Preventing Payment Fraud with AP Automation for Auto Dealerships
It may seem hard to believe, but incidents of business payment fraud have been on the rise in recent years, and the statistics are alarming: A2024...
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5 min read
January 11 2025
by
Chris Cosgrove
The benefits of AP automation are increasingly clear, but did you know around 36% of businesses haven’t even started automating any of their AP processes? It’s true, and this gap is wider in industries like automotive, where dealerships still grapple with manual AP tasks that drain time, increase errors, and expose them to security risks.
For auto dealerships looking to remain competitive and efficient in 2025 and beyond, prioritizing AP automation adoption is no longer optional—it's essential. This blog will explore why auto dealerships must make AP automation a priority in 2025, including yours.
Like most businesses operating today, ensuring the security of financial transactions and preventing fraudulent activity is one of the most significant concerns for auto dealerships. With up to 96% of businesses affected by fraud in 2024, this comes as no surprise. Traditional, paper-based AP systems are highly vulnerable to errors, human manipulation, and cyber threats. By automating AP processes, however, dealerships can significantly reduce the risk of fraud.
AP automation platforms offer advanced security features, such as role-based access controls, digital audit trails, and encryption for sensitive data. With these features in place, unauthorized access is much harder to achieve, and any suspicious activity can be easily traced and flagged. Additionally, automation helps prevent common mistakes like double payments or incorrect invoices—issues that can slip through the cracks in manual systems and be exploited by fraudsters.
By moving to automated systems, dealerships create more secure and transparent AP processes which helps minimize the potential for fraud while safeguarding both a dealership’s finances and reputation.
For auto dealerships, maintaining strong relationships with vendors is key to both smooth operations and fair negotiations. Unfortunately, late payments, miscommunications, and invoice processing errors can damage these relationships and lead to delays, missed opportunities, or even lost suppliers.
Once AP processes become automated, however, dealerships can process payments more quickly and accurately so invoices get paid on time and in full. Automation also helps dealerships track and manage vendor information, ensuring that any discrepancies are resolved promptly.
Another benefit of AP automation can include the use of vendor portals where suppliers can check the status of their invoices, track payments, and update payment information. This level of transparency then builds trust and fosters stronger, more collaborative vendor relationships—crucial in today’s highly competitive automotive industry.
In a busy auto dealership environment, managing invoices manually is generally time-consuming and error-prone. Staff must routinely review, match, and enter invoices into accounting systems—tasks that can easily lead to delays and backlogs.
By implementing AP automation, dealerships can significantly accelerate their invoice processing rate because the software automatically captures and extracts relevant data from invoices, matching them with purchase orders and receipts. This reduces the need for manual intervention and ensures that invoices are approved and processed faster, often in a fraction of the time compared to manual methods.
Faster invoice processing means dealerships can avoid late fees, manage cash flow better, and even gather valuable cash rebates on virtual card spend. Additionally, by reducing the time spent on administrative tasks, employees are free to focus on more strategic areas of the business, helping drive greater productivity and efficiency.
Accurate and organized financial records are critical for any business, especially when it comes to audits, tax filing, financial reporting, and compliance. But as you’re already aware, using manual AP systems means keeping track of paper invoices, receipts, and payments that often become a logistical nightmare.
AP automation simplifies record keeping by digitizing all documents and creating a centralized repository for easy access. All invoices, POs, receipts, and related documents are stored in the system, allowing for quick searches and retrievals whenever needed by a staff member. This level of organization not only makes audits and tax season easier but it also enhances overall financial transparency within an auto dealership.
Automated systems also have the ability to generate detailed reports in real-time, providing managers and decision-makers with up-to-date financial insights. These reports can be customized and analyzed to identify trends, optimize cash flow, and make more informed business decisions.
As an auto dealership grows and expands to multiple locations, managing AP processes becomes more and more complex. With multiple branches, dealerships must ensure that invoices are accurately processed, payments are made on time, and financial records are synchronized across all locations. Manual AP processes often create big bottlenecks, making it difficult to scale operations smoothly.
AP automation solves this problem by providing one centralized platform for all locations. Whether a dealership operates in one city or across multiple states or regions, a dealership is able to use the same system to manage all AP tasks, including invoice approvals, payments, and financial recordkeeping.
As a dealership scales, an automated AP system can be customized to meet the specific needs of each location, ensuring that all operations continue to run smoothly without the need for additional staff or resources. Having this level of scalability then means that dealerships can grow efficiently and cost-effectively while also maintaining a high level of financial control and oversight.
If your dealership has limited or no AP automation, implementing an automated AP solution is going to be a gamechanger for your AP department and your financial operations. But there are many steps involved, and it’s fair to say that exploring AP automation solutions will require a fair portion of your time in the new year.
Do you have a Dealer Management System (DMS)? If you do, that’s great! Adding AP automation can be a natural next step. Here's how to get started:
By following these steps and carefully selecting an AP automation solution able to integrate with your DMS, your dealership can unlock significant efficiencies, reduce manual errors, and improve overall financial management across locations.
In 2024, auto dealerships faced increasing competition, heightened security risks, and greater operational complexity. As a new year begins, the benefits of AP automation—combating fraud, improving vendor relationships, speeding up invoice processing, enhancing record keeping, and facilitating scalability—are clear, measurable, and compelling benefits.
To stay competitive and efficient, it’s essential for your dealership to adopt AP automation sooner rather than later. The transition to automation doesn’t just make good financial sense—it’s a strategic move that will support your dealership's long-term success in an increasingly digital world.
If your dealership is ready to embrace AP automation and unlock its full potential, CloudX is here to help you get started. Our state-of-the-art solutions are designed to simplify your AP processes, streamline your vendor payments, and set your business up for success in 2025 and beyond.
Contact CloudX today to learn more about how AP automation can transform accounts payable and take your dealership to the next level.
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