Manufacturing companies—both large-scale and small-scale—deal with hundreds if not thousands of transactions every single day as a result of being the largest sector of industries that involves a massive labor force, machines, and new technology. As they act as fore players in the supply chain industry by streamlining the manufacturing process, they have a high cash flow that needs to be meticulously organized and planned.
However, due to the rise in manufacturing costs, supplier demand, and the sudden spike in inflation, manufacturing companies face difficulties when it comes to safeguarding their revenues.
What are the challenges faced by the manufacturing industry when it comes to the Accounts Payable Process?
AP processing is a vital component to keep track of the transactions taking place between the company, the suppliers, and the customers. While playing the role of a huge service provider, manufacturing companies also need to make sure that their money is spent at right time and on the right thing.
As a result of heavy cash flow, manufacturing companies find it hard to keep up with all the transactions going on. Moreover, instead of increasing their core revenues, they have to struggle with saving their costs.
There are several challenges that result in a heavy cash drain that frustrates manufacturing companies;
Too many bills and invoices
Being manufacturers, these companies deal with thousands of bills and invoices every single day. With long lists of bills passing here and there, there is a higher chance of missing out on payments bills, cheques, and invoices. This can often result in overdue and companies will have to pay more than the intended payments.
In manual invoice processing, data should be entered into account books where everything is clean and visible. However, with the rising cost of products, the paper has become quite expensive. Manufacturing companies can’t risk paying doubles when they need to focus on increasing their revenue. Therefore, the cost of stationery has become a challenge.
Manual labor cost
For manual Accounts Payable processing, manufacturing companies need laborers who have the capacity to deal with invoices and bills. However, these hired individuals demand a high paycheck that credits their strength, time, and effort. In this case, manufacturing companies must be conscious when they hire professional help.
Manufacturing companies have a large amount of unorganized data that should be properly invoiced and entered. This can be hard with a limited amount of time.
Erroneous data entry
Manual data invoice processing is highly error-prone. Employees tire out quickly and they can get easily distracted. In such cases, manufacturing companies must pay an additional amount to retrieve or enter lost data and keep the database organized.
How can AP automation save money?
AP automation is a revolutionary technology that is designed to help companies to reduce additional costs and increase revenues. By automating the Accounts Payable process, manufacturing companies can reduce additional costs spent on manual data entry, paperwork, and data correction.
To learn more about AP automation and its potential benefits, read our blog on What is AP Automation here.
Here are some ways how using AP automation software can help manufacturing companies save money;
1. Minimizes manual labor cost
The accounts Payable process was traditionally done manually where an employee enters the invoice data into the database. This can be tiring and costly since these employees should be given a higher paycheck. AP automation seeks to reduce this challenge by entirely automating the process. Accounts Payable automation software is capable of extracting, processing, and storing data into the database without any human interference. So you don’t have to spend money to hire new employees to carry out the invoice processing. Obviously, this does not threaten the job of the current employees, but you don’t need to go looking around for a new labor force. Thus, AP automation can save you money.
2. Reduces paper cost and error cost
When automation was first introduced it was mainly to save time and reduce errors that are caused by manual AP processes. The traditional Accounts Payable process can result in entering multiple or wrong figures, duplicating calculations, and wasting stationary to correct data. Manufacturing companies can’t afford to take any risk as they must support the supply chain industry with their production.
AP automation software, which is 99% accurate, is specifically made to trace such inconsistencies within the cash flow. They can track duplicated data, payments and many more. With AP automation software providing collaborating workspaces that can be viewed by companies’ financial teams. So you don’t need to bother for new stationary. This not only reduces paper costs but also builds trusts, accuracy, and visibility. With AP automation easing your financial procedure, you can save your money without trouble.
3. Streamlines invoice processing
Maintaining the steady flow of production is an important aspect of manufacturing companies. A single misinformation can derail the entire production and threaten the supply chain. This can cause companies to pay more to adjust the supply. You can avoid these challenges by automating the AP process. When the AP process is automated, it ensures that the whole invoice processing is streamlined and the cash flow is controlled. When the manufacturing companies receive invoices from their suppliers and customers, AP automation solutions can extract them into the database and gear up the invoice approvals and payments.
AP automation solutions, being powered by the latest digital trends, are capable of matching, coding, and approving invoices. Hence, this process asserts the productivity of the company. By simplifying the Accounts Payable process, AP automation helps to track the transactions and balance the finances which can help manufacturing companies save more money and spend less.
4. Optimizes core cash flow
Accounts Payable process automation makes sure that every invoice is extracted and processed. It allows you to view and track how much money has been coming in and going out of the companies. When you have direct access to the transactions, you can stop unwanted payments from happening and project money for the most needful. With AP automation, along with tactful decision-making, you can save and make more money in no time.
5. Boosts customer and supplier relationship
Customer and supplier relationship is important for the survival of a manufacturing company. The more efficient and steadfast you are in your supply and payments, the more clients you will attract. Since AP automation helps you to gain control over your cash flow, you can use your time to make new connections. And making more connections will ensure that there’s more money flowing into the company.
How can ELIPO help you?
ELIPO is a customizable Vendor Invoice Automation software that is powered by state-of-art technology. It can extract, convert, and process your Invoices, and seeks to bridge the gap between you and your vendors by assisting you with invoice processing procedures while ensuring visibility, accuracy, productivity, and save your time. As one of the major software that uses state-of-art technology, ELIPO ensures that you work with the best up-to-date tech solution.
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