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Best Practices

A Clear Path to A/P and A/R Automation

Consider these best practices when implementing software to automate key stages of the order-to-cash process.

By Erin McCart | Updated on June 18, 2015
Stock illustration representing rapid movement of information or money via technology

An initiative to automate accounts payable (A/P) or accounts receivable (A/R) processes has tremendous potential. In an ineffective A/P function, each payment costs twice as much to process as the typical payment in an organization that follows best practices; best-in-class companies spend an average of around $4 on processing each payment, versus an average of $8 per payment in a subpar A/P function. Poor management of A/R exceptions can also be extremely expensive. A/R costs organizations an average of 2.7 percent of their total invoiced income.

According to the Association for Information and Image Management (AIIM), automation of payables and receivables processes enables organizations to see improvements of 50 percent or more in working capital metrics such as DSO, DPO, and aged receivables. Automation of payment processes reduces the risk of errors, strengthening the supply chain. It offers faster invoicing and improved visibility, which may boost customer satisfaction. Moreover, automation offers relief from time-consuming manual processing, freeing up A/P and A/R staff to dedicate more time to development of strong relationships with customers and suppliers.

But a successful A/P or A/R automation project entails more than just deploying a software solution. Companies that embark on this journey need to keep the following goals in mind:

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