In a fast-paced economy, your accounting firm needs to accomplish more than ever while still facing new challenges like working remotely, labor challenges, and organizational growth.
Automating your time-consuming and business-critical Accounts Payable (AP) process can improve your operations and create huge time savings. However, it also is directly tied to another one of your firm’s biggest priorities: improving the bottom line. AP automation doesn’t just impact your client — it impacts your firm’s finances as well.
If you’re used to thinking of AP in terms of operations, here is an overview of how different areas of AP automation can impact the bottom line for both your client and your accounting firm.
Accounts Payable Automation
Automated invoice processing, digitized invoices, AP automation… all of these phrases refer to the process of automating certain aspects of your AP process.
Historically, processing invoices involved many time-consuming tasks done by hand, such as:
- Collecting paper invoices
- Delivering or mailing invoices to the AP department
- Keying in invoice data and general ledger (GL) codes
- Hunting down approvals and signatures
- Resolving issues through phone calls and emails
- Running payments, printing and mailing paper checks
- Reconciling invoices and payments
- Filing invoice records
Many of these manual steps can be streamlined through automated invoice processing, and the result can have a clear impact on your firm’s profit margin.
How Streamlined AP Impacts Your Bottom Line
In the past, the AP department expenses were seen as a cost of doing business for companies and accounting firms. However, with new software platforms and automation technology, your AP can turn into an asset for your organization — or even a profit center.
How can AP automation impact your profit margin? Let’s explore everything from operational efficiencies to new revenue opportunities.
Fully Integrated Invoice Tracking
When you use an automated AP software, you centralize all invoice processing onto one system, which ultimately adds efficiencies and lowers operational costs.
For instance, whether an invoice arrives through EDI, as a PDF, or from a staff member taking a snapshot photo on their phone, invoice files are uploaded seamlessly onto the AP platform. If you need to reference these records because of an issue or an audit, there is a fully digital “breadcrumb trail” complete with original files and vendor correspondence.
In addition, with all invoices centralized onto one system, the software can automatically detect and flag any duplicate or missing invoices. By avoiding payment delays, duplicate payments, and complicated vendor communications, your team can be more efficient and cost-effective overall.
With full integration between your accounting software and AP solution, you can also eliminate any manual exports/imports of data and possible miskeys. If your accounting team works with different accounting software for different clients, this “friendliness” between systems is critical to maintaining efficiencies.
Accurate, Automated GL Coding
General ledger (GL) coding is one of the most tedious parts of bookkeeping, yet it is essential for the accuracy of your client’s records.
AP solutions can automate GL coding, adding efficiencies and enormous time savings for your accounting team. An invoice processing platform like Plate IQ can automatically capture header data and line-by-line details like product names, quantities, and prices. Once you map line items to a GL code, machine learning applies it moving forward.
This increased accuracy adds up to increased time savings across the organization. With higher accuracy, your team doesn’t need to spend time down the line addressing any mistakes from miskeys, and your client can trust that information is accurate.
Overall, reduced errors add lost time back to your bottom line. Automating menial data-entry tasks is a strategy for data management that can benefit operations, mitigate risks for mistakes, and save staff resources.
Faster Invoice Processing & New Savings
Removing the delays caused by a manual invoice system means that invoices can be processed exponentially faster. In fact, the Institute of Finance and Management (IOFM) reported, “Highly automated accounts payable departments process more than 10 times as many invoices per full-time equivalent (FTE) compared to departments with a low level of automation.”
AP teams that use automation tools, compared to teams doing everything by hand, can experience a major difference in productivity. As mentioned above, these efficiencies add up to time savings for your team. However, there can be other concrete, monetary benefits as well.
For instance, processing invoices faster allows your customers to take advantage of early payment discounts and other vendor incentives. IOFM also found that taking advantage of the early payment discount programs “can generate savings far higher than the combined salaries of an AP team. In other words, an early-pay discount capture strategy can convert AP from a cost center to a profit center.”
