Growth-focused owners of small-to-medium-sized businesses (SMBs) understand the importance of adopting tech-based solutions that help streamline processes and build profits. Although some might think that much of this technology is better suited for bigger organizations, many innovative solutions are perfectly suited and customized for SMBs.
Accounts payable (AP) automated systems are a perfect example. These cloud-based solutions are designed for companies of all sizes to manage the entire accounts payable process digitally, eliminating the need for manual paper handling and processing.
The system’s positive impact on an SMB can easily be measured by these eight key performance indicators:
- Invoice Processing Time
Many SMBs have limited resources to process manual invoices. As a result, the invoice process can take days or even weeks, especially if multiple people must review them before payment can be processed, which can cause payment delays.
Automated AP systems move the invoice electronically through the pipeline, never getting stuck or lost in the process. Faster invoice processing allows for faster payments, allowing leaders to manage their cash flow more effectively.
- Invoice Approval Time
As the invoice moves through the system, there will be one or more steps for approval before it can be posted for payment. Because SMBs have relatively small AP teams, a paper invoice can become unchecked on a desk if the person in the approval chain is away.
With cloud-based approval in an automated AP solution, invoices can be approved remotely with just a few clicks, ensuring that invoices don’t get stuck in the pipeline. The result is improved supplier relationships and opportunities for early payment discounts.
- Touchless Processing Rate
Touchless processing means what it says – the invoice is completely hands-off and untouched by anyone in AP, enabling it to proceed smoothly through the automated AP system. The only time that an invoice requires human intervention is when there’s a discrepancy that needs to be addressed and revised.
Digital scanning technology in an automated AP system brings the data entry error rate to almost nil, helping improve the touchless processing rate to near perfect and ensuring you have a seamless, streamlined AP process that requires little to no intervention.
- Exception Rate
The exception (error) rate is generally the inverse of the touchless rate. For example, lower exception rates usually result in high touchless rates.
With the elimination of exceptions and duplicate entries that come with AP automation, accuracy is improved and process disruptions are minimized, resulting in faster processing, on-time payments, and no late payment penalties.
- First-Time Match Rate
The first-time match rate (FMTR) represents how efficiently invoices move through the system. The rate is calculated by taking the number of invoices matching the associated purchase orders and dividing it by the total number of all processed invoices (purchase orders) in the accounts payable department in a given period. The higher the FMTR, the more efficient the AP system is.
Manual invoice systems are prone to data entry errors, causing delays that bring down the first-time match rate. Inefficient communication between stakeholders in the approval chain, poor technical quality of digital documents, and too many manual steps can also negatively affect the FMTR.
Automated AP systems with accurate data capture eliminate the factors that bring down your FMTR, resulting in a much more efficient system.
- Supplier Inquiry Response Time
Suppliers may have questions about their invoices or your payments. Your AP staff needs to be on top of these queries with quick responses to protect the supplier relationship. Unfortunately, having a paper-based AP system means your team needs to go through filing cabinets to locate the invoice. If the invoice is misfiled or lost, it can cause problems with the supplier.
Automated AP systems offer real-time invoice status in seconds. Fast document retrieval means promptly answering your supplier’s questions with up-to-date information while they’re on the phone. Shorter query response times help build supplier trust and strengthen the relationship.
- Invoice Data Capture Accuracy
Mistakes can be made during manual entry, leading to process delays, time-consuming audits, and slower payments.
Sophisticated optical character recognition (OCR) technology in automated AP systems helps ensure accurate data capture, saving your AP team time and energy from correcting avoidable data entry mistakes. This technology also provides significant operational benefits, such as more accurate financial reporting and forecasting.
- Electronic vs. Paper Invoice Ratio
SMBs are more cost-conscious than ever. A higher electronic vs. paper invoice ratio brings them impactful cost savings that help build profits and create sustainable organic growth.
For example, the time your AP team would spend processing paper invoices can now be allocated toward activities that develop relationships that strengthen your market position. You’ll also be able to make more strategic business decisions based on real-time data, scale quickly during your busy season without overworking your AP team, and save on office expenses such as paper, printer ink, filing cabinets, and office storage space while cutting down on your environmental footprint.
Reap the benefits of an automated AP system for SMBs with Ash Conversions International
Automating your end-to-end accounts payable workflows improves the overall efficiency of the invoicing processes and builds profits that contribute to your SMB’s long-term success. Eliminate the risks of manual processing and add to your bottom line with an AP automation solution from ACI.
For over 40 years, Ash Conversions International (ACI) has specialized in transforming how companies run their daily business processes with efficient, cost-effective solutions that provide complete AP invoice visibility, easy invoice routing for approvals, one centralized cloud-based location for invoice processing and retrieval, robust workflow reporting, and much more.
For more information on how your organization can benefit by automating the accounts payable process, call us at 800-719-9621 or click the button below.
