Seamless Payments: The Power of AP Automation in Auto Dealerships

Did you know that one of the biggest burdens for modern-day accounts payable (AP) teams is damaged vendor relationships? Forty percent of contributors to 2024 research by the Institute of Financial Operations & Leadership (IFOL) said this was their second biggest concern, just behind poor processes in their AP departments. 

These burdens are closely related, because when bottlenecks occur from poor AP processes, it can result in vendors getting paid late. This trickle-down effect results in damaged vendor relationships. 

Accounts payable automation is a technology solution that changes the way an AP team operates. It's so beneficial that businesses choosing to automate have experienced seamless integration with existing DMS platforms—along with 81% lower processing costs and 73% faster processing cycle times in their cloud-based AP automation operations.

Auto dealerships, like all businesses, can capitalize on AP automation, and this article will describe just how powerful an automation solution can be in regard to invoice and payment processing.

The State of AP Operations and Payments in Dealerships

In many auto dealerships, manual accounts payable processes are a major source of inefficiency and frustration. When invoices need to be manually keyed into systems, there's potential  that mistakes will lead to additional time spent on corrections, eventually delaying payments and straining vendor relationships. 

Short-staffed AP teams add to the problem. When fewer employees are available to handle large invoice volumes, the workload can become unmanageable and the chances of errors, delays, and burnout escalate. The consequences of this also include giving away labor hours that could be better spent doing other tasks like handling customer relationships or improving sales strategies.

When AP operations rely heavily on manual processes, security risks are also a significant concern. Lack of automation leaves room for fraudulent activities, whether from intercepted invoices or unauthorized access to payment information. Without adequate controls and transparency, businesses are at higher risk of financial loss and sensitive data becomes more vulnerable to misuse.

Late payments are one of the most significant issues that arise from manual AP processes. Inefficiencies across the invoice cycle cause this and vendors end up experiencing long wait times for payments. Months of payment delays can lead to strained vendor relationships, eroded trust, and missed opportunities in the dealership for early payment discounts or cash rebates.

How AP Automation Improves Invoice and Payment Processing

AP automation is a revolutionary data technology for auto dealerships looking to optimize their payment processing systems. The shift to automation eliminates much of the manual labor involved in AP tasks and replaces it with streamlined, error-free processes. With automation, data is extracted from invoices through optical character recognition (OCR) and entered directly into the system. The result is fewer transaction errors, faster payment processing, and a smoother experience for both the dealership and its vendors.

Additionally, AP automation helps businesses capture early payment discounts and cash rebates, which is especially valuable for auto dealerships that deal with large volumes of transactions. By paying invoices earlier, dealerships can access these financial incentives, ultimately saving money and improving cash flow. 

Improved communication between dealerships and vendors is another key advantage of AP automation. Automated systems provide real-time updates on invoice statuses so vendors no longer have to call repeatedly to check on their payments. With self-service portals available, vendors can view payment histories, track invoice statuses, and reach out for assistance when needed. The resulting transparency helps build stronger relationships and improves vendor satisfaction, reducing frustration and the number of inquiries AP teams must handle.

Another critical benefit of AP automation is the reduction in labor costs. With manual processes eliminated, fewer resources are required to process invoices and handle payment approval workflows. With more time available, AP teams can focus on more strategic tasks that add value to the business, rather than getting bogged down by repetitive manual tasks. 

Payment Method Options with an AP Automation Solution

A common concern that dealerships have when considering AP automation is how it will impact their payment methods. Fortunately, AP automation solutions are versatile enough to accommodate a wide range of payment options, including checks, wire transfers, EFTs, corporate credit cards, and virtual credit cards.

For dealerships that still rely on traditional checks, automation doesn't mean they have to immediately abandon this method, as they can still approve checks seamlessly. Instead, AP automation allows dealerships to issue checks while still reaping other benefits of automation, such as improved visibility and communication. Vendors receiving paper checks can still track their payment status online, view payment histories, and reach out to the dealership for any questions or concerns as needed.

Virtual credit cards are also an increasingly popular payment method for AP automation. By using virtual credit cards, dealerships can take advantage of rewards and cash rebates while also streamlining payment processes. These cards also offer added security, as they provide a one-time use number for each transaction, effectively eliminating the risk of fraud. 

Add AP Automation to Your Dealership Operations in 5 Steps

Implementing an AP automation solution in your dealership doesn’t have to be a complicated process. With the right approach, you can streamline your accounts payable workflows and see immediate benefits. Here are 5 steps to help you successfully vet, choose, and onboard an AP automation provider:

1). Assess Your Current AP Operation and Its Pain Points

Before you start searching for an AP automation solution, take a step back and evaluate AP operations in your dealership. Identify the specific challenges your dealership faces, such as delayed payments, approval bottlenecks, or manual data entry errors. Understanding these pain points will help you determine what features you need from an AP automation solution, ensuring a better fit with your operational needs.

2). Research and Compare Automation Providers

Start by researching AP automation providers that specialize in AP automation for dealerships. Look for solutions with experience in your industry and a track record of success. Pay attention to their range of services, customer reviews, and case studies. Key features to consider include payment processing speed, security measures, compatibility with your DMS or accounting system, and the types of payment methods they can support (e.g., checks, wire transfers, and virtual credit cards).

3). Request Demos and Test the Software

Once you've narrowed down your options, request demos from the providers you’re interested in to get a firsthand look at how their platform works and whether it integrates well with your dealership’s existing software. Demos should be free and put you under no binding obligation. During the demo, gather your stakeholders and evaluate the user interface, reporting features, and the ease of setting up and managing workflows. It's essential that the system is intuitive and user-friendly for your AP team or you’ll risk adoption and integration issues after onboarding the solution.

4). Evaluate Customer Support and Training Resources

Choose a provider that offers robust customer support and training resources to your managers, team, and vendors. An AP automation system is an investment, and you’ll want to ensure your team has the support they need during the onboarding process and beyond. Check if the provider offers 24/7 support, online tutorials, training sessions, and troubleshooting assistance. Strong customer service can make all the difference when it comes to successfully implementing and utilizing an automation system.

5). Negotiate Pricing and Finalize the Contract

Once you’ve chosen a provider that meets your needs, the next step is to discuss pricing and finalize the contract. Be sure to review the costs associated with the following

• Customization
• Setup
• Training
• Customer service
• Technical support
• Invoic

Negotiate terms that align with your budget and business goals, and ensure that you have a clear understanding of the contract duration, renewal terms, and any exit clauses in case the solution doesn’t work out.

By following these 5 steps, your dealership can confidently vet, choose, and implement an AP automation solution that will streamline your payment processing, improve accuracy, strengthen vendor relationships—and most importantly—help grow your business.

Ready to Empower Accounts Payable in Your Dealership?

Manual AP processes are a significant challenge for auto dealerships, resulting in errors, delays, damaged vendor relationships, and missed opportunities for cost savings. However, by adopting an AP automation solution, dealerships can overcome these obstacles and dramatically improve payment processing, vendor communication, and overall efficiency.

CloudX® offers comprehensive AP automation solutions designed to help dealerships streamline their accounts payable functions, reduce fraud risks, gather cash rebates, and enhance vendor satisfaction. With years of experience working with businesses across industries, CloudX has the expertise to support auto dealerships in optimizing their AP processes, saving time and money, and improving vendor relationships.

Ready to transform your accounts payable processes and automate accounts payable to improve your dealership’s bottom line? Reach out to CloudX today and request a free demo to see how our AP automation solutions can help your dealership thrive.