Achieving better AP processes with automated workflows
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Achieving better AP processes with automated workflows
Revenues and expenses represent the two financial flows of every business, and the accounts payable department oversees a critical piece: the money flowing out of the company. While revenue (money coming in) is what a business needs to thrive, expenses (money flowing out) need to be meticulously tracked and managed while keeping related costs to a minimum. This is where the accounts payable department plays a key role in the success of a company.
The productivity of accounts payable directly impacts an organization’s financial stability and reputation. This is why keeping your AP department running efficiently should be a priority for any business. With this understanding, it’s surprising that a large number of AP departments still handle all of their processes manually. From invoice entry to purchase order matching to payment release, many AP teams are still entering and approving invoices by hand. However, businesses are beginning to recognize the value, cost savings, and improved processes that automated, cloud-based accounts payable software can provide.
Improving processes using AP Automation
Your AP department might look a little something like this: an invoice is received in a variety of formats, such as PDFs, JPGs, Word documents, faxes, or paper bills via the mail. The invoice is then printed and sent through inter-office mail for manual review, coding, and entry. Then the invoice is either physically passed around or emailed for approval, which can take up to a few weeks. This process often gets delayed when employees go on vacation, become sick, go on leave, or leave the company. If there is an invoice exception or error, they must be tracked down within the organization, causing additional bottlenecks. When approved, the invoice data is manually entered, and the invoice is physically or electronically filed.
For any business striving to grow, these time-consuming and potentially costly processes need to change. AP Automation workflows help teams process invoices faster, reduce manual data entry and coding errors, streamline approval workflows, minimize approval cycle times, ensure on-time payment, improve working capital management, and optimize performance.
Here are some of the ways that your business can use AP Automation software to optimize your workflows and processes.
Automating invoice entry
Manual sorting, categorization, and input of invoices and related data can be a complex task that takes employees a significant amount of time, especially when they have hundreds of invoices to process. AP Automation allows accounting department workflows to be optimized from the very beginning by automating invoice collection, sorting, categorizing, and data input upon arrival. When sent electronically, invoices can be processed immediately, and the data can be digitally extracted “as-is” and free from human error. You can also use the software to automate recurring invoices that repeat at the same time intervals and with the same cost against a customized template or contract and automatically flag any discrepancies. Overall, a digital platform significantly reduces the amount of manual time spent inputting invoice data and helps construct a more systematic intake process.
Automating purchase order matching
An important part of the accounts payable process involves matching and reconciling each payment with the purchase order, the receiving report, and a vendor invoice, yet another manual and laborious process. AP Automation software extracts and stores all necessary and supporting documents while capturing and digitizing invoice data, so information such as GL codes, line item information, terms, and amounts can be verified according to your pre-determined workflow rules, which are customized to fit your company’s needs. In turn, AP departments are able to save time, remove bottlenecks, and improve accuracy.
Automating data capture
Manually scanning documents and inputting data requires hours of intensive labor; this leaves your employees fatigued, making them more prone to mistakes and duplicate data entry. AP Automation software extracts digital and handwritten data from invoices and automatically captures it. Not only does automated data entry reduce invoice cycle time, but fully automated data capture and sophisticated analytics allow you to forecast a truer picture of costs and better control P&L. Eliminating invoice errors and duplicate payments also means teams will no longer need to rebalance the books when last-minute errors are found during the month-end close. Additionally, all captured data can be synced across your accounting department and utilized for other purposes throughout the entire organization.
Automating routing and approval
Invoices must go through a series of different stages and approvers before payment, a seemingly simple task that often turns into one or more bottlenecks. When invoice approvals are routed manually, there’s a greater chance for invoices to get lost. These delays that result in late payments that incur late fees and penalties. Automating this process helps simplify the routing structure and speeds up approval times.
Once an invoice is captured and validated, it is automatically sent to the manager responsible for approving the payment along with notifications that ensure the invoice doesn’t get missed. If the approver is out of the office, an automated system can route the invoice to another designated approver. Additionally, with cloud-based software, approvers can access and approve invoices from anywhere in the world, at any time. This improved approval process not only saves time, it saves money.
Additional benefits of AP Automation
Utilizing the full scope of an automated accounts payable system can create a new world of efficiencies, reduce menial and tactical tasks, provide predictive forecasting, planning, and budgeting, and drastically improve data quality. Streamlined cash flows and measurable cost reductions are just some of the positive returns your business can achieve through automation along with enhanced control of your processes.
Here are a few more benefits a business can expect from implementing an automated AP software platform:
- Automated payment execution allows you schedule approved payments before their deadline. Reducing late payments ensures companies can take advantage of opportunities for savings and volume rebates
- E-invoicing allows you to pay accounts immediately which can generate early payment discounts from many vendors
- Consistent visibility into your financials and AP data supports strategic decision-making throughout the company
- Advanced reporting and analytics can improve cash flow analysis and future planning and identify bottlenecks or trends in your AP processes
- You can reduce fraud with consistent, up-to-date data monitoring
- Compliance risk is reduced when you have a verified audit trail of all financial activities
Automating your AP process from start to finish provides visibility into the status of every invoice at every step, allowing companies to address bottlenecks, accelerate payments, reduce cost per invoice, and improve profitability. Accounts payable automation helps AP teams do more in less time and shift their focus from repetitive manual tasks to more strategic, meaningful work.
In the end, any business that wants to succeed must have an accounts payable team in place with the appropriate software and tools to carry out their jobs with efficiency and confidence.