Accounts payable and receivable have been among the most heavily targeted areas of the business when it comes to initial automation technology deployments. These processes are among the best suited to be overhauled by automation software and other advanced management technologies, though there are plenty of challenges that must be overcome to truly modernize these elements of the accounting department.
First, let's take a look at some of the costs associated with optimal versus poor AP/AR management.
Extreme value in transformation
CFO published a benchmark survey on the average cost of processing invoices for companies that have optimized their strategies, those that are somewhat in the middle of the road, and others that have not modernized their systems. According to the news provider, the worst performers spent $12.44 to process each invoice in 2015, average firms spent $7.75, and the best only spent $4.98.
While those figures might not seem like a lot of cash, they certainly add up quickly. If a business were to process just 100 invoices in a year - not many at all - they would save nearly $750 by optimizing their invoice processing activities. Notably, CFO pointed out that labor tends to account for 62 percent of processing costs, meaning that automation needs to be a primary consideration when working to overhaul these frameworks. However, automation must be deployed in a safe fashion to avoid some substantial risks.
Proactively mitigating risk
Forbes recently reported that robotic process automation has certainly offered companies a wide range of opportunities to completely revolutionize their accounting departments, especially AP/AR, but there are immense threats and risks involved that seem to be seldom discussed. Automation of any kind will not simply fix every problem with the click of a button. Rather, processes and management play major roles in success rates, while the actual selection, implementation, integration and maintenance of the software is also vital to achieve positive outcomes.
According to Forbes, businesses can benefit from targeting the least complex workflow items with their primary automation deployment, and then work through the challenges experienced and how to overcome them before moving on to higher level activities. Considering the fact that the accounting department is so critical in the context of financial stability, regulatory compliance and leadership decision making. AP/AR is at the center of everything, automation deployments must be carried out with care.
This is also why many companies will benefit from the support of a managed service provider that offers the right solutions, as well as the option to get assistance when trying to use tools such as AP/AR automation and workflow management. Small and medium-sized businesses that do not have large accounting departments or much experience with general management demands might benefit the most from these entities.
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