Why Adding AI to Your Workday Financial Management Reduces the Cost of Running the Accounts Payable Department by 60%
In many cases, paying vendors costs a lot more than the amount due on the vendor bills. Read on to learn about some of the largest costs of running an AP Department, how to reduce costs by more than 60%, and how Workday helps you achieve this.
The Cost of Running an AP Department
The cost of running an Accounts Payable department varies based on the size of the company, the volume of invoices, and the complexity of the payment processes. Some of the biggest areas are highlighted below.
Staffing Costs
The largest component of Accounts Payable costs is typically employee salaries and benefits. An Accounts Payable clerk makes on average more than $37,000 a year as a salary. Once you add in benefits, the cost to employ an AP clerk is much closer to $61,000. Inflation is at historically high levels and many employees are demanding higher pay, more impactful work, and better overall working conditions.
Processing Costs
Processing invoices also comes with costs such as printing, mailing, and filing documents, as well as handling exceptions and disputes. According to a study by Ardent Partners, the average cost to process a single invoice in the United States is approximately $11.54. This includes the cost of labor, software, and other expenses such as postage and printing.
According to a study by Ardent Partners, the average cost to process a single invoice in the US, including labor, software, and other expenses such as postage and printing, is approximately $11.54.
Audit and Compliance Costs
Ensuring compliance with regulations and conducting audits to prevent fraud and errors also adds to the expenses associated with running an Accounts Payable department. The costs add up when you include readiness assessments and other overheads.
Training and Development Costs
Keeping up with changing technologies, regulations, and best practices requires ongoing training and development for staff, which also requires some investments to be made by the organization. Staff members may need to attend classes, sessions, or conferences to maintain accreditation or certification requirements.
How to Reduce Your Costs
Imagine a world where Accounts Payable teams could scale without doubling headcount. Advanced technologies such as Large Language Models, generative AI, and computer vision could automate the management of the AP mailbox, processing invoices, estimating supplier invoice accruals, and compliance with audit requirements. Using advanced technologies frees up Accounts Payable teams to focus on the higher impact work, reduces turnover, and eliminates mindless business processes. This makes for a much happier and more productive AP team.
Advanced technologies such as Large Language Models, generative AI, and computer vision could automate the management of the AP mailbox, processing invoices, estimating supplier invoice accruals, and compliance with audit requirements.
Keeping up with emails is tedious and leads to burn out over time. When teams get out of the weeds and focus on their vendor management strategy instead of answering emails and inputting invoices manually, organizations will better manage their supply chain.
In fact, implementing vendor management strategy could lead to better pricing, discounts, and more favorable payment terms. Regularly reviewing vendor contracts, consolidating vendors, and negotiating better terms helps reduce cost and overhead for the organization.
Why Auditoria and Workday?
Workday and Auditoria offer the first platform to combine data with the Accounts Payable mailbox. The solution suite offers end-to-end automation for the following use cases:
- Answering Vendor Payment Inquiries
- Completing requests for Remittance Advice
- Digitizing incoming Invoices
- Answering PO funding status inquiries
- Reaching out to Suppliers for month end accruals estimates
- Creating, posting, and reversing Supplier Expense Accrual Journals
- Generating responses to audit inquiries
Implementing a robust vendor management strategy could lead to better pricing, discounts, and more favorable payment terms.
Workday Financial Management data is combined with other data sources like the AP mailbox to provide SmartBots with a full view of the world similar to an entry level team member. With that data and years of “experience” handling AP business processes, the Workday Auditoria AP Automation Bundle is a no-code, quick to implement solution.
source: According to the Bureau of Labor Statistics (BLS), in 2020, the average cost of benefits per employee hour worked for private industry employers in the United States was $12.63. This includes both the employer's share of costs for various benefits such as health insurance, retirement benefits, paid time off, and legally required benefits such as Social Security and Medicare.