Tips for Making the Business Case for AP Automation

As an accountant or member of your company’s financial team, you understand the need for automation within accounts payable. AP is often one of the most overlooked areas of business, but as a critical process for operations, it’s invaluable to upgrade performance here by eliminating manual work while streamlining approval and payment activities.

Before automation can be put in place, though, you must convince your supervisors and the executive team that an investment will be beneficial for the organization. Here are a few essential items to remember as you make the business case for AP automation:

Highlight the problems with paper-based processes

First, it’s important to shine a light on the complications and issues with current manual AP processes. Some problems to bring up can include:

• Lost or missing invoices, and the costs associated with finding and replacing them.
• Drawn out approval processes that can cause late payments.
• Charges related to late payments, and the inability to take advantage of offered vendor discounts.
• Problems with tracking and reporting for outstanding invoices.
• Issues and costs related to human error.

Starting off in this way will help demonstrate the need for change within AP that can support less expensive and more efficient internal processes.

Preparing to make the business case for AP automation? Consider including these talking points.

Discuss the potential time savings

Once you’ve highlighted the issues stemming from current processes, it’s helpful to underscore some of the most value-driven benefits that AP automation can provide. As this blog post pointed out, time savings – specifically, the ability to considerably streamline the approval process – is one of the most attractive advantages of AP automation technology.

It’s also beneficial to support this discussion with key data points. For example, the Aberdeen Group discovered that while the typical organization sees anywhere from 500 to as many as 5,000 invoices per month, it can take up to 10 days to process these manually. What’s more, these paper-based activities come with a cost as high as $15 per invoice.

The time employees devote to manual AP processes, including the approval process specifically, could be much more usefully spent on other, more mission-critical initiatives. Driving this point home will help you provide a robust business case to supervisors and executives.

Note the impact to partner and vendor relationships

It can be advantageous to follow up by highlighting the impact that inefficient AP processes can have on the company’s relationships with its partners and vendors. As reported in this blog, one study found that 47 percent of businesses had not met contractual payment deadlines on 10 percent of their invoices. Another 16 percent of organizations are consistently late with their vendor payments, while only 5 percent of companies can say that they always pay on time.

Vendors and partners don’t appreciate late payments, particularly when deadlines are included in contractual agreements. In addition, processing invoices behind schedule can also prevent the company from taking advantage of potential service discounts that come as a perk for paying on time.

Overall, there are numerous elements that can be included in the business case for AP automation. In addition to these points, it’s also helpful to consider including data about the security and fraud prevention advantages, as well.