How AP Automation Helps Manufacturers Fight Back Against Tariff Costs

Tariffs can drive up costs fast. Whether it’s imported steel, aluminum components, machinery, or finished goods, you may find yourself paying more for the same materials and equipment you’ve always relied on.

For manufacturing companies, the impact runs deeper. You can’t switch suppliers overnight. Sourcing new parts often means requalifying vendors, updating processes, or reconfiguring equipment. Plus, domestic suppliers may raise prices in response to market shifts, leaving you with limited options and tighter margins.

You can’t control trade policy. But you can control your internal operations. And for many manufacturers, the accounts payable department is one of the smartest places to find cost savings. 

The Hidden Costs of Manual AP in Manufacturing 

For many manufacturers, AP remains stuck in the past. It's often a paper-heavy process that quietly drains resources:

Paying Too Much Per Invoice

The average company spends about $12.88 to process each invoice manually. As a manufacturer handling numerous vendor invoices for materials, components, and supplies, these costs add up quickly.

Wasting Hours on Payment Runs

"It used to take our AP team an hour or more to do a check run and we would do up to four runs a week," said Randy, Controller at Haviland Enterprises, a chemical manufacturer. That's 16+ hours monthly spent just on payment execution across multiple facilities.

Dealing with Frequent Exceptions

Manual processes create costly mistakes. Traditional AP departments have a 22% exception rate, meaning more than one in five invoices need special handling, compared to just 9% in best-in-class automated systems. 

Only 23.4% of invoices process 'straight-through' without manual intervention in traditional systems, creating multiple points where payment errors can occur, from duplicate payments to incorrect amounts.

Leaving Discounts on the Table

Many suppliers offer 1-2% discounts for prompt payment, especially in manufacturing supply chains with high-volume purchases. These opportunities often slip by when AP departments are buried in paper, effectively increasing your net material costs.

Offsetting Tariff Costs with AP Automation

AP automation provides several ways to counter the rising costs caused by tariffs. The table below shows the stark contrast between manual and automated AP processes, highlighting the potential savings for manufacturers:

Let's examine each of these benefits in detail:

Dramatically Reducing Processing Costs

Companies with best-in-class automated AP operations spend only around $2.78 per invoice, compared to $12.88 for manual processing. That's a 78% cost reduction. 

For a manufacturer processing 10,000 invoices annually, this could mean reducing processing costs from $128,800 to just $27,800 — a $101,000 savings each year.

This efficiency is particularly valuable for manufacturers with complex approval workflows that require input from plant managers, engineers, or procurement specialists.

Time Savings That Support Strategic Responses

When Flowco Production Solutions, an industrial lift manufacturer, automated their payments, their AP Manager reported: "I'm saving almost an entire day every week doing payment runs!"

This freed-up time directly cuts operational costs as your finance team can focus on:

• Analyzing spending patterns to find cost-saving opportunities

• Negotiating better terms with key suppliers

• Evaluating alternative materials to reduce tariff impacts

For manufacturers with multiple locations, automation creates a consistent payment process across all facilities, providing company-wide visibility into supplier costs.

Optimizing Cash Flow When It Matters Most

With faster invoice processing (3.1 days versus 17.4 days), manufacturers can consistently capture early payment discounts. 

For a manufacturer spending $15 million annually with vendors offering 1% early payment discounts, this could mean $150,000 in bottom-line savings.

AP automation also provides the visibility and scheduling tools needed to optimize payment timing based on your cash position. This is especially valuable when tariffs create cost pressures, as manufacturers can:

• Maintain cash reserves during periods of price volatility

• Take advantage of favorable payment terms with strategic suppliers

• Balance cash outflows across billing cycles to maintain liquidity

Manufacturers with international supply chains can use automation software to handle international payments more easily. These tools convert currencies and show the true cost of materials from different suppliers.

Building Stronger Vendor Relationships

When facing tariff-driven price increases, strong vendor relationships become a strategic asset. AP automation helps by ensuring consistent, timely payments and providing the data needed for informed negotiations.

"Our bank reconciliation is very easy now. We have one payment that goes out every week instead of multiple payments in various methods going to all our vendors," explained the AP Manager at Flowco. 

This reliability strengthens relationships with critical suppliers, potentially translating into preferential treatment during supply shortages.

