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10 Ways Payment Automation Effectively Scales AP Processes

Every business with longevity goes through multiple growth stages. These periods are often exciting because they come with successes that pave the way for an expansion of operations. They are also critical periods in which decisions that a business makes in a moment have critical ramifications for the future.

Growing pains are natural for any company looking to expand, but how you respond to those challenges will dictate future opportunities. As you scale upward, teams such as accounts payable departments can begin to struggle and lag, hindering your overall growth. This lag typically occurs because of friction between manual processes and the growing volume of orders and invoices that the AP team must handle.

Manual processes may have been suitable during the company’s ascent, but there always comes a point at which they can no longer support a modern business. In this guide, we’ll look at how implementing intelligent forms of payment automation can help you effortlessly scale the AP process. Suitable for both growing and established companies seeking to improve, AP automation transforms clunky workflows into value-adding drivers of smart business practices.

Topics we’ll cover include:


Processes to Consider When Scaling Your Business

Critical capabilities of accounts payable automation

Overseeing the financial aspects of a company’s work is a major responsibility. You may feel the need to continually look for ways to improve operations. As the organization grows and the responsibilities facing your teams become more complex, you may look seriously at solutions for accounts payable automation. Before you can successfully automate anything, you need to know where to focus your energy.

What are some of the most vital processes that deserve your attention as you are evaluating AP and payment automation opportunities?

Communication Touchpoints

Communication is a key part of an effective AP process. In operations at scale, businesses must often communicate large amounts of information to vendors. Vendors then transmit information back to the business. These touchpoints can be a leading source of delays if some or all of the process remains manual.

Advanced tools facilitate the automatic transmission of this data, from purchase order submission to order confirmation and beyond. All this information feeds into your business systems without human interaction, ready for teams to review or use.

Invoice Processing

How quickly can your AP team process, match and approve an invoice for payment? The faster this process occurs, the better the outcome for any business. At scale, invoice processing is often a severe bottleneck for finance departments balancing limited resources.

Instead of processing a few dozen invoices per week, bigger businesses need to handle hundreds or even thousands. That need creates many opportunities for confusion and lost time. Automating this process as much as possible will yield multiple benefits.

ACH and Bank Verification

Does that bank account really belong to the vendor requesting funds? How does a supplier know that your accounts won’t bounce a transaction? This area is the domain of bank and automated clearing house (ACH) verification. By automating this cycle, a business can establish trust rapidly through the electronic confirmation of an account and its ownership, paving the way for easier electronic payments to vendors.

Automatic Approvals

Right now, in your business, how many desks does an invoice pass over before it receives a final stamp of approval for payment? For many companies, the answer is, “too many.” Strong rules about invoice approval can prevent wasteful spending and fraud, but manually moving documents for confirmation is too slow in today’s environment.

Through automation, invoices can receive immediate approval if they pass rules that you’ve established beforehand. When manual approval is necessary, the system—not an employee—instantly routes it to the right individual. It is a key area to consider for effective scaling.

Purpose-Built AI

Artificial intelligence (AI) could be the most potent tool available for a modern company’s setup. With AI/machine learning (ML) applications that assist with automated payment processing, businesses can customize deployments that align with their organizational governance principles. At the same time, AI can process tasks at a speed that is many orders of magnitude faster than the average knowledge worker.

At first glance, not all these processes seem connected—and that fact reflects a negative aspect of traditional accounts payable. Transition to a modern solution such as Kofax AP Essentials™®, however, and you can put all these processes under one digital roof. The result is a single package of automation software that lets your teams work more capably within a streamlined ecosystem. It can also help you address some common AP concerns.

Common Issues in the Accounts Payable Process

A challenging AP landscape

Identifying areas where effective scaling is critical is an essential step during the process of choosing solutions. It is worth taking this time to examine the problems that you may have today that payment automation solutions could address or even eliminate.

There are two key areas of concern while you are developing a plan for scaling up your department’s operations: the inherent limitations of manually processing invoices and payments, and the real-world financial impacts of outdated AP work.

Manual Process Constraints

There are upper boundaries to how productive manual AP processing can be, and their ceilings are low compared to automated payment processes. Consider just a few of the common constraints of manual payments:

  • Too much volume to process effectively
  • Reduced productivity due to staff absences; e.g., during sick days
  • Human error, from typos and mismatches to skipped steps due to mental fatigue

Late Penalties

These constraints have consequences beyond a slow payment process that can hinder procurement. Slow, manual methods mean invoices can be lost or overlooked. Missed payment deadlines often result in late penalties from vendors, which in turn costs your business money and disrupts your budget.