With a more efficient invoice processing system, you can also reduce the new invoice requests, duplicate payments, or missing payment mistakes your team has with the vendor. Not only can you take advantage of discounts, but you are also helping your client improve their overall vendor relationship, setting them up for success in the future.
Control and Visibility into Accounts
Between vendors, customers, line item details, and payment deadlines, the AP process involves a lot of moving parts. Any change in your operations that provides easy visibility can add new efficiencies.
AP automation provides more control and visibility into accounts payable for both your organization and your customers, helping minimize risks and support financial growth. The software allows your team and your customers to track invoices throughout processing and understand the next steps.
Instead of constant phone or email communication, any user can view communications in a central dashboard that also includes all the information you need to know. Without sifting through emails, messages, and records, your team is saving time and budget.
Accessible Digitized Invoice Data
Your AP software can also serve as a digital repository for your customer’s data (and with the right software partner, this long-term document storage doesn’t cost extra for your client).
Searchable historical data turns invoice data into an asset for a company. The AP department processes an enormous amount of valuable information for companies about what funds are being spent and where. With access to this historical data, your team can take advantage of generating detailed reports that provide value for customers, like real-time Profit & Loss (P&L) statements in real time or cash flow analysis.
When your team indexes and catalogs accurate historical data, you are also empowering your customers with data that powers tools they can use to benefit their operations, like inventory analysis for a retail store or menu engineering for a restaurant.
Valuable Cash Back Rewards
If your firm or your customers use a corporate card that offers cash back rewards, this feature can be a critical strategy to turn your AP department into a revenue center.
Using a corporate card for everything from petty cash purchases to paying regular invoices can generate a small but significant source of cash flow over time. You can provide value to clients by advising them how to earn rewards on payments they are going to have to make anyway.
If your firm uses cards that generate cash back, you could also apply those rewards to your own company strategically, either discounting or subsidizing your services with the savings or using the capital to invest in further AP automation.
Long-Term Scalability for Growth
To be strategic about your firm’s financial future, investments that you make today should scale with you as you grow. Your firm doesn’t want to make investments in short-term solutions.
When considering an AP automation solution, scalability is a critical factor. Especially since your accounting firm may grow and work with many different kinds of clients, your AP solution should be able to interface with various accounting programs and ERP systems. Choosing an automation solution that grows with your business can help protect your bottom line, now and in the future.
Improved Recruitment and Retention
Competition for talent is a challenge in the AP industry. To face this issue, many finance leaders are looking to two related areas, automation and retention.
Of course, as discussed, the efficiencies that come with automation can help accounting firms focus labor hours where they are most needed. IOFM reported in 2018 that finance leaders were evaluating departmental resources, writing “improving processes and automating manual processes ranked among the top accounts payable concerns for 41 percent and 33 percent, respectively.”
However, those improved processes and automations in your AP department can also be part of your recruitment and retention strategy.
Having automation in place can make you a more attractive employer to potential employees. Manual paperwork and menial data entry may not appeal to experienced candidates, or candidates with certain finance career ambitions. Automating tedious work and allowing employees to instead focus on strategic tasks, like reporting, analysis, and consulting, can help make the roles and responsibilities more attractive to candidates.
Your recruitment and retention have an enormous impact on your firm’s bottom line. Improving working conditions to create more streamlined, specialized roles can help you keep star employees and provide excellent customer service to your clients.
Generating Value for Your Accounting Firm
“Forty-eight percent of CFOs believe that digital technologies will fundamentally change finance,” reports IOFM. To keep up with the industry, your accounting firm should be considering how to pivot from providing just bookkeeping services to also offering value-add services like financial consulting and business expertise.
The business model based on “traditional” accounts payable is labor-intensive, time-intensive, and may no longer be sufficient to maintain healthy profit margins. Being able to understand how AP automation contributes to the profit margin for both your client and your firm is key to staying ahead of the curve.
If your firm is interested in incorporating AP automation into your client services, Plate IQ can help you transform your AP, invoice, and payment process. Plate IQ has you covered when you're ready to take the next step with integrations with the software you already use, including QuickBooks integration.