Creating a New Revenue Stream Through Rebates

Perhaps most significantly, AP automation platforms can convert traditional check payments to virtual cards that generate cash-back rebates. Haviland Enterprises, a chemical manufacturer, earned $44,000 in rebates in their first year. This direct financial benefit helped offset rising material costs.

These rebate programs essentially create a new revenue stream from existing spend. The more vendors you pay with virtual cards, the more rebates you earn, creating a scaled benefit that grows with your business.

Implementing AP Automation: A Simple Path Forward

Implementing AP automation doesn't have to be complicated or disruptive to your operations. Most manufacturing companies find the process straightforward compared to other technology initiatives:

Requiring Minimal IT Resources

Most solutions are cloud-based, eliminating the need for complex infrastructure changes. Leading AP automation providers handle the technical setup, mapping approval hierarchies and configuring payment rules. Many manufacturers report their AP teams being fully operational with the new system within 2-3 weeks.

"I would estimate that it took us less than 10 hours of staff time to implement," said Chris Patrick, President of Gem-Dandy, a wholesale distributor of manufactured goods. "It was much easier than I expected. We wish we would have implemented sooner!"

Implementing in Manageable Phases

Rolling out AP automation in phases helps your team adjust with minimal disruption. Here’s a common path:

1. Start with Payments: Digitize payments for your highest-volume suppliers. This reduces check cutting, captures early rebates, and delivers quick wins.

2. Add Invoice Automation: Bring in tools to capture and route invoices automatically. This lightens the manual workload and speeds up approvals.

3. Integrate with Your ERP: Connect your system to your ERP for automatic PO matching and full visibility across locations.

These three steps help manufacturers build momentum without overwhelming the team. Each phase delivers measurable improvements while setting the foundation for long-term efficiency.

Integrating Seamlessly with Manufacturing ERPs

Modern AP automation solutions integrate with manufacturing-specific ERPs like Chempax, SYSPRO, and Microsoft Dynamics GP. This integration eliminates duplicate data entry and creates a single source of financial truth.

When an invoice arrives, the integration allows automatic matching against open POs, confirming quantities received, and validating contracted pricing. Most AP automation platforms connect to manufacturing ERPs through pre-built connectors that accommodate industry-specific data structures.

Measurable Results from Manufacturing Companies

Haviland Enterprises (Chemical Manufacturer)  

Haviland is a leader in chemical manufacturing, packaging, and distribution with multiple locations across three states. The company implemented AP automation to address their growing payment volume and rising workload across locations. Their results included:

• 52 AP hours saved every month

• $44,000 in rebates earned in the first year

• 570+ vendors enabled for electronic payments

"This wasn't about letting go of people. It was about trying to make more time available through technology," said Randy, Controller.

Flowco Production Solutions (Industrial Lift Manufacturer) 

As an industrial lift manufacturer facing growing material costs, Flowco needed to modernize their payment process while transitioning to remote operations. After implementing AP automation, they achieved:

• 6+ hours of weekly AP time saved

• $14,000 earned in monthly cash rebates

• Seamless transition to remote operations

"We're becoming a permanently remote business as part of our cost-cutting initiatives," explained their AP Manager. "With paperless AP, there are no issues for us."

Gem-Dandy (Wholesale Distributor) 

Founded in 1921, this wholesale distributor of belts and accessories struggled with antiquated manual payment processes that were inefficient and costly. Their AP team spent hours each week on tedious tasks like cutting checks and stuffing envelopes. After automating, they saw:

• $10,000 in annual savings

• Less than 10 hours to implement

• Thousands of hours saved annually

"We wish we would have implemented sooner!" said Chris Patrick, President of Gem-Dandy.

Conclusion: You Can’t Eliminate Tariffs, But You Can Reclaim Control

While you can't control tariff policies, you can control how efficiently your AP department operates. When tariffs squeeze your margins, AP automation offers a practical way to offset these costs while strengthening your overall financial operations.

The combination of reduced processing costs, captured discounts, earned rebates, and strategic time savings delivers measurable ROI that helps manufacturing companies maintain profitability even when facing external cost pressures.

Ready to calculate how much AP automation could help you reclaim lost margin?

Explore Corpay’s AP solutions for manufacturers and take the first step toward lower costs and higher cash flow.