How AP Automation Software Can Slash Your Invoice Processing Costs by 80%

Do you want more time and resources to process invoices manually? Does it feel like an endless task with no end in sight? With the rise of technology, there’s now an easier way to handle invoice processing: AP automation software.

Not only can automation software save your time and resources, but it can also significantly reduce your invoice processing costs. By as much as 80%! Let’s examine how AP automation software works and how it can greatly benefit your business.

What is AP Automation Software?

AP automation software is a type of software that organizations use to streamline their accounts payable process. The software uses optical character recognition (OCR) technology to capture data from paper receipts and invoices. Machine learning algorithms then read and input the necessary information automatically, so there is no need for manual input.

What are the Benefits of Using AP Automation Software?

The benefits of using AP automation software in your business are numerous and significant. You can save time and resources and cut costs by using this innovative technology.

1. Improved Efficiency

Improved efficiency is one of the most important benefits of AP automation software. The software uses OCR technology to capture data from paper receipts and invoices, drastically reducing manual input. 

Furthermore, the machine learning algorithms within the software improves with time, reducing errors and speeding up the overall process. As a result, you can process invoices much faster and handle more transactions more quickly.

2. Lower Processing Costs

Software that provides AP automation can save you a great deal of money. With the software’s ability to process invoices automatically, staff can be reassigned to other duties, reducing the need for manual labor. 

Additionally, you can save time and money by eliminating the need to print, distribute, and store paper invoices with automated invoice processing. The result is a reduction in processing costs and a freeing up of valuable office space.

3. Improved Accuracy

Another benefit of using AP automation software is improved accuracy. Manual invoice processing can be tedious and time-consuming, leading to mistakes and errors. Using AP automation software, however, ensures faster and more efficient data processing. With machine learning algorithms and OCR technology, the software can automatically read invoices and receipts, reducing the risk of human error.

4. Enhanced Financial Control

AP automation software can enhance financial control. The software allows invoices to be processed more efficiently and effectively, reducing fraud risk and ensuring proper financial management. Having financial control can make sure that all financial transactions are accurately recorded, thus reducing loss risks.

The Cost of Manual Invoice Processing

Manual invoice processing can be tedious, error-prone, and expensive, causing significant harm to a company’s profitability. But how does an AP automation slash invoice processing costs by 80%?

Paper Invoices vs. Electronic Invoices

First, let’s compare the costs of paper invoices vs. electronic invoices. Paper invoices require physical storage, handling, and mailing, which can become costly. Each invoice has to be manually entered into the accounting system, increasing the risk of errors. On the other hand, electronic invoices can be quickly processed, submitted, and stored in the cloud without needing physical storage space.

Additionally, you can save time and money by eliminating the need to print, distribute, and store paper invoices with invoice automation.

Manual Tasks & Human Errors

A manual invoice processing system can also result in human errors. For instance, data entry mistakes can occur, leading to payment delays or incorrect amounts. This mistake can result in frustrated vendors and further costs to the business, such as penalty fees, reputational damage, and disrupted supply chains.

Late Payments & Penalty Fees

Furthermore, late payments can lead to significant penalty fees. The cost of penalties varies depending on the industry and the specific vendor contracts. In practice, the penalty fee can be up to 5% of the invoice’s total amount, causing substantial harm to a company’s bottom line.

Average Cost Per Invoice in a Manual Processes System

Finally, on an average, it costs a company $12.90 to process each invoice manually. This fee includes the following:

• Printing, 
• Paper costs, 
• Labor, and 
• Mailing expenses. 

For smaller businesses, these additional costs are unwelcome to their budget, especially if they are trying to grow and become more sustainable.

On the other hand, the cost per invoice in an automated system can be as low as $3. By implementing electronic invoicing and automated systems, businesses can reduce costs and improve efficiency in their invoicing processes.

Let’s see an example and be more clear on this:

A business usually processes 1,000 invoices monthly, spending around $12,000 in manual processing costs alone. AP automation software can reduce the cost per invoice to as low as $2.40, effectively reducing the total invoice processing cost to $2,400 per month. That’s a significant saving of $9,600 a month, equivalent to $115,200 annually.

These huge cost savings and increased efficiency give companies a competitive advantage, empowering them to invest the money saved from invoice processing into other business areas. It also eliminates the need for additional staff, saving the organization fund on salaries, benefits, and other employee-related costs.

Streamlining Your AP Processes With Automation Software

Streamlining your AP (Accounts Payable) processes is crucial to improving your organization’s efficiency and bottom line. One solution worth considering is implementing automation software to simplify and enhance your AP operations. 

Now that we know, AP automation software can significantly decrease the time and costs associated with manual tasks such as invoice processing, data entry, and payment management. 

Let’s look closely at its features and how it works.

Features of an Automation Solution

1. Invoice Scanning and Data Extraction — AP automation software can scan invoices automatically and extract key data. This feature can reduce manual errors, speed up invoice processing, and eliminate the need for manual data entry.

2. Workflow Management — Automation software can also help manage the end-to-end invoice processing workflow, including routing invoices for approvals, tracking deadlines, and tracking payment status.

3. Integration with other Systems — AP automation solutions typically integrate with other financial and operational systems, such as accounting, ERP, CRM, and procurement systems. This feature provides a holistic solution for streamlining the AP process, from invoice creation to payment processing.

4. Optical Character Recognition (OCR) Technology — This feature allows the software to scan and capture data from paper documents such as bills, invoices, and receipts. OCR technology can recognize and extract key data, including supplier name, invoice number, date, and amount. This feature reduces manual data entry and minimizes the risk of data entry errors.

5. Payment Management — Automation software also offers options for automating payments through direct bank transfers or integrations with your existing payment systems.

6. Security and Compliance — Advanced AP automation software solutions are built with high-level security features that secure sensitive financial documents and data exchanges. This feature includes meeting regulatory requirements like SOC 2 and GDPR.

7. Reporting and Analytics — Access to real-time dashboards and reports provide businesses with insights into their accounts payable processing and helps identify opportunities for improvement. Data-driven insights allow companies to make informed decisions to improve processes, allocate resources, and improve vendor relations.

Final Thoughts

AP automation software is a game-changer regarding invoice processing. By excluding the need for manual data entry and streamlining the entire process, businesses can save up to 80% on their invoice processing costs. Not only does this lead to increased efficiency and productivity, but it also reduces the risk of human error and eliminates the frustration of paper-based systems. 

With the help of AP automation software, businesses can transform their invoice processing operations and reap the benefits of streamlined, cost-effective finance management. 

So why not take the first step towards reducing your invoice processing costs today! 

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