Manufacturing companies make many purchases of inventory parts used in production that are recorded as accounts payable when receiving credit terms. They also buy supplies and services to operate their business. Manufacturers experience expensive production delays when required parts aren’t available on time for scheduled production. These delays can result from disruptions in the supply chain and from supplier order shipment cutoffs due to late payments.
Manufacturing accounts payable automation software helps these companies process invoices on time, efficiently pay global suppliers using mass payments, and achieve other benefits, such as reducing hiring needs and improving supplier relationships.
What is Manufacturing Accounts Payable Automation?
Manufacturing accounts payable automation is the use of AI-driven, automated software to streamline workflows for payables processes and eliminate manual data entry in the invoice processing cycle of manufacturing companies. AP automation includes supplier onboarding, invoice data capture, verification, account coding, matching, payment approval, global mass payments, and payment reconciliation.
The AP automation software can be used for manufacturing and wholesale solutions and has ERP integration or accounting software integration.
Benefits of AP Automation for Manufacturing Businesses
Benefits of AP automation for manufacturing businesses include:
- Saving time with supplier onboarding and automating payment status
- Eliminating manual processes and data entry with electronic invoices
- Validating suppliers for fraud reduction and detecting invoice errors automatically
- Automating 2-way or 3-way matching of invoices with POs and receivers
- Guiding approvals with communications and supporting document views
- Taking early payment discounts and avoiding shipment holds
- Simplifying global payments
- Automatically reconciling mass payment batches
- Automating global regulatory compliance and tax compliance reports
- Viewing multi-entity payables by entity and total corporation
- Gaining real-time insights with dashboard metrics and payables business intelligence
- Improving cash flow visibility, spend management, and profitability
1 – Saving Time with Supplier Onboarding and Automating Payment Status
A self-service supplier onboarding portal guides suppliers to accurately enter their contact information, preferred payment method, and banking or other payment details. Suppliers must enter their W-9 or W-8 forms data before receiving the first payment. This supplier portal will display the history of invoices and payments for invoice management and supplier invoice receipt, approval, and payment status. These capabilities result in much less time spent by your AP staff.
2 – Eliminating Manual Processes and Data Entry with Electronic Invoices
AP automation in manufacturing lets your company achieve digital transformation, eliminating the need for time-consuming paper invoices and related documents. Manufacturing accounts payable automation lets your company avoid bottlenecks by streamlining payables processes and reducing manual tasks.
As an automated process, AP automation software accepts supplier invoices by email, supplier portal upload, or data capture using artificial intelligence/machine learning-driven OCR technology. It records accounts payable for manufacturing companies and automates invoice processing steps in the AP process.
3 – Validating Suppliers for Fraud Reduction and Detecting Invoice Errors Automatically
AP automation software used by manufacturing companies automatically validates supplier TIN numbers. Tipalti AP automation software uses 26,000+ rules to detect and avoid invoice payment errors. It reduces errors by 66%.
4 – Automating 2-way or 3-way Matching of Invoices with POs and Receivers
To further verify invoices for accuracy and only pay amounts after the receipt of goods, AP automation software matches invoices with electronic POs and receiving reports for 3-way matching. If the purchase transaction only requires a 2-way match with a purchase order, that is used as the matching technique.
5 – Guiding Approvals with Communications and Supporting Document Views
Your manufacturing business can get invoice approvals faster without losing paper documents with the automatic routing of electronic guided approvals. Approvers receive emails requesting their invoice payment approvals, accompanied by electronic documents. With Tipalti, they can also approve invoices with Slack messages.
6 – Taking Early Payment Discounts and Avoiding Shipment Holds
When companies pay invoices early enough to meet vendor invoice payment terms, they can take lucrative supplier early payment discounts to significantly reduce costs. Companies keep their inventory supply flowing without experiencing shipment cut-off delays from suppliers from overdue payments.
