7 Trends Affecting AP Invoice Approval Process
The AP invoice approval process is affected by many factors, including invoice frequency, invoice volume, and the invoicing system used by the vendor. Read on to learn more about how these trends are affecting your AP invoice approval process.
1) New payment terms
Many companies are now allowing for new payment terms such as quarterly or monthly payments. If you’re looking to make invoicing easier, then a recurring billing solution will help reduce your workload and improve efficiency. Additionally, you’ll be able to better predict cash flow as you won’t need to send out invoices so frequently. As a bonus, recurring billing will allow your customers more flexibility on when they pay their bills.
2) Paperless conversion
We are living in a paperless society. Every day, more and more companies are looking for new ways to convert to digital invoicing solutions in order to reduce costs and increase efficiency. In fact, it is estimated that by 2022 all accounts payable processes will be paperless, which is only a few years away! When considering AP invoice approval process outsourcing options, you should always look at how much time employees are spending on these repetitive tasks—this is one of many important factors impacting your overall cost savings.
3) Switch to subscription billing
As subscriptions become more popular, it’s becoming easier to switch to a recurring billing model that allows you to charge customers on a schedule they set. Accounts Payable (AP) invoices are usually created and mailed on a bi-weekly basis, which means an invoice can take up to four weeks to process. This is definitely an antiquated system—and one that can be easily streamlined by choosing automated subscription billing solutions for your business.
4) Lack of trust in suppliers
Many AP departments cite not trusting their suppliers as one of their biggest reasons for not automating. However, though there are still concerns about data security, most companies have moved beyond worries that they’ll be hacked—and 73% of B2B companies use digital solutions to run back-office operations such as invoicing and accounts payable.
5) Increased supplier invoice fraud detection
Despite accounting for a small percentage of total invoices, invoice fraud still costs organizations billions of dollars each year. It makes sense that as CFOs and other business executives look for ways to protect their bottom line, invoice approval processes may become more strict than ever before. Some companies may even choose to outsource their invoice management to professional services firms.
6) Increase in early payment discounts
Many companies are offering early payment discounts to consumers, enticing them to pay their bills before they’re due. This is a good trend for business owners since invoices that are paid early won’t be subject to late fees or finance charges. It also means that businesses can receive payments faster, helping cash flow and improving accounts receivable (A/R) management.
7) Cost cutting measures
It’s no secret that businesses everywhere are tightening their belts. With an eye toward slashing costs and increasing profitability, managers are looking for ways to reduce spending. The easiest place to do so is usually in accounts payable processes, including invoice approval. One way to cut down on money spent on paying bills? Automate them, using recurring billing software.
Conclusion
There’s no doubt that recurring billing has had a significant impact on how organizations manage their accounts payable and receivable functions. Here are 7 trends you need to be aware of if you want to reap all of its benefits—and avoid its drawbacks. The best way to do so is through proven accounting software designed for recurring billing . Leveraging a single system ensures that you have total visibility into your entire invoicing process and all of your monthly, quarterly and annual payments.
