Control Cash Flow

Are You Ready to Automate Payables and Payroll?

Are You Ready to Automate Payables and Payroll?

Although managing payables and payroll in-house might seem like a logical choice, it can take a surprising toll on your business’s efficiency. Streamlining operations can free up resources for high-value tasks and enhance results. Before you decide to automate, however, ask yourself the following questions:


1. Are you missing out on critical information? Without the quantifiable insight into cash flow and cash management that automated systems provide, you and your bookkeeper or accountant may struggle to effectively manage and forecast the company’s cash position. As a result, business leaders may not have the information necessary to make decisions. In addition, manual systems often cause businesses to overlook the opportunity for early payment discounts.

2. Have you analyzed how you operate? Used in isolation, automated systems can save businesses an average of 51 percent for each payment processed.But taking advantage of technology to speed up a process can do only so much good if the process itself is flawed. Taking a step back to evaluate how tasks are performed can lead to dramatic performance improvements that the right technology can then optimize.

A good historical example of these efforts is Ford Motor Company, which began automating processes as early as the 1980s. The automaker revamped its goods acquisition process and—in conjunction with database automation— reduced headcount in its payables department by 75 percent and improved accuracy. Ford achieved these gains by looking at the process from a cross-functional perspective, rather than focusing on a specific department or task.2 While a small business will not have the same experience as Ford, it’s always a good idea to evaluate the effectiveness and efficiency of your processes.


1. Have you estimated the true cost of doing it yourself? One in three small businesses reports spending more than 80 hours a year administrating federal tax paperwork, and more than one-quarter shell out more than $10,000 handling this task.3 That’s two weeks of the year and a hefty bill—and this doesn’t cover all of the other aspects of payroll management, such as time spent cutting, signing and distributing checks and answering employee questions. Automating accounts payable invoicing can cut processing costs by as much as 80 percent through a number of ways: reducing manual errors, eliminating paper and avoiding duplicate payments, among others.4, 5

2. Could paper checks be taking a toll? More than 80 percent of workers in the U.S. are currently paid via direct deposit, up from 74 percent in 2011.6 It’s no wonder: A company can save between $2.87 and $3.15 per check when using direct deposit, which reduces processing costs and fees associated with lost checks.7 In addition to cost savings, paying employees by direct deposit eliminates the risk of altered or counterfeited paper checks. And with direct deposit, a business’s account number remains confidential and cannot be compromised.

Tip: For employees without bank accounts, employers should investigate the option of payroll cards so they can eliminate paper checks.

Want to learn more about boosting efficiency?

See how our Small Business Best Practices Guide can help you and your business.

1 “Reap The Benefits Of Invoice Excellence With AP Automation,” February 2016, Aberdeen Group

2 “Reengineering Work: Don’t Automate, Obliterate,” July-August 1990, Harvard Business Review

3 “NSBA 2015 Small Business Taxation Survey,” April 2015, National Small Business Association

4 “How to Instantly Boost Profitability with Invoice Automation,” Nov. 19, 2015, Logistics Management

5 “10 Ways Workflow Automation Cuts Invoice Processing Costs,” Aug. 3, 2016, Pyrus Blog

“New NACHA Survey Shows Adoption and Awareness of Direct Deposit via ACH Continues to Build,” April 18, 2016, NACHA

7 “Benefits of Direct Deposit to Employers and Employees,” Sept. 9, 2015, Paychex

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