The accounts payable department of the future
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The Accounts Payable Department of the Future
Today’s accounts payable (AP) department is incredibly hands-on, and chances are these teams feel a bit like they’re underwater. Costly and error prone manual data entry, compliance and security risks, lost or misplaced invoices, and time-consuming vendor inquiries regarding payment status all combine to barrage AP teams with constant issues. Sound familiar? If so, it’s time to recognize that your AP department’s methods are on their way to becoming obsolete.
AP teams of the present, and the future, are moving away from manual processes and instead embracing automation. AP automation digitally captures, extracts, and codes data from invoices, identifies billing errors before they become problematic, routes invoices for approval, and ensures payments are sent on time, enabling opportunities for early payment discounts.
AP automation platforms will positively change the way your department functions and is perceived within your organization.
Yesterday’s antiquated AP department
Yesterday’s AP department looks something like this: an invoice received in a paper or electronic format by a variety of people within the organization (i.e. mailroom, finance department, purchaser, and/or branch office), is sent to the AP department for review, coding, and approval. Then the invoice is either emailed or physically passed around for approval. This process can often get delayed when employees go on vacation, become sick, go on leave, or quit. Invoice exceptions and errors must be tracked throughout the organization. Once approved, the invoice data is manually entered, and the invoice is physically or electronically filed.
Here are just a few of the issues AP departments face using out of date, manual processes:
Handling everything manually is extremely time consuming. Having people collect invoices, key in data by hand, cut physical checks, and move paper around creates opportunities for errors, lost or misplaced invoices, and missed payments.
Currently, just one invoice can cost anywhere from $11-$15 to process. This can create up to tens or hundreds of thousands of dollars in cost over the year depending on the number of invoices cycling through your organization. Not to mention that companies need to account for the physical costs of handling paper (paper checks, printer expenses, postage/mailing costs, etc.)
With paper processes, the risk of error greatly increases. Paper also allows sensitive files to be easily be compromised, and paperwork can be misfiled, destroyed, or stolen. Despite what you may think, paper-based systems are at higher risk for fraud then digital methods. There’s also risk for late fees and billing errors.
What many CFOs, CEOs, and Controllers don’t realize is that there’s a better way to manage AP processes. Instead of asking, “How can we make this old system work for us?”, it may be time to consider embracing new technology and trends that can bring massive benefits to your organization.
Today’s future-facing, tech-driven AP department
Companies that make a shift to AP automation don’t just improve their departmental processes but unlock the potential to turn their AP team into a digital, data-driven, strategic powerhouse. AP departments will be able to optimize their performance, better manage cash, control spend, mitigate risk, and bring advanced capabilities to your business.
So, what does the modern AP team look like?
- No longer will team members need to spend countless hours scanning and entering invoices into their system. Automation digitizes paper invoices so they can be stored online and are completely searchable.
- A cloud-based platform allows your team and approvers to work from anywhere, anytime. This means no waiting on employees who are out of the office to approve invoices ensuring payments are made on time.
- Staff can dramatically reduce the amount of time they spend cutting and mailing checks. AP automation software integrates with financial accounting and ERP systems directly with bank accounts to allow for on-time payments, better controlled cash flow, and reduced fraud.
- Because vendors can be automatically notified of impending payments that are electronically transmitting, employees can save hours of time previously spent answering vendor status questions. As a result, vendor relationships are also improved, which results in better negotiating terms and collaboration.
How does it work?
Automation empowers companies to create personalized workflows that enable stronger, nimbler, and more efficient accounting departments. Teams can streamline approval workflows, cut invoice processing time, eliminate mistakes, ensure on-time payment, improve working capital management, and optimize performance, all while driving rapid ROI.
Here are just some of the ways AP automation can help improve efficiency and optimize performance:
You can simplify your AP workflow by automating your invoice collection, sorting, categorizing, and data input upon arrival, saving tedious hours of manual invoice processing time.
Automation helps streamline the routing process and speeds up approval times. Once an invoice is captured and validated, it is automatically routed directly to the manager responsible for approving the payment accompanied with fully customizable workflows and notifications that ensure the invoice doesn’t get missed.
AP automation software extracts digital and handwritten data and automatically captures it, accurately. These sophisticated analytics reduce invoice cycle time, allow you to forecast a truer picture of costs, and better control P&L, giving teams greater confidence in their financial predictions and reporting.
Purchase order matching
AP automation software stores all necessary and supporting documents as well as captures and digitizes invoice data such as GL codes, line item information, and terms. Invoices will also be compared to their corresponding POs and mismatches will be flagged. Automatically matching invoices removes bottlenecks, improves accuracy, and frees up your AP staff to focus on strategic projects and analytical work that supports organizational efficiency and growth.
By automating payment execution, you can schedule approved payments to be sent out on or before their deadline. AP automation also makes electronic payments simpler by providing one central location from which to choose your payment method of choice.
Yesterday is today
Companies, large and small, making the switch to AP automation have a clear business advantage. When done right, AP automation can bring vital benefits to an organization that means all your company resources, including staff time, money, processes, and more, are working efficiently and effectively. Automation empowers organizations to create a future where accounts payable is no longer a tactical, back-office function but a strategic and visionary part of the company.