Fully integrated, automated payments! A dream goal for of many CFOs and controllers. Imagine how much more mission-critical work finance staffers could dig into?
Here’s a reality check: If you’re still in the process of transitioning from manual to automated processes, you’re far from alone. Just 5% of mid-sized companies (annual profits between $3 to $15 million) have fully automated their accounts payable (AP) and receivable (AR) processes, according to a recent PYMNTS study.
“Nearly 44% have only automated one or two AP or AR tasks, and more than one-third have not started any automation and are still anchored in paper and manual duties,” the study finds. “Fifteen percent have automated three or more tasks” using a software solution.
Automating AP in particular can save finance teams more than nine hours of staff time per week, according to a PYMNTS report. Five hundred or so hours of work saved per year saves money and boosts efficiency.
So it’s no wonder the vast majority of finance chiefs that are still a ways away from full automation are moving forward regardless. Just 2% of finance pros surveyed by PYMNTS say their organizations have no plans to automate their AP processes.
“[M]ost mid-sized firms plan to automate their AP and AR operations, implying that a reduction in manual AP and AR processes is on the horizon,” says PYMNTS. “Among the top tasks firms will automate are payments of regular amounts or occurring at regular intervals, payments involving greater calculations, and payments that offer discounts for being paid faster.”
Finance Automation Pros Outweigh the Cons
Finance pros certainly “get” the myriad of benefits of integrating and automating both AR and AP:
- an end to (nearly all) manual entry errors
- time saved getting signatures — automated payment approval eliminates that
- up-to-the-minute tracking of cash flow
- fewer payment delays and mistakes
- real-time payments for their companies and customers/vendors
- reduced paperwork, and
- slashing of postage costs.
Bonus benefit: More companies say they prefer instantaneous electronic payments as opposed to writing, mailing and depositing checks. Companies that can provide an automated payment platform make themselves more attractive to clients, especially new customers.
When it comes to making regular B2B purchases, customers say their preference is bank-to-bank payments, followed by corporate credit cards. Yet checks are still the top (and in some cases only) payment options for nearly a third of businesses’ credit & collection departments. But surveys show finance pros expect electronic and real-time payments to become the primary — and someday only –mode of B2B and B2C transactions.
Of course, automating and integrating AP and AR is an uphill battle for practically any company that gives it a shot. (Except for start-ups.) The software solutions on the market are great — convincing customers to change how they’ve done business with a company is the uphill battle.
Also: Some software vendors do a better job of hand-holding their customer companies than others. The first one to six months of a transition — even if it’s only on the AP or AR side — can cause a lot of hiccups. Many companies that try to implement an automation software platform give up because it:
- doesn’t provide the bang for the buck the vendor promised, and
- takes up too much of staffers’ time to learn.
Robotic Process Automation: The AI End-Around
So we know that only about 5% of companies threaded the needle and automated all of their AP and AR processes. If it were easy, everyone would’ve done it by now. Bottom line: If a business can automate or digitize any finance task, it’s a win for accuracy and efficiency.
An AI option that’s gaining steam is robotic process automation (RPA). Gartner lauds RPA for its “ability to eliminate repetitive tasks and its role as a steppingstone toward hyperautomation” [just what CFOs need, more jargon to learn!]
In a nutshell, RPA uses software and AI machine learning to create bots that can handle repetitive tasks solo, such as data entry and processing, document management, regular financial transactions and accounting. Bots can log into apps, enter and copy data, and complete programmed tasks.
Banks and financial firms are leaning heavily on RPA for generating reports, inter-department payment settlement and rapid account opening. The benefits of RPA to a stretched-thin, talent-seeking finance team may be worth exploring.
Finance staffers who worry about AI taking their jobs can take a deep breath. RPA “cannot replace humans or replace human cognitive functions … [and can’t] perform logical thinking as humans do,” according to Simplilearn.
