Many businesses rely on manual accounts payable and accounts receivable processes, which lead to slow, error-prone accounting that increases fraud risk. This can result in cash flow consequences, impacting both sides of the ledger.
The PYMNTS Intelligence report “Why Automating Both AR and AP Is Vital to Fiscal Fitness” found that as companies seek to improve their financial health, automating AP and AR is becoming a key strategy. Automation streamlines accounting, strengthens security and improves B2B relationships through improved visibility and efficiency.
According to the report, 65% of firms that still rely on paper checks experience check fraud, adding to the risks of manual methods. Additionally, paper-based invoicing, time-consuming approvals and manual data entry inflate costs, while the lack of automation leads to slow invoice delivery and payment collection, extending days sales outstanding (DSO). This delay, coupled with slow vendor payments, strains supplier relationships and causes companies to miss early payment discounts.
These inefficiencies take a toll on businesses’ cash flow. According to the report, 91% of small businesses face cash flow challenges, with 31% having to miss or delay critical payments such as payroll and rent due to these outdated processes. The lack of automation hinders timely decision-making and forecasting, which compounds cash flow issues. By addressing these challenges with AP and AR automation, businesses can optimize their financial operations, improve cash flow management, and reduce the risk of costly errors and fraud.
Automating AP and AR processes can improve financial health by creating a seamless, end-to-end workflow. The report revealed that 95% of companies that fully automate their AP processes see increased accuracy, efficiency and operational improvements. This transition to digital payments not only accelerates invoice processing but also reduces fraud risk.
Real-time visibility into incoming and outgoing cash flows allows companies to make more accurate financial forecasts and better manage working capital. Additionally, with 64% of firms having automated at least some part of their AP processes and 65% automating part of their AR, the move toward full automation is gaining momentum. This allows for faster payments, improved forecasting and stronger financial positions.
Integrating payment portals with automated AP and AR processes improves visibility by allowing customers and vendors to track invoices and payments in real time. This elevates transparency, reduces manual workload and strengthens B2B relationships by ensuring timely payments and accurate invoicing. By using electronic payments and automation, companies can enhance cash flow management and improve supplier and customer relations.
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