing, payments and procurement.
  • Set clear targets and due dates: Establish benchmarks and schedules against which AP automation can be measured and communicate results throughout your organization.

 

  • Track performance: Measure performance against clear and well-defined expectations and identify opportunities to enhance AP processes and systems.

Automating AP gives you the ability to enhance your organization’s working capital by streamlining payment processes, reducing costs and providing insight into all aspects of payments. By working with a seasoned bank partner, you can develop and implement a program to harvest all the benefits that AP automation offers.

Questions about AP automation?  contact Allison Standish-Plimpton, Vice President and Senior Relationship Manager, Business Banking at KeyBank at 860-645-2583 or Allison_Standish_Plimpton@keybank.com

 

©2017 KeyCorp. KeyBank is Member FDIC. 170130-187266

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