How AP automation improves vendor relationships
While technology can create barriers in some instances, it can enhance relationships in others. This is true of accounts payable automation when it comes to helping small- to medium-sized businesses build rapport with their suppliers and vendors. AP automation benefits the accounts payable department by improving efficiency and accuracy. In this post, we’ll discuss how AP automation contributes to better vendor-business relationships.
Why your vendors want you to use accounts payable automation
AP automation doesn’t just save labor costs and create time for employees to devote to tasks they find meaningful; it also streamlines the payment process, making it more efficient for vendors on the receiving end of the accounts payable process.
Who doesn't like to get paid sooner?
Vendors have businesses to run just like you do. They also have to ensure their own vendors and suppliers are paid in a timely manner.
AP automation reduces your company’s AP cycle. When your AP cycle is reduced, the invoice processing cycle is sped up, allowing your vendors to be paid sooner and in turn meet their own financial obligations and invest in their own businesses.
Everyone appreciates reliability
As a business, being able to rely on your employees to show up to work and your customers to pay you is a good feeling – and vendors like that feeling, too. When you pay your vendors reliably, they won’t have to waste time and labor costs to chase down your payment. And they might feel more comfortable taking on debt to fix broken equipment or grow their business, knowing they have a reliable source of revenue to pay their creditors.
AP automation eliminates the messiness of paper-based processes, which can result in misplaced documents. It removes the mental load of remembering when invoices are due so accounting professionals can stay focused on other priorities. It reduces the potential for error that can occur in a process involving multiple steps and multiple people. When you enter an invoice in an AP automation system, you are setting wheels in motion that will ensure it will be paid quickly and accurately by streamlining the invoice approval process, ensuring timely and accurate payments.
What’s the value of a positive vendor relationship for the accounts payable department?
Failing to pay your vendor invoices on time can result in added fees, the loss of a supplier or even legal repercussions. Accounts payable automation solutions provide comprehensive benefits for vendor relationships. Paying your bills on time and accurately – which is more likely to occur with the help of AP automation – builds goodwill between your business and its suppliers and vendors, which carries with it a number of benefits.
Discounts
Vendors appreciate on-time, reliable payments so much that they’re often willing to provide financial incentives to get them. Electronic invoicing (e-invoicing) can facilitate timely payments and lead to financial incentives. Vendors may offer a 2% discount to customers that pay their invoices within ten days of receipt. For an invoice in the amount of $20,000, you’ll save $400, which is enough to pay for a new tablet so your top salesperson can work more efficiently in the field.
Improved supply chain reliability
Hiccups in the supply chain still occur, even if the supply chain has improved in recent years.
When that happens, a vendor your company has treated respectfully may be more likely to prioritize your purchases over another customer’s, or might be more likely to work with through those challenges. Strong vendor relationships translate to strong supply chains. Automating AP processes can further improve supply chain reliability by streamlining operations, reducing errors, and enhancing transparency.
Favorable terms and just plain favors
Maybe a vendor normally requires a minimum purchase but waives it for you since you’re always so reliable with your payments. Maybe your software vendor will add in training and a certain amount of tech support at no extra charge because they value the breathing room you’ve given them by always paying early. You can pass these savings along to your own customers.
AP automation makes it possible for your company to treat its suppliers and service providers better, earning better service in return. Choosing the right AP automation solution is crucial to maximize these benefits from vendors.
How does Gravity Software’s AP automation software work?
While automating any part of the accounts payable process can save your company time and money, Gravity Software's AP automation software offers comprehensive capabilities and benefits, from inputting the invoice to accounting for the expense.
Advanced data extraction ensures fewer bills need to be processed by hand for invoice processing
Many accounting solutions use optical character recognition (OCR) to extract data from vendor invoices. Not only does this method come with a learning curve, but it can’t always extract data if a bill isn’t set up in a traditional way. Gravity Software’s more advanced AI data extraction tool is able to recognize characters beyond just letters and numbers and possesses enhanced ability to extract the correct invoice data—even when a document is laid out in an unconventional way.
Accurate extraction of invoice data ensures fewer invoices fall through the automation cracks and require manual processing.
Multi-entity capabilities keep the convenience coming
For a multi-entity enterprise, extracting data from an invoice isn’t necessarily where the AP process becomes bogged down. It’s the fact that a single invoice may apply to multiple entities within an organization.
With legacy accounting software that requires a separate database for each legal entity, this means that any data from an invoice — whether extracted via AI tools or otherwise — must be entered into a separate database for each company involved with the charges. This can translate to a cumbersome process of copying information from one database, logging out of that database and into the next, then pasting the information into the new database and repeating this until every entity’s share of the invoice is recorded.
If it’s tedious to read about, imagine what it’s like to implement.
And don’t forget that once the invoice is actually paid, you’ll need to repeat the whole process to record the appropriate intercompany transactions.
Gravity is different. Once AI extracts vendor information from an invoice, that data can be applied to any number of entities within your organization with the click of a few buttons. Intercompany transactions are similarly convenient. The software integrates seamlessly with multiple accounting systems, streamlining accounts payable processes and improving overall efficiency.
This is a major Gravity selling point for the Sunray Companies, a 47-entity hospitality company. According to their accounts payable administrator, the time spent on settling intercompany transactions has been cut from multiple days to about 30 minutes with Gravity.
Automated workflows put the icing on the AP cake
Some companies require approval from company leadership before paying invoices over a certain amount. This can be a real stick in the spokes of the AP cycle. When you aren’t using automated workflows, you may end up with a slow drip of emails back and forth – or an even slower, messier process if you use paper-based approvals. With automated workflows like Gravity’s, you can set up your system so that invoices over a specified amount are automatically routed to the appropriate employees for approval. And instead of resulting in a back-and-forth to rival that usually seen on a tennis court, you’ll have a clear-cut acceptance or rejection.
The British Institute of Innkeeping, a hospitality trade organization, has saved a remarkable amount of time with this aspect of Gravity’s functionality. They use automated approvals for purchase orders – a few steps ahead of accounts payable, true, but still an important step in building vendor relationships. Thanks to Gravity’s automation, the BII has seen “a reduction in manual input time” when it comes to this process, according to Head of Finance Shila Singh.
All of these components come together to form an accounts payable automation system that reduces tedium and frustration and gives your company more breathing room. Within that breathing room, your company will have more time to focus on relationships with vendors and customers alike, leading to a stronger, more sustainable business overall. Implementing AP automation can significantly enhance these automated workflows, providing numerous benefits such as increased efficiency and reduced errors.
Learn more about Gravity Software’s accounts payable automation.
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