The manufacturing industry was one of the first industries to embrace automation. By using technology to facilitate repetitive tasks, manufacturing companies discovered early on that they could maximize their efficiency.
However, not all have been quick to embrace accounts payable (AP) automation in the same way. Those who have not yet shifted to AP automation are missing out on key benefits. Processing invoices and payments is also laborious and time-consuming, so streamlining the AP process should help manufacturing companies save time and money as well.
How can AP automation lower costs for manufacturers?
Streamlining the AP process helps your manufacturing business cut expenses and raise productivity. In particular, AP automation:
1. Expedites invoice processing
Invoice processing involves several steps, including receiving the invoice, recording the data on it, verifying this data against the purchase order, getting all the necessary signatures and approvals, and paying the invoice. Manually processing a single invoice could take as long as three weeks, but with AP automation, this time is reduced to between one and seven days.
For manufacturing companies that process hundreds or even thousands of supplier invoices, AP automation is the gold standard for streamlining invoice processing and ensuring control over their supply chain.
2. Minimizes errors and manual processing-related issues
Manual AP processes take a lot of time and effort that staff can easily become distracted and more likely to make mistakes. Inaccurate data entries, lost paperwork, missed payments — your company would need to spend even more time and money to correct these errors.
Different AP automation software improve accuracy and efficiency by taking manual processes and human error out of the equation. For example, a document management solution like PaperSave eliminates the need for manual data entry by automating data capture. In particular, the software lets you extract data from a photo of a document taken using a smartphone or tablet. This means your AP staff won’t have to manually record information, which reduces the likelihood of typos and misinterpreted data.
3. Reduces AP staffing requirements
Because AP automation shortens the time to process invoices, your AP staff can still accommodate an increase in the volume of invoices as your business grows. You won’t need to hire new employees as quickly, or you could even decrease your staffing needs. Some companies, for instance, rely on remote or contract workers for their AP needs.
Not only will you be able to lower staffing costs with automation, but you can also maximize your employees’ time. Your AP staff can instead focus on high-value initiatives, which can lead to overall gains for your company.
4. Allows for better control over non-core spending and optimizes cash flow
The cost of manually processing a single invoice can reach up to $15. In contrast, using an automated AP system brings down the average to $5 or less. The difference in costs is typically a result of slow processing and additional time spent fixing avoidable mistakes.
With automation speeding up invoice processing and minimizing errors, your AP team can process more invoices in a shorter amount of time and avoid incurring unnecessary expenses. In addition, you can ensure timely payments, which positively impact cash flow.
5. Improves supplier relationships
Building rapport with suppliers is important for manufacturers if they want to make sure that they have a steady supply of high-quality materials. AP automation helps with this by guaranteeing that payments are always made on time. Not only does paying early prove to suppliers that you are a reliable customer, but it also makes the purchase process smoother. What’s more, suppliers may be willing to offer discounts and other cost-saving opportunities if you pay early.
PaperSave is a best-in-class document management solution that enables businesses to save money by streamlining and securing their AP processes. Schedule a free personalized demo today to learn more about what PaperSave has to offer.