5 Benefits of AP Automation for CPG

LearnJanuary 17, 20246 min read
Caroline Lu, Product Marketing Manager

AP automation offers numerous benefits for the consumer packaged goods (CPG) industry. By automating the accounts payable process, CPG companies can streamline their operations, improve payment accuracy and vendor relationships, and by doing so, maybe even negotiate for vendor discounts.

Additionally, AP automation provides better visibility and control over financial processes. CPG companies can easily track and monitor invoices, payments, and expenses in real time to help make informed decisions about spend and cash flow.

To learn more about how AP automation can transform your business and allow you more time to focus on more strategic tasks and improve overall productivity, continue reading the rest of the article.

Centralizing your CPG brand's AP Workflows

AP automation allows businesses to create an automated vendor database, which centralizes vendor management and facilitates payment recording. It enables easy identification of the contact person for each vendor and provides visibility into the amount paid to each vendor within a specific time frame. Meanwhile, digitizing invoice processing eliminates the need for sorting, organizing, and filing paper documents or sorting through drives for files and invoices, making it easier to locate and track invoices. Having all your vendor invoices and payments organized and tracked in one place also allows your team to avoid missing payments and duplicating payments. AP automation also streamlines routing and approval processes by automatically routing invoices to relevant approvers, reducing delays and improving efficiency.

Achieving cost and time savings with AP Automation in CPG

AP automation brings significant time and cost savings for CPG companies by reducing manual processes, avoiding late payment fees, and improving cash flow management. By automating invoice capture, errors caused by manual data entry can be eliminated, improving efficiency and accuracy. This also saves your team's time, allowing them to focus on activities that require human interaction. Per a report by Kofax, companies using digital payables platforms can 73% faster processing cycle times and 81% lower processing costs.

Eliminating manual work

No one wants to spend more time manually typing in invoice data, which is where the "automation" in "AP automation" really comes in. By leveraging advanced technologies such as optical character recognition (OCR) and intelligent data extraction, AP automation tools can eliminate the time-consuming and error-prone task of manual entry.

By reducing the risk of human error, teams can also ensure data integrity and improve overall data quality. This is particularly crucial so you're not accidentally paying the wrong vendor or overpaying invoices.

Reducing fraudulent payments and overspend

If you're also expanding your AP automation strategy to include purchase orders, then another benefit is 3-way matching. With automation software, businesses can easily match invoices with purchase orders and receipts, reducing errors and discrepancies. This not only improves accuracy and prevents overspend and fraudulent invoices but also speeds up the payment process (since you don't need to manually compare three documents), ensuring that suppliers are paid on time.

Enhanced Visibility and Improved Collaboration

AP automation also improves cross-functional visibility and data transparency by centralizing vendor, invoice, and payment data and integrating with accounting systems like Quickbooks and NetSuite to automatically import and export relevant information. Teams can know the status of every invoice and payment and get real-time reporting of key financial metrics, enabling accountants and business leaders to easily see the financial picture of their company.

AP automation tools can also facilitate real-time collaboration of the different team members of the AP cycle. With automated workflows and routing capabilities, invoices can be directed to the appropriate individuals for authorization based on various criteria such as invoice amount, department, etc. Team members can also check to see where the bottlenecks are in the approval chain to help unblock approvals and payments.

Strengthening CPG Vendor Relationships with AP Automation

It's no secret that CPG brands can't exist without the inventory and services that their vendors provide, which makes paying them how they want and on time even more crucial. AP automation provides flexible payment options such as ACH, paper checks, and domestic and international wires so you can pay multiple vendors with different payment needs and allows them to track payments within the system.

Plus, with faster invoice processing comes timely vendor payments. Timely payments not only foster trust and strengthen connections with suppliers, which in turn can lead to better service and on-time deliveries but also allow businesses to take advantage of early payment discounts or negotiate pricing down the road.

How to start automating AP for your CPG brand

To embark on the AP automation journey, it is crucial to understand the key steps involved. By following these simple steps, you can take a proactive approach to embrace technology and start reaping all the benefits of AP automation previously mentioned.

