When you're saving money, every little bit counts. You collect your change in a jar labeled "vacation!" and skip the frou-frou Starbucks drinks and the other extras that can add up over time.
Before you know it, you've hit your goal, and you're ready to book your trip!
In business, saving money is the same in the sense that little chunks of change can add up over time, but it can be a little more difficult to find places to cut back.
Even if you feel like you’ve cut back everywhere you possibly can, consider this cash-finding strategy: taking invoice approval digital.
The paper side of invoice approval is tiresome enough. Manual data entry is time-consuming and error-prone. How many times should you have to enter the same data anyway? Once? Twice? Three times? We think you shouldn’t have to enter it at all! (Check out our Automation with OCR video for more on this.)
What’s more concerning is that paper-based processes add a layer of risk and complexity when it comes to making changes, catching errors, and responding to your vendors. Human errors happen, and they take time and effort to correct.
But what’s your biggest loss if you haven’t yet digitized the entirety of your invoice approval process? It’s the missed opportunity to turn your AP department into a profit center!
Let’s talk about how exactly can deploying digital procure-to-pay processes can make money appear.
When you use AP Process Automation software, your accounting department can operate at a comparatively low cost and high speed when processing electronic payments through the Automated Clearing House (ACH) network.
What else? When you’re digital, everything is recorded for you. This means you can mine the digital AP environment for data, which you can use to find additional cash flow opportunities, including extended payment terms, which translates to you being able to keep more working capital on hand.
And now, with DocuPhase Payments powered by Nvoicepay, you can pay all of your domestic and international vendors through one simple electronic process.
As you can imagine, it’s easy to get early payment discounts when your AP processes are digital and automated. But there’s more than just early payment discounts on the table. In addition to getting that 2% discount (or however much it comes out to), when you pay an invoice within 10 days, as opposed to the required net 30, you can also earn dynamic discounts. These offer you an even greater opportunity for return.
What are dynamic discounts? They’re discounts paid on a sliding scale from day 1 until the actual due date. They can be so lucrative that there are entire e-commerce solutions built around them – solutions that can help your AP department act quickly and reap the maximum benefits available.
By utilizing a payment automation solution like DocuPhase Payments powered by Nvoicepay, you can take advantage of these rebates for potential combined benefits of over $5 per payment. If your organization writes 20,000 checks a year, you could typically see benefits of over $100,000 per year.
As you can imagine, when you stretch your days payable outstanding (DPO), profits will follow. When your AP department uses digital processes, you’re able to keep your reserve cash on hand longer than when you use manual processes.
How? Your payments are made faster when you leverage electronic payment options. DocuPhase's payment automation solution meets the needs of complex AP processes with multiple levels of hierarchies, complex approval workflows, multiple locations, multiple bank accounts, and international payments.
Think about how many days you could save if you didn’t have to manually route checks.
When you link buyers, suppliers, and third-party funders electronically, all parties reap the benefits. The buyers can get extended terms, and the sellers can get paid earlier. Both sides can coexist peacefully in this transparent digital environment.
Going beyond periodic outreach to suppliers, DocuPhase Payments by Nvoicepay reviews each payment for new vendor information and looks for opportunities for electronic payments. Electronic payments cost 10x less than paper checks, so that means that continuous vendor outreach means greater savings for you.
As you can see, digitizing your procure-to-pay processes can give your company returns in cold hard cash. The more of these options you take advantage of, the more your savings will add up over time.
Want to know more about Accounting Automation with DocuPhase? Check out our ebook, What Is Procure-to-Pay Automation?
Nvoicepay syndicates thought leadership content from our partners. This article originally appeared on Docuphase's blog.