Accounting · November 12, 2020

How Automated Payables Help You Save Time and Improve Your Cash Flow

As your business grows, you'll likely see an increase in the number of bills you have to pay, invoices and accounts payable (AP) transactions. Keeping track of this information and managing AP processes can become a time-consuming task for your finance team. That's where automated payables solutions come in. This technology can help streamline your invoice processing, improve efficiency and optimize your business's cash flow.


How it works

With the help of automated payables software, you'll be able to automate multiple steps in the AP process. You can also digitally upload, store and track your invoices or bills, so you can easily find them.

The software automatically enters data from different invoices, like uploading the payment information for a new vendor or collecting information from each bill. You can also use it to track invoice deadlines and pay them—using ACH and other electronic methods—so you don't have to write paper checks.

Benefits of automated payables

When you're dealing with hundreds of invoices per month, your finance team could spend much of their day on manual tasks. Automating your AP transactions helps free up their time.

When your finance team isn't spending their day on manual data entry, they can focus on ways to help your bottom line, like searching for opportunities to negotiate better payment terms with vendors. Your other staff members will also save time because they can pull up the status of vendor payments through the system, without going back and forth emailing your AP department.

AP automation can help cut down on mistakes—which are often unavoidable when employees have to manually enter so much data. If your finance department accidentally misses a payment deadline, the vendor could charge your business late payment penalties. An automated system will help keep everything on track and avoid these fees.

Automated payables can improve your cash flow. The software usually uses lower-cost methods of payments, like ACH transfer, so your organization doesn't have to spend money on paper checks. It can analyze your invoices and pay each bill right at the deadline, so you hold onto your cash longer.

Process and cost

AP automation can help you save costs by reducing the time and effort your team has to spend on various day-to-day tasks. These include:

  • Scanning and archiving invoices digitally
  • Tracking and validating invoices
  • Processing payments
  • Onboarding suppliers

Your business could automate all these areas at once or only focus on the biggest pain point.

There are different software and cloud-based solutions available for each part of AP automation. Decide what you want to prioritize and research the best solutions for that task. Then, schedule several demos with different vendors and see which approach feels like a good match for your finance team. Include your IT department in the conversation to make sure your current infrastructure can support the new system.

The cost of the software can vary significantly depending on what your business needs. The more features and the more transactions you process per month, the more it will cost. Basic small business programs can cost a few hundred dollars a month. Larger company solutions processing thousands of invoices a month can cost five figures or more to set up.

Vendor selection

There are numerous programs out there for AP automation. You could work with a cloud-based service that specializes in this type of software. Accounting software may also include AP automation as an add-on. Your bank could be another option. If it offers automated payables, this can be a highly effective solution because your checking account is already linked, so you could process and pay invoices right out of your balance.

As you conduct your research, speak with your AP team about what they see working well and where they need help. If it sounds like one or more of their duties is taking up too much time because it involves a lot of manual work, your business may be a good candidate for automated payables.

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This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.