By investing in intelligent accounts payable automation software such as AP Essentials for invoice processing, you can make it much simpler to avoid late penalties. Learn about these opportunities and how they can help your business virtually eliminate late payment penalties and other negative AP process outcomes.

Why Payment Automation Is Wise

As we’ve seen so far, accounts payable invoice automation software can consolidate your processes while addressing two major areas of concern. However, these benefits are just scratching the surface of what modern AP solutions have to offer. There are 10 key reasons to consider automating these processes as soon as possible.

More Rapid Cycle Times

Automation almost immediately leads to a reduction in the time it takes for an order to complete its life cycle, from placement to payment. Automation makes procure-to-pay an efficient process instead of a constant source of concern.

Less Costly Transactions

Transitioning to automated electronic payments means paying less money in fees and eliminating the hassles of bookkeeping with paper checks. Even sending a credit card payment becomes cheaper with better ACH tools and the right services. Digitizing payments can shave more money off your cost per invoice.

Preventing Fraud

By putting AP workflows such as matching in the care of AI-guided processes, businesses can prevent payment fraud through better oversight. At the same time, vendors can enjoy secure ACH transactions that build confidence in the business relationship.

Reducing Duplicate Payments and Other Errors

Without automation, it is very easy for overworked AP staff to make errors that lead to negative financial outcomes for the business. Double-payment of invoices due to improper PO matching is common, but it is possible to virtually eliminate this concern with systems that raise a red flag before allowing a double payment to occur.

Cutting Down Your Invoice Backlog

Increased speed is a leading benefit. As a business grows, teams become overwhelmed by the amount of work flooding into their departments. Smart software makes it easier for your teams to rapidly process a large volume of invoices with less friction at every step, leading to a smaller number of invoices awaiting action.

Dropping Cost Per Invoice

“Cost per invoice” might represent more than just the total of the goods and services that the business buys—it could include the time and effort that teams spend processing invoices. Saving on payroll and redirecting labor are additional benefits to automation. Top companies spend, on average, only about $2 per invoice—other businesses might see their costs ballooning toward $10.

Better Data Visibility

Modern business strategies thrive on deep insights derived from big data. Automated systems make it simple to see how AP performs at a glance, including where slowdowns might occur. With increased visibility comes the opportunity to make smarter business decisions.

Early Payment Discounts

As your cycle times drop, you might be surprised to see invoice totals dropping, too. If you eliminate late payments and speed up processing so that your business pays early, you could find suppliers offering discounts for reliability.

Paring Back Supplier Inquiries

No AP team enjoys facing continuous calls, emails and other inquiries from suppliers about when payment will arrive. A robust web system lets suppliers see the status of every outstanding invoice. With a more agile system and shorter cycle times, suppliers get paid on time or earlier.

Boosting Vendor Satisfaction

A supplier that gets its money quickly develops confidence in your business. Satisfaction boosts more than your business’s reputation: in the future, you might receive special consideration as a loyal client when you have an urgent or especially demanding order to make. Knowing that your business will be prompt and reliable with payment is a strong motivator for premium customer service from vendors.

More Oversight for Good Governance

With accounts payable centralized in one platform for automation, it’s easy to run reports, draw insights from data and see the overall health of the AP department at a glance. The result of this additional oversight is a more effective and secure payment process that can capably respond to high volumes within a thriving business.

Drawing Conclusions About AP Automation

Automation is the next logical step in the evolution of business machines and software.

For AP directors and department leads, the time has passed to ask, “What is payment automation?” Instead, the question that should be top of mind is, “How can we deploy automation intelligently?” As you oversee a growing business and scale effectively, the right tools and the appropriate setup will be essential elements of your success.

Automation is the next logical step in the evolution of business machines and software. At the advent of these new technologies, the presence of software alone was enough to improve operational capabilities. Today, the modern business world demands even greater speed and agility. AP automation keeps vendors satisfied, provides your business with reliable data and frees up valuable labor for less tedious and more important tasks.

With AI-powered tools, including AP Essentials and Kofax TotalAgility®, you can create the conditions for success during your next growth stage. Learn how to scale your AP processes and explore a customized quote for your business today.