7 – Simplifying Global Payments
AP automation for manufacturing companies makes global payments efficient. It enables global mass payments to 196 countries with a choice of 120 currencies and payment methods. Currency exchange is easy, with optional advanced FX features (Tipalti Multi-FX and Tipalti FX Hedging) offering live currency exchange rates, hedging of accounts payable transactions, and a centralized virtual payment account that takes the place of an international regional bank network. With a choice of payment methods, you can make your global payments more cost-effective than using expensive international wire transfers for all cross-border payment transactions.
8 – Automatically Reconciling Mass Payment Batches
Getting automated payment reconciliations for large batches with up to thousands of invoices and multiple payment methods saves your company significant time and can accelerate your monthly close by 25%.
9 – Automating Global Regulatory Compliance and Tax Compliance Reports
With AP automation software, your manufacturing business will have its suppliers screened against an OFAC sanctions list and other blacklists. Payments will comply with global regulations.
Tipalti AP automation software automatically prepares tax compliance preparation reports for 1099-MISC, 1099-NEC, and 1042-S IRS forms. Your business can optionally buy a SaaS subscription to partnered Tax1099 software, Tax1099 has Tipalti integration, letting you automatically eFile 1099-MISC and 1099-NEC reports using 12 calendar months of imported Tipalti payment data.
10 – Viewing Multi-Entity Payables by Entity and Total Corporation
When you use a multi-entity ERP or accounting software with Tipalti integration, you’ll be able to use advanced multi-entity Tipalti features that let you automate and view payables, spend, and cash flow requirements by each business entity and combined for the entire corporation, with one unified AP automation platform.
11 – Gaining Real-time Insights with Dashboard Metrics and Payables Business Intelligence
Tipalti AP automation for manufacturing provides near real-time dashboard metrics with trends and Tipalti Pi business intelligence engine that’s AI-driven. Tipalti Pi, a virtual digital assistant, integrates with ChatGPT and provides other AI features for business intelligence. You can Ask Pi questions to gain insight into your company’s business spend and payables and get automated GL account coding of invoices.
12 – Improving Cash Flow Visibility, Spend Management, and Profitability
AP automation software gives your manufacturing company better cash flow visibility, helps you control business spend, and improves profitability and gross margin. With AP software for manufacturing automation, your company will achieve cost savings, including taking more supplier-offered early payment discounts on time and hiring fewer finance and accounts payable team members.
How are other manufacturers solving their supplier payment challenges?
Customer testimonials and a global AP automation checklist for Tipalti product solutions are presented here for AP automation, employee expense reimbursements, global payments, and supplier and PO management products.
What Types of Manufacturing Businesses Can Use AP Automation?
All types of manufacturing businesses, using different manufacturing processes, can use AP automation software to streamline payables processes, reduce human errors and fraud risk, and achieve compliance, while saving time and reducing costs. AP automation software has integration with your ERP or accounting software.
Tipalti Manufacturing AP Automation Case Studies
Zipline and T3 Micro are Tipalti manufacturing customers providing testimonials as users of its AP automation software. Excerpts from their Tipalti case studies follow.
Zipline-Tipalti Manufacturing AP Automation Software Case Study
Zipline, a manufacturer, logistics network, and healthcare services company using drone delivery, has been a Tipalti AP automation customer since 2019. Zipline integrates Tipalti with NetSuite ERP.
With Tipalti AP automation software, Zipline:
- Scaled globally for business growth
- Increased spend management and visibility
- Improved purchase order matching with its Tipalti/NetSuite ERP integration
Zipline has achieved significant efficiency and reduced hiring benefits from using Tipalti AP automation software, achieving cost-reduction.
Before Tipalti, our finance team was working 70 hours a week on AP. Now, that’s down significantly with half the staff needed. It’s a huge reduction in both cost and time.
