Do you know how much accounts payable is costing your business? Business leaders seeking to optimize costs and reduce overhead spending should consider tracking the total cost to process accounts payable, per invoice processed. This metric considers all the labor, systems, and outsourcing associated with the processing of accounts payable.
One survey of CFOs found that median organizations are spending $5.83 to process an invoice. Best-performing businesses spend $2.07 per invoice or less, while those spending the most are spending $10 or more per invoice.
Those costs add up. Fortunately, if your company falls on the higher end of that range, there are things you can do to improve your accounts payable process and spend less processing invoices.
An easy way to reduce your cost-per-invoice is to standardize and automate the steps it takes to approve and pay each invoice. Invoice automation refers to using software to process invoices in your accounts payable function, automatically updating the information in your Enterprise Resource Planning (ERP) system.
Many businesses still receive and route invoices on paper, requiring significant resources to input data, track down payment approvals, and move the invoice through the payment workflow. Using automation can speed up this process and reduce the resources spent on accounts payable.
Automating this process requires intelligent accounts payable software like Glean AI. Glean AI automatically extracts a highly accurate invoice summary and line item details within minutes. This information is shared with other insights designed to help stakeholders understand what they need to know and take action faster.
[Read more: Invoice Automation: Your Guide to Automated Invoice Processing]
An accounts payable process can get derailed quickly when a key stakeholder is missing the information they need to make a decision. Bills often land on someone’s desk for payment — with no context. Approvals are held up while the stakeholder gathers information on the vendor, checks the bill for errors, and gets the information needed to ensure the bill is compliant.
[Read more: Is your company actually reviewing its invoices or just pretending to?]
AP automation tools can deliver timely information to participants in the accounts payable process. AP automation tools (like Glean AI) deliver complete records so the approver has confidence in signing off on key payments. Faster approvals lead to higher productivity within your business, as well as higher rates of client satisfaction. Every other part of the company can work seamlessly without worrying if their invoice was approved or paid on-time.
Data entry errors and duplicate payments can delay the accounts payable process and hold up other financial processes. Double invoicing — when a business pays two invoices for the same item from the same vendor—is a costly problem. A typical small business pays 450 invoices a month with a 1.29% duplication rate – about six duplicate invoices a month. The average amount on those invoices was $2,034, meaning that these small businesses are losing about $12,000 per month if each duplicate invoice is paid.
Unfortunately, 64% of organizations rely on manual processing to detect duplicate invoice payments and errors elsewhere in the accounts payable process. Manually searching for data entry errors to avoid duplicate payments and compliance issues can lead to alert fatigue, low morale, and other problems in the accounts payable process.
Accounts payable process improvements are possible with today’s intelligent AP software. With Glean AI's spend management platform, AP teams can stop checking for duplicate invoices and instead rely on analysis to detect spend trends and anomalous pricing changes. Glean AI uses powerful AI technology to flag when a vendor has been overpaid, enabling the accounting team to immediately address and remedy the situation.
Look for an accounts payable solution that automatically syncs with your GL systems to give finance leaders real-time information. No more waiting until the month's end to understand cash flow and burn rate. Payments made through Glean AI are automatically reflected in your general ledger. Saving time has never been easier with automated data extraction, GL coding, bill approvals & payments, and prepaid amortization schedules.
Likewise, this accounts payable process improvement means there are no more errors that come from manual data entry to your general ledger. Business leaders can make smarter spending decisions and work with vendors who have a proven track record of success.
Adding automation is a key accounts payable process improvement that reduces fraud and increases compliance. Automated AP systems link all documents, messages, and approvals involved with each invoice, purchase order, and receipts. These records create an audit trail that’s error-free and complete — no misfiled paperwork, receipts written on the back of napkins, or missing paper approvals.
It also helps lower the risk of fraudulent charges. Automation helps increase the chance of catching a fraudulent invoice before the payment is processed. Workflows with multiple people can be established with the assurance that automation will keep these workflows running efficiently. Adding multiple people helps create a series of checks for missing and incorrect (possibly fraudulent) data.
Taking these accounts payable process improvements can save companies 60% to 90% of the average cost per invoice.
To learn more accounts payable process improvements, and to see Glean AI in action, request a demo today.