  1. Assess your current AP workflow: Before diving into automation, it's essential to understand your current AP workflow. Identify pain points, bottlenecks, and areas prone to errors. Do you need faster ACH payments? Tailored user permissions for different team members? More granular payment approval rules? Assessing your existing processes will help you find and tailor automation solutions to address specific needs and challenges.
  2. Choose the right AP automation software: There are various AP automation tools available in the market, ranging from invoice processing software to integrated ERP systems. Consider your budget, the size of your CPG brand, and the complexity of your AP processes when selecting the right tools. Look for features that fit your CPG brand's AP needs (see #1: Assess your current AP workflow) such as invoice scanning (OCR), workflow automation, purchase orders, and integration capabilities.
  3. Integrate with accounting systems: For a seamless AP automation experience, integrate your chosen tools with your existing accounting systems (Quickbooks, NetSuite, etc). Integration facilitates real-time data synchronization, allowing for accurate financial reporting and analysis. It also eliminates the need for manual data entry across multiple systems.
  4. Provide training and support: Once you've implemented AP automation tools, ensure that your team is adequately trained to use them. Offer ongoing support to address any issues or questions that may arise. A well-trained team is essential for maximizing the benefits of automation and ensuring a smooth transition.
  5. Monitor and optimize: Continuous improvement is key to the success of any automation initiative. Regularly monitor your automated AP processes and gather feedback from users. Identify areas for optimization and updates (for example, maybe you need to start paying foreign vendors involving different currencies or need to defer payments due to inventory and cash flow gaps) to keep your automation strategy aligned with the evolving needs of your CPG brand.

Get AP Automation tailor-made for CPG with Settle

Settle's AP Automation was purposely built for CPG brands - with an all-in-one platform designed for all things payments, you can easily pay vendors, and manage purchase orders and invoices. You can also customize Settle's AP workflows to your needs with custom roles and approvals and get a bird's eye view of your cash flow with our cash outflow and AP Aging graphs. For businesses that qualify, you can also defer vendor payments with Settle Working Capital’s founder-friendly, non-dilutive financing for inventory, marketing, and so much more. Get started for free at settle.com.

SharePlatform iconPlatform iconPlatform icon

Subscribe to our newsletter


OR

Recommended Articles

What Are Net Terms?
Learn4 min read

What Are Net Terms?

Making use of net terms can enable both buyers and vendors to increase their profitability and sales dramatically. This is what net terms are.

Settle Spotlight Series: Q&A with Vividly
Learn9 min read

Settle Spotlight Series: Q&A with Vividly

We sit down to chat with Alyshah Walji from Vividly, a trade promotion management (TPM) software built by and for the consumer packaged goods industry.

What is the Cash Conversion Cycle?
Learn6 min read

What is the Cash Conversion Cycle?

A company’s cash conversion cycle can speak volumes about its operational efficiency and financial stability. It can also determine whether people get paid on time.

Accounts Receivable Factoring 101
Learn4 min read

Accounts Receivable Factoring 101

Accounts receivable factoring can help companies can improve their financial stability and cash flow. We’ll explain what it is and how it's beneficial in our guide.

How to Create an Invoice
Learn6 min read

How to Create an Invoice

Creating invoices can be tedious, especially for new businesses processing everything manually. Learn how to create invoices effectively and efficiently with this detailed guide.

Settle Spotlight Series: Q&A with SourceMedium
Learn14 min read

Settle Spotlight Series: Q&A with SourceMedium

In this month’s Settle Spotlight Series, we chatted with Will Holtz from SourceMedium about how interconnected data can be a superpower for brands in hyperscale mode.

Why Supply Chain Visibility Matters and How to Achieve It
Learn5 min read

Why Supply Chain Visibility Matters and How to Achieve It

Improving supply chain visibility is becoming a priority for many companies, as it’s essential for streamlining operations, boosting efficiency, and maintaining strong customer satisfaction for consumer brands.

Do I Need an ERP to Manage My Supply Chain?
Learn4 min read

Do I Need an ERP to Manage My Supply Chain?

Effectively managing a supply chain is essential for any consumer brand working with a network of suppliers, distributors, and partners. If you're considering an ERP for your business, here are some key factors to evaluate to ensure it meets your supply chain needs.

The 2024 Settle Staff Picks Holiday Gift Guide
Learn2 min read

The 2024 Settle Staff Picks Holiday Gift Guide

Do you really need another gift guide this time of year? Our Settle team spends so much time obsessing over our customer brands, that the right answer is obviously yes. We have compiled the inaugural Settle Staff Picks Holiday Gift Guide, with the most fire small brands out there. So read on for ideas from stocking stuffers to travel accessories – for everyone on your list. And join us in shopping small this holiday. 

