Vendors and utilities submit bills to banks. They then expect banks to pay these bills on time. Manual accounts payable systems require bank staff time to schedule and make timely payments, none of which saves a financial institution any money—manual systems typically only increase expenses without any positive return to the bottom line.
However, automating the accounts payable function manages cost, frees up bank personnel to focus on more productive tasks, and allows institutions to take advantage of vendor discounts offered for prompt payment. No one needs a Masters degree in Advanced Mathematics to understand that a discount for prompt payment is light years better than a costly late fee for tardy payment of an invoice.
Yet, often bank staff becomes overwhelmed by manual accounts payable systems that require massive amounts of time and paper moving to manage. Since accounts payable departments are seldom considered to be profit centers by experienced bank executives, any arguments supporting manual systems fall short of wise management decisions. Conversely, there are numerous advantages to automating the accounts payable process.
Automated Accounts Payable System Advantages
Among the many advantages of automated accounts payable software are the following items.
- Reduces the volume of time wasting paper. Digitizing invoices saves money, time and trees. Along with eliminating the paper shuffling requirements of manual systems, automated accounts payable systems immediately make data available to appropriate staff and management.
- Speeds invoice approvals. Does this sound familiar? As invoices come in, staff must record the details and wait for executive approval to pay. After spending the time to accurately enter invoice information, taking advantage of discounts and avoiding late fees sometimes becomes a daunting challenge while waiting for management approval to pay. Since automated accounts payable information is available instantly after digitizing it, bank management does not need to wait for the tedious process of manually recording data from invoices.
- Use “quick pay” discounts to impact the bank’s bottom line. Prompt pay discounts, such as 2% if paid in 10 days, may not seem like much, but if the bank establishes a pattern of quickly paying invoices, over the course of a fiscal quarter or year, these savings translate to positive impacts on financial institutions’ bottom lines. These results are far better than consistently making late payments and the penalty fees this practice generates. Upper management seldom appreciates the negative impact late payment creates on the expense aea of a bank’s Income Statement. Unless specific invoices are disputed, bills must be paid anyway. Why not save money by taking an offered discount?
- Minimize accounts payable errors. Overwhelmed accounts payable staff will make mistakes. Count on it. Efficient accounts payable software minimizes or eradicates typical typographical errors, which usually defeats even the best cost control procedures.
- Simplify the internal audit policy. A bank’s audit staff can save time and money by having accurate accounts payable data at their fingertips. They appreciate the simplicity of following digital trails and reduces the time needed for internal audit procedures. This electronic audit trail continues to pay dividends when it is time for financial institutions’ annual outside audits. Outside audit teams need less time to examine accounts payable data for accuracy.
- Automated accounts payable software maximizes staff productivity. Saving the time and money of personnel entering, proofreading and verifying invoices to produce accurate manual reports and payables aging, gives staff the time to address more pressing matters. Accounts payable personnel also have more time to analyze and evaluate bank payables, including vendor contract terms, expirations, and/or renewals.
Using accounts payable software offered by top firms dedicated to financial institution solutions, such as BankTEL, saves money, time, and minimizes human errors. To save more, these proven apps can often accept electronic invoices, saving paper, postage, and staff scanning time.
Some of these systems allow banks to memorize and schedule payment amounts and/or dates to ensure timely payments and take available discounts. Who knows, bank senior management may even start referring to the accounts payable department as a profit center.