—David Wong, Head of Finance at Zipline
T3 Micro-Tipalti Manufacturing AP Automation Case Study
T3 Micro is a manufacturer and wholesaler of hair styling tools in the beauty industry. T3 has been a Tipalti AP automation software customer since 2019.
T3 Micro achieved these results from Tipalti AP automation:
- Avoided the need for more hiring in the finance/AP department
- Reduced manual work by 50%
- Streamlined international payments in multiple currencies
Tipalti was a godsend for us. Everything’s done on your phone and email—you just click approve, and you’re done. We never miss a payment, we are never late. Payments is a seamless process for us.
—Amanda Afeiche, VP of Finance & Administration at T3 Micro
Why Make the Leap to Manufacturing Accounts Payable Automation?
Make the leap to manufacturing accounts payable automation to digitally transform your payables processes from manual to electronic, onboard and validate suppliers, streamline workflow and automate invoice processing, including capturing, verifying, and matching invoices, getting approvals, making global mass payments, and automating payment reconciliation. With AP automation, your company will need fewer hires, can save 80% of payables processing time, and can switch finance team focus to projects with more strategic finance benefits.
Integrate Your Manufacturing ERP System with Tipalti
Tipalti automation software integrates with your manufacturing ERP system and with all ERP systems and accounting software used in a wide variety of industries.
Examples of ERP and accounting systems (by company size) used by manufacturing companies are:
Large Enterprise ERP Integrations
Tipalti integrates with top-end Oracle ERP and SAP S/4 HANA, which are unified enterprise resource planning systems used by the largest enterprises and growing mid-sized companies needing a scalable AP automation solution.
ERP Integrations for Medium-Sized Companies
Oracle NetSuite ERP, Microsoft Dynamics 365 and Business Central, Infor/Infor Cloud Industrial (Syteline), Acumatica, Sage Accounting, IQMS (formerly DELMIAworks), and Kinetic (formerly Epicor ERP) are some ERP systems used by mid-sized companies that seamlessly integrate with Tipalti AP/finance automation software.
Small Business Accounting Software Integrations
Tipalti AP automation software integrates with QuickBooks Online, Xero, Sage Intacct, SAP Business One, E2 ERP, Genius ERP, and other accounting software for small businesses. Some of these systems also serve mid-sized companies.
The Importance of AP Automation in the Manufacturing Industry
AP automation is important in the manufacturing industry because it results in cost savings, more efficiency, faster approval process and payments of supplier invoices, reduced errors and fraud risk, and better supplier relationships, inventory flow, and production timeliness. AP automation software reduces AP team frustration and the need for hiring more staff.
Manufacturing Accounts Payable Automation FAQs
Some frequently asked questions (FAQs) with answers about manufacturing accounts payable automation follow.
What is the accounts payable process in manufacturing?
The accounts payable process in manufacturing onboards suppliers and vendors selling parts and supplies for product manufacturing and business operations, processes supplier invoices for payments, and makes global payments in large batches.
AP automation:
- Makes payables and payment processes much more efficient
- Increases financial controls to reduce errors and fraud risk
- Simplifies global and tax compliance
- Automates payment reconciliation
- Offers advanced FX(foreign exchange) and hedging solutions for cross-border payables
What manufacturing tasks can be automated?
Many manufacturing tasks can be automated with your ERP system and add-on software, including master planning, bill of materials, production scheduling, real-time IoT/smart shop discrepancy control notifications, and accounts payable.
Tipalti handles accounts payable processes, providing automated add-on AP automation, global mass payments, procurement management, employee expense reimbursement software, and controlled spending cards.
How can I learn more about Tipalti as my AP automation solution?
To learn more about Tipalti as your company’s AP automation solution, get started with a demo.
Conclusion
To be competitive, manufacturing companies must achieve the advantages offered by multi-entity accounts payable automation, global mass payments, and advanced FX software for processing and paying their global supplier invoices.
To see an overview of the features and benefits of Tipalti’s AP automation solution for your manufacturing company, continue reading.