Settle 2023 Product Wrap
New Feature3 min read

Settle 2023 Product Wrap

A year in review of Settle's product releases that make running CPG brands easier.

Your purchasing process. Made simple.
New Feature2 min read

Your purchasing process. Made simple.

We brought simplicity to bill pay. Now we’re bringing it to the purchasing process, with end-to-end support that takes a load off your plate.

Invoice vs. Receipt: What's the Difference?
Learn6 min read

Invoice vs. Receipt: What's the Difference?

Invoices and receipts are similar in concept, but differ in the details. Here’s what differentiates invoices from receipts, and why it’s important to understand.

The CPG Guide to Managing Tariff Uncertainty
Learn2 min read

The CPG Guide to Managing Tariff Uncertainty

Proper planning is key to protecting profit in times of tariff uncertainty. With potential plans to impose a 60% tariff on Chinese goods and a 10% to 20% tariff on other imported goods, many CPG brands are taking 4 key steps now so they don’t get a shock to their COGs.

What is an A/P Aging Report?
Learn6 min read

What is an A/P Aging Report?

The Accounts Payable Aging Report is an essential tool for businesses with a large number of accounts payable to track. Here’s a general breakdown of A/P Aging Reports.

What Are the Consequences of Equity Dilution?
Learn5 min read

What Are the Consequences of Equity Dilution?

Equity dilution can be a very concerning process for shareholders who are unfamiliar with its consequences. This is how to avoid equity dilution and keep stocks healthy.

What is the Accounts Payable Process?
Learn4 min read

What is the Accounts Payable Process?

Accounts payable (AP) refers to all the payments that a business owes its suppliers and creditors. Neglecting your accounts payable process can lead to production and supply issues.

Black Friday CPG Prep Checklist
Learn6 min read

Black Friday CPG Prep Checklist

Black Friday sets the tone for your business’ holiday season. Start early on forecasting demand, devising marketing strategies, and preparing your site.

How to Evaluate Accounting Firms
Learn7 min read

How to Evaluate Accounting Firms

Figuring how to find the right accounting firm for your company can be difficult. Here’s how to choose the best accounting firm for any business.

A Guide To Inventory Management for CPG
Learn6 min read

A Guide To Inventory Management for CPG

Learning to navigate inventory management can be a tricky part of growing your brand. Check out our guide to inventory management to find out more about it.

Non-Dilutive Funding Guide for CPG Brands
Learn7 min read

Non-Dilutive Funding Guide for CPG Brands

A popular source of funding is financing from angel investors and VCs. Yet many companies fail to recognise non-dilutive funding — where no ownership is lost.

Navigating Distribution And Retail Margins for CPG Brands
Learn8 min read

Navigating Distribution And Retail Margins for CPG Brands

For emerging CPG brands, navigating challenges like supply chain disruptions and retail changes underscores the critical importance of understanding and managing retailer and distributor margins, as it directly impacts profitability and success in the industry.

How to Find a CPG Distribution Partner
Learn5 min read

How to Find a CPG Distribution Partner

Partnering with the right distributor is arguably one of the most essential tasks for a retail company. Find out what to look for in distribution partners and how to source them.

Accounts Payable vs. Accounts Receivable
Learn5 min read

Accounts Payable vs. Accounts Receivable

Understanding accounts payable and accounts receivable is an essential part of business workflow. So how do they differ? Learn more about them in this guide.

An Introduction to Cash Flow Forecasting
Learn6 min read

An Introduction to Cash Flow Forecasting

A company’s ability to make a cash flow forecast is essential in the world of modern business. Here is everything you need to know about cash flow forecasting.

What Is Amazon FBA and Is It Right For You?
Learn7 min read

What Is Amazon FBA and Is It Right For You?

Using Amazon FBA is a great way for companies to expand their scalability and fulfillment abilities. Here is how it works, and how businesses can benefit from it.

How Long Does a Wire Transfer Take
Learn7 min read

How Long Does a Wire Transfer Take

Wire transfers can be the quickest method of exchanging funds. Knowing how long it takes can help determine whether wire transfer is the best solution.

Guide: The ABCs of cashflow
Learn2 min read

Guide: The ABCs of cashflow

We put our heads together with the folks at IndieCPG to create a guide to the basics of cashflow for new (and maybe even not-so-new) founders.

Settle blog

Insights in your inbox

Join our newsletter and never miss an update on Settle's latest features and industry trends.