AP Automation: The Gateway to Successful Working Capital Initiatives

 AP automation, or accounts payable automation, is the process of using technology to streamline and automate accounts payable workflows. AP automation helps companies reduce costs, increase efficiency, and improve cash flow by digitizing and automating invoice processing, payment approvals, and data entry.

AP automation offers payment certainty regarding time and date, assured date, and total payment from the supplier's standpoint. In addition, suppliers have the option for next-day payment thanks to simplified early payment access, which helps them sustain their businesses and make necessary investments. These advantages add up to something far more significant: improved corporate decision-making due to increased cash flow confidence.

One of the primary benefits of AP automation from Skyscend is its impact on working capital management. Working capital is a company's money available to cover its short-term operating expenses, such as inventory, salaries, and rent. By automating accounts payable, companies can speed up the invoice approval process, reduce the risk of errors, and optimize payment timing to take advantage of early payment discounts and avoid late payment fees.

Six Ways AP Automation Enhances Working Capital Performance

Whatever the size or nature of the business, managing cash flow is essential for success. However, every firm encounters difficulties managing cash flow, and everything you can do to increase cash flow could benefit the whole company.

The amount of cash flow significantly impacts your firm even though it's not the best indicator of overall company performance. This is because the incoming and existing cash represents the operational activities of an organization.

Here are some of the ways that AP automation from Skyscend can improve working capital management:

1.     Faster invoice processing

Manual invoice processing is time-consuming and error-prone. AP invoice automation software can automatically extract data from invoices, route them for approval, and post them to the accounting system, reducing processing time from days to hours or even minutes.

2.     Improved accuracy

]By eliminating manual data entry, AP automation reduces the risk of errors and discrepancies in invoices and payment records. This can help avoid costly mistakes and delays that can affect cash flow.

3.     Better visibility

AP automation provides real-time visibility into invoice status and payment timing, enabling companies to manage cash flow better and optimize payment timing to take advantage of early payment discounts.

An effective ap invoice automation solution maintains complete records. The system keeps track of each modification and event as invoices move through it and logs the data in a database. These records are available in real time, and the searchable database gives all the data you need at your fingertips to keep track of cash flow and make future purchasing plans.

4.     Reduced costs

AP automation can significantly reduce the cost of invoice processing by eliminating the need for manual data entry, reducing paper-based processes, and streamlining payment approvals.

Automation of accounts payable solves these issues by vastly accelerating the processing of invoices. As a result, you won't ever need to be concerned about late payments again. Also, you'll save money on labor expenditures, a critical factor in organizations that don't automate AP's cost-per-invoice.

5.     Enhanced supplier relationships

By automating invoice processing and payment, companies can pay suppliers faster, reduce payment inquiries, and improve supplier satisfaction, leading to better terms and discounts.

Some automated solutions additionally offer a supplier portal that allows for online collaboration between suppliers and customers, doing away with the back-and-forth communication in a traditional accounts-payable environment through phone calls, emails, and faxes. The site allows suppliers to view the status of payments and invoices in real time without making time-consuming phone calls or sending lengthy emails.

6.     Improved working capital efficiency

Working capital performance can be enhanced by controllers using automated accounts payable solutions. For instance, the quicker cycle times for invoice validation that organizations obtain through automation create additional potential for early payment discounts. Businesses can pay a greater percentage of bills during the early payment discount period by moving to higher degrees of automation.

Controllers can view accruals expenditure in real-time thanks to analytics. Also, by using specific virtual card programs to pay suppliers, controllers can rapidly extend their Day's Payable Outstanding without altering their payment terms with suppliers.

The accounts payable department's expense can be reduced by the cash-back rebates gained on supplier payments made using a virtual card, turning the department into a profit center.

Wrapping Up

When you want to increase cash flow, technology like working capital solutions, supply chain finance solutions and AP automation from solution providers like Skyscend are your best allies. The easier it is to handle cash, the more efficient each business function is, which affects cash flow.

In summary, AP automation is critical to successful working capital initiatives. By reducing processing time, improving accuracy, providing better visibility, and reducing costs, companies can optimize cash flow, improve supplier relationships, and achieve greater financial agility.

Contact Skyscend if you're seeking high-quality business process technologies. They provide a dependable software portfolio, which includes AP automation, that integrates with your current ERPs to produce the ideal business solutions for your firm. Please schedule a demo with them to learn more about how they can aid your business' cash flow.