In today’s world, there’s simply no room for slow, error-prone business processes. No one is arguing that point, yet many organizations seem stuck in the Stone Age of accounts payable (AP). When the benefits of AP automation are now more apparent than ever — less paperwork and manual processes, fewer errors, and more time for strategic thinking — why are so many companies lagging behind?
Consider a manufacturer struggling to keep pace with growing order volumes. Growth is good, right? But, overwhelmed by a deluge of supplier invoices, its AP department is bogged down in manual data entry, time-consuming approvals, and error-prone, paper-based processes. This effort, hampers efficiency and creates a bottleneck that prevents the company from reacting quickly to market changes and seizing new opportunities — to say nothing of keeping up with existing orders.
Unfortunately, this remains a common headache for businesses in every industry. According to the Yooz State of Automation in Finance 2024 report, only 28% of organizations see themselves as progressive or innovative when it comes to AP automation. What about the other 72%? While many say they are on their way to AP automation, a whopping 45% admit to having just started investigating the technology (or they haven’t started the journey at all).
The numbers don’t lie. They underscore a perplexing paradox: despite the obvious opportunity to gain a competitive edge by adopting advanced AP technologies, there is a persistent reluctance to do something about it.
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The too-high price of inaction
Think again about that manufacturer grappling with a surge in product orders. While production lines ramp up to meet the increase in demand, the AP team struggles beneath a growing mountain of invoices. Timely and accurate payments are critical to maintaining the inflow of materials needed to build and ship product orders. The recent survey showed that finance teams consider the top three problems with manual AP processes and systems to be bottlenecks due to complex validation processes (37%), errors made on past invoices (36%), and lack of visibility into the invoice status (36%). Simply put, manual payment processes continue to threaten organizations’ ability to make timely payment for the supplies they need to maintain (and grow) their businesses.
From a financial perspective, the average cost of processing an invoice remains daunting—it is now $15.40 in the US—not to mention the labor time involved. The time AP staff spends on mundane tasks also rises every year. For example, the time to approve vendor invoices increased by 24.6% in 2024 compared to 2023, averaging 24.8 hours.
On top of the obvious costs associated with labor, paper, and processing time, manual AP processes introduce a host of hidden expenses. Errors in data entry, late payments resulting in missed discounts, and inefficiencies in cash flow management can erode profitability, strain vendor relationships, and potentially disrupt the supply chain. In manufacturing or any other industry sector, as production ramps up the consequences become more acute. By using more and more valuable time and resources on mundane tasks instead of strategic initiatives, the AP department
The question, then, is: how can any business that wants to grow (or just maintain its position) afford not to automate such brittle, unscalable processes?
The well-worth-it productivity payoff
Compared to the challenges posed by manual AP processes, automation offers a clear path to increased efficiency, cost savings, and improved decision-making. By automating routine tasks such as invoice data capture, matching, and approval, businesses can free up valuable employee time to focus on strategic initiatives.
Despite the rise in invoice processing time due to manual AP processes, the State of Automation in Finance 2024 study reports that organizations who embrace automation see an average 26% reduction of that processing time. Moreover, 31% of companies automating their AP processes report they can capture and process invoices in under two hours! No one can argue with a productivity boost like that, nor the cost reduction that goes along with it. These findings underscore the significant return on investment a business can realize through automation.
AP automation can be a game-changer for a company struggling with invoice capture and processing, reducing processing time, improving accuracy, and enhancing overall efficiency. This newfound productivity (and extra labor hours) can be channeled into activities that directly contribute to the company’s bottom line, such as analyzing supplier performance, identifying cost-saving opportunities, and supporting strategic sourcing initiatives. Plus, the timeliness and accuracy of automated payment processing can only boost the company’s relationships with its vendors and suppliers, helping ensure its future orders are filled quickly and efficiently.
Breaking through the barriers to an automation adoption strategy
Despite the compelling case for AP automation, many organizations remain hesitant to adopt this transformative technology. Common challenges reported continue to include budget constraints, resistance to change, or lack of IT resources. In addition, financial decision-makers now considering AP automation want their chosen solutions to integrate smoothly with their ERP and other systems and to be able to leverage the power of artificial intelligence (AI) as it becomes available. These broader considerations, coupled with the complexities of modern supply chains and regulatory environments, can create a formidable barrier to entry and moving forward with the adoption of AP automation.
To overcome these hurdles, organizations must adopt a strategic and data-driven approach. Businesses can develop a tailored automation roadmap, starting with a thorough assessment of current AP processes and identifying pain points. Building a solid business case, demonstrating clear ROI, and securing executive sponsorship are essential for securing the necessary budget and resources. In addition, fostering collaboration between finance and IT departments can help ensure a smooth implementation process.
By proactively addressing these challenges and implementing a well-planned automation strategy, organizations can unlock the full potential of AP automation and drive significant improvements in efficiency, accuracy, and cost savings.
Resolving the paradox is more critical than ever
The stark contrast between the potential benefits of AP automation and the slow pace of adoption highlights a paradox in the business world. Corporate decision-makers recognize productivity as the “top” benefit of AP automation, yet embracing automation can also unlock significant improvements in data accuracy, fraud risk reduction, cost savings, cash flow optimization, and more. Strangely, though, while the technology to revolutionize AP processes is readily available, many organizations continue relying on outdated, manual methods, holding them back from becoming more efficient, agile, and profitable.
Indeed, how quickly and how well a business resolves the productivity paradox may well determine its future.
Fully realizing the benefits of AP automation starts with an organization assessing its current AP processes and identifying areas for improvement. By prioritizing automation as a strategic initiative and building a solid business case, companies can secure the necessary support and resources to drive successful implementation. For those still hesitating on their journey to AP automation, the increased productivity, cost savings, and competitive advantage are more than enough reason to get started.
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