A study performed by PayStream Advisors, Inc. revealed “healthcare payment cycles are ten times less efficient, and decidedly more complex than payment processes found in virtually any other industry.” The reason behind this is that many organizations are using paper-based systems, requiring more time and other resources to get the job done. This means that more employees are required to manually complete the process; whereas with AP automation software deployed, the software essentially does the work for you—enabling more attention on supporting the organization’s overall business objectives.
Benefits of AP Automation in the healthcare industry: As cited by an APQC survey conducted in April 2010, “Senior finance executives believe it’s worthwhile to confront the paper-clogged nature of financial transaction processing. About two-thirds of survey respondents said they were deploying or planning to deploy innovative technology solutions aimed at reducing the amount of paper moving through their payables and/or receivables processes.” While CFOs, AP managers and controllers are all investing in automating their companies’ AR systems, the number of healthcare organizations deciding to invest in AP automation is no exception. Healthcare organization executives are seeking out opportunities to make cost-saving improvements in their processes and be in a position to positively contribute to the company’s bottom line. Today, forward thinking healthcare organizations are taking full advantage of pre-payment discounts and focusing on reducing expenses incurred from a late payment penalty or unforeseen audit. Although the AP department is not directly contributing to patient satisfaction scores, the team does contribute to the overall brand reputation.
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As the PayStream Advisors, Inc. study reports, 42 percent of CFO’s said “the ability to get rid of the paper-based system in the AP department was vital to their cash management SOP.” These factors all make compelling reasons why you should switch to an automated AP system, clearly impacting the overall benefit of any healthcare organization.
AP automation decreases labor costs: Is your organization wasting time and resources by retrieving invoices that are stored in physical files – potentially in offsite locations? Switching your healthcare organization to AP automation software enables users to minimize time-consuming tasks such as sorting through papers and performing data entry tasks. Since labor typically represents two-thirds of the cost of running financial processes—and 67 percent of the total process cost specifically for accounts payable—you’ll be able to save significantly on labor costs by cutting out these cost prohibitive procedures.
Don’t miss out on valuable discounts: Another benefit of using AP automation is the capability to speed up the payment process, allowing for more on-time payments—which means less late-payment penalty fees and more early payment discounts. Using a disorganized paper system increases the chances of misplacing paper invoices and increases the time to find old invoices—resulting in costly missed opportunities for your organization to gain discounts.
In summary, the more manual processes your healthcare organization’s AP system requires,the more employees you’ll need; putting a drain not only on your limited workforce, but also your budget. By implementing a more efficient automated system for AP, more of your resources can be directed to the patient and focused on what really matters: improving patient care and increasing patient satisfaction scores across the board.
