Today, the AP automation statistics disclose an astounding 84 percent of invoices that have at least a single exception. Invoice exception takes place when further approval is required to apply for payment or when the invoice line does not match lines on PO.
Such exceptions can bring your accounts payable methods to an arrest. The best- in-class automation solutions feature three-way and two-matching that solves purchase order matching problems.
Very often, the greatest challenge experienced by organizations while switching to accounts payable automation is integrating with the existing finance and ERP systems. Accounts payable automation simplifies all the activities that are performed by the AP team.
From buying of products from suppliers to approving and paying the invoices, automation develops effectiveness, which translates into bigger levels of productivity and lowers the expense of invoice processing.
Here we present a quick checklist on everything you should know about accounts payable automation and how to eliminate bottlenecks in your AP process.
How Your AP Team Benefits from Automating Accounts Payable
Your AP team is responsible for debt reconciliation owed to vendors, utility organizations, and partners. It is very common for businesses to accept supplies or funding on credit from the entities. Structured contracts show when and how these debts should be repaid and if any interest is added to it.
An error in recording these debts, whether it is an asset or liability, can cause crucial damage to the organization’s cash flow.
Large business organizations owe money often to multiple entities such as publishers, vendors, affiliates, and more. There can be a few cases when one team within an organization would owe the other team. For instance, if the marketing team borrows money from the development team, an internal invoice is utilized to record the transaction and to make sure that the debt is reconciled.
The AP team is a fundamental aspect of the success of an organization. When you lack the exact picture of whom to owe and when the payments are due, it deters development opportunities with suppliers.
Moreover, it leads to an indistinct understanding of your organization’s financial status. You have 40,000 dollars coming per month from the revenue, but when you owe 50,000 dollars a month to the vendors, your business is not going to stay afloat without making the changes.
Accounts payable automation system like SutiAP offers complete visibility which can be used to refine your accounts payable and operational methods strategically, thus enabling you to save money and time, while making recurring payments.
Automating Accounts Payable Process
There is a huge amount of data managed by the accounts payable team that comprises of reports, invoices, contracts, and purchase orders. The efficiency of the team has a deeper impact on an organization’s cash position, credit score, and relationship with vendors.
Accounts payable takes the hassle out of having to perform administrative works, such as entering supplier-specific details for every invoice. It can cut the invoice processing expenses by more than 80 percent by capturing pertinent data automatically and storing it in an organized way. It provides the AP team an effective way to see new as well as old invoices and approve them.
Automating accounts payable helps to scan and upload invoices using in-built OCR technology, followed by performing sequential categorization. Later, the invoices are examined and intelligently routed to the relevant entities for approval.
Today, there are multiple accounts payable solutions available in the market. AP system worth leveraging should have all the below features :
a) Online Tracking
b) Electronic Invoicing
c) Reporting Capabilities
d) Process Monitoring
e) Vendor Network Categorization
f) Spending Analytics
g) Intuitive UI
Importance of AP Automation for the CEOs
Today, the finance managers are aware of the difficulties of the accounts payable team. They understand how automation improves payment accuracy, eliminates lag time, and minimizes labor expenses. However, often, many CEOs are on the fence regarding whether to invest in automation.
It is true that they have heard a lot of time that automating any task will always lead to saving money, but the price of accounts payable automation is what bothers them the most.
The advantages of automating AP are not seen at the business level. Effective document management and quick invoice processing is the key to the accounts payable team, but the CEO is rarely involved in such tasks. They cannot see how automation can benefit the whole organization and avoid taking up new initiatives when the operations are moving along with little challenges.
Moreover, they have a complicated time examining what they must do if the accounts payable team headcount gets minimized. Will they let go of workers or designate them to some other roles?
Good AP automation that is worth buying will come with optimal client support and an extensive range of automation solutions.
Do you want your CEO on board to automate AP workflows? Discuss the advantages that your business can acquire from automation.
1) Prevent Late Payment Fees