Benefits of Automated Payment Processing In Manufacturing
Manufacturers can gain a host of benefits by automating payment processes, including a more cost-efficient and productive business model. Here are just a few of the ways automated payment processing can improve the bottom line for all manufacturing operations:
Improved cost control
The products you manufacture and the materials and systems associated with those items involve business costs, which dictate your potential profitability. Though you may be able to negotiate the costs of raw materials and labor to some extent, there are typically limits on how much expenses can be reduced, without sacrificing product and service quality. You can overcome such hurdles to profitability by proactively optimizing the costs associated with payment processing, through automation. In one study conducted by The Institute of Financial Operations, 35 percent of business respondents said they employ between five to 10 full-time employees primarily tasked to manually perform basic payment functions like matching and entering invoices into an accounts payable system. With automated payment processing systems, redundant and time-consuming tasks prone to human error, like data entry are automated; your accounting staff can focus their outputs on the needs that directly contribute to your business’s financial health.
Reduced time delays
Regardless of the size of your manufacturing business or what you produce, your business model can become more profitable with processes founded on Lean Six Sigma simplicity. Consider one such lean principle developed by lean pioneer Taiichi Ohno, known as “the seven wastes” that manufacturers face: Overproduction relative to demand, waiting and delays associated with the next step in processing, unnecessary transport, over processing due to poor system design, excess inventory, unproductive actions performed by employees, and the production of defective parts. While the wastes refer specifically to the physical processes of manufacturing, many are equally applicable and detrimental to payment processes, and the cost implications inefficiency presents. With automated payment processing, your accounting teams can electronically track and capture invoice receipt, account status, securing necessary approvals electronically, and establish an optimized cadence for issuance of payment based on projected demand, accounts receivables and cash flow at any given time.
Reduced hard costs associated with paper waste
Automated payment processing systems allow functions like invoice matching, and image capture to take place in an electronic environment — for a reduction of the hard costs associated with wasted paper, and printing supplies. The cost of such waste may not appear to be significant to your bottom line, but consider the cost that paper waste presents, beyond out of pocket expense: Reduce.org estimates that a $5 ream of paper actually costs a business more than $150 additional expenses like printing, hard copy storage and disposal. By eliminating just some of that waste through automated payment processing, your business can invest the money saved into business functions that contribute to growth and longer term strategic goals.
Improved service levels
Relationship management is a critical aspect of your ability to realize a competitive advantage as a manufacturer. Without reliable and positive partnerships with vendors and suppliers, your business is vulnerable to many threats — including, loss of access to materials and product, and the inability to source products at a competitive price that allows for your own profitability, while appropriately meeting demand. Automating your payment processing systems ensure your critical suppliers are provided with the levels of service needed for the continued health of the business relationships that ultimately dictate your ability to serve your end users.
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