Accounts Payable in Banking: Top 10 Benefits of Automation

Banks and credit unions across the country are automating accounts payable to maximize efficiencies and position their organizations for growth and opportunity.

By: BankTEL

AP automation is no longer a trend on the distant horizon. In fact, the move to back-office automation has accelerated significantly over the past year, even among historically late-adopter banks. Why? Unexpected disruption certainly played a role, as many teams were forced to work remotely. This made printing and mailing paper checks even more inefficient and problematic than ever.

Many banks and credit unions that were not already taking advantage of the benefits of AP automation made the transition to facilitate remote working and workplace restructuring under new health and safety guidelines. 

Still, the wider trend of automating accounts payable was surging even before the pandemic pressed the issue. Now, as financial institutions adjust to a new normal that may include remote work on a more permanent basis, automation gives banks and credit unions the freedom to adapt to whatever the future holds.

Automating accounts payable doesn’t just provide a safeguard against disaster and disruption. It offers a strategic advantage in terms of maximizing efficiency, cutting costs and preventing fraud.

Here are 10 of the biggest benefits of automating accounts payable in banking:

10. Employee Retention / Career Advancement

Did you know that hard-working AP professionals spend up to 30% of their work week on manual tasks alone? This includes everything from printing checks and stuffing envelopes to tracking down vendor payment information and responding to invoice-related questions. Why are these highly intelligent, hard-working individuals spending so much time on menial tasks?

Reducing your FI’s dependence on outdated, paper-heavy AP workflow will unleash the full potential of your team, and facilitate the all-important shift from manual processes to a more strategic mindset. Satisfied employees with a clear path toward high-value contribution and career advancement are far more likely to want to stay with the FI, and focus on high-priority initiatives to help the bank grow and succeed.


9. Safeguard Against Disruption

Automated AP helped many banks and credit unions face the disruption of 2020. Financial institutions like MainStreet Bank, a community bank with an asset size of $1.2 billion, were able to weather the storm thanks to an automated back office.

Diana Marroquin, an accounting assistant for MainStreet Bank, sums it up best. “With BankTEL products like AvidPay, not having to be in the office and relying on the mail to get payments processed, not having to follow up with stop payments — this was all critical because payment volume and workload had increased,” she said. “We now realize how being able to do things remotely and having a backup plan is so important.”

8. Improve Vendor Relations

Automating payments provides vendors with greater options, and helps them get paid faster. It also cuts down on the steps they have to take to submit an invoice and get paid, which makes the whole process easier. A platform that makes it simple for vendors and suppliers to transition over to a virtual payment environment will go a long way to ease the adoption process. 

It goes without saying that what’s good for the vendor is mutually beneficial for the FI, who can process payments faster, with more transparency and in fewer steps than the manual method. The AP team will also spend far less time fielding calls about where a payment is.

7. Simplify Audits

Total transparency and easy access to data streamlines compliance and makes audits a breeze. Forget about digging through file cabinets to locate invoices, accurate data is at the AP team’s fingertips in a few quick clicks thanks to digitized documents that are organized and easy to find.

An automated approval workflow keeps auditors happy and makes it simple to retrieve reports.

This clear and easy-to-access audit trail helps FIs keep up with regulatory compliance and avoid fines and penalties.

6. Save Time and Improve Efficiency

Inefficiency is one of the biggest challenges faced by AP departments, and the manual process is the main culprit. Processing a payment manually takes at least 7 steps and 8.3 days at a cost of around $10.08 per invoice. Automated payments, on the other hand, can be processed in a quick 3-step process that takes less than 3 days and only costs around $2.19 per invoice.

Beyond manual payment processing, automation significantly reduces the time spent on everything from account reconciliation to audits. What could your AP team do with 70% more time? 

For First National Bank of Grandbury, a $650M bank located in Texas, streamlining AP optimized their entire accounting department’s workflow. “The biggest factor that won us over as a small, two-person AP department, was that we weren’t going to have to manually cut hundreds of checks each month, making us far more efficient in our everyday roles,” said Kyle Williams, AVP/Internal Operations Manager. “I am personally able to move on to other projects much sooner instead of being tied up just getting our vendors paid.”

5. Prevent Fraud

AP fraud is an issue that affects banks and credit unions everywhere. According to the Association of Financial Professionals (AFP), over 80% of organizations were targets of payments fraud in 2019, the highest percentage since 2009. Manual AP and a reliance on paper checks exposes banks and credit unions to avoidable fraud that can be devastating to an FI’s bottom line and reputation.

Automating AP allows FIs to fight back against scammers attempting to perpetrate business email compromise along with wire, ACH and check fraud. If you want to prevent fraud at your financial institution, it’s important to keep a secure and centralized digital repository of all internal and vendor financial information. 

4. Minimize AP Errors 

Hardworking AP professionals often become overextended by the sheer volume of work they have to get done on a weekly basis. In between chasing down invoices, ensuring timely vendor payments and securing approvals, they’re responsible for carrying out a number of redundant tasks tied to manual AP, including error-prone data entry. Automating your back office eliminates the risk of avoidable errors like duplicate entries and key-in mistakes. 

3. Streamline Approvals Workflow

Forward-looking FIs need an efficient approvals workflow that provides easy tracking, auditing and 24-hour visibility and control. Your team can design custom approval rules based on your FI’s unique needs that ensure that all invoices are paid on time, every time.

A simple and completely customizable approvals workflow gives your team full visibility of where the invoice is in the approval process, and allows them to track progress in real-time. No more waiting around to manually input invoices or track down officer approvals. In addition to being automatically routed, invoices can also be approved from anywhere with an internet connection. 

2. Save Money

Automating AP reduces overhead to save FIs money. Beyond the reallocation of your team’s time and the elimination of late fees and penalties, there are the hard costs saved on reams of paper and check stock, envelopes, printer cartridges, stamps and trips to the post office. Early-pay discounts and e-payment incentives are another source of savings.

When paid consistently over time, a seemingly inconsequential early-pay incentive, such as a 2% discount for invoices paid within 10 days, can contribute significantly to your FI’s bottom line. E-payment incentives are another source of significant savings. Recently, River Valley Community Bank paid just $15.66 to process all 86 of the bank’s payments for the month thanks to incentive-based deductions.

1. Focus on High-Value Initiatives

When you take manual tasks off your team’s plate, AP pros are freed up to contribute to value-adding activities. With more time, the team can shift focus to initiatives like improving customer service and contribute to strategic planning, provide support for mergers and acquisitions, and spend time on other revenue-generating efforts. Transitioning from manual to automated AP benefits both the bank and the individual employee at every level of the organization.

Automation also provides a new level of transparency and actionable insight. In addition to allowing you to drill down into areas of opportunity (or issues), this visibility makes it easy to see the big picture and optimize accordingly. 

Accounts Payable in Banking: Automation Pays Off

Automating accounts payable allows you to streamline your FI’s entire AP workflow, save time and money, prevent fraud and simplify vendor management. As banks and credit unions continue to adjust to the current landscape, this forward-thinking shift is an easy way to strengthen operations and optimize your resources.

Contact us today to learn more about AP automation, and how BankTEL helps FIs position for long-term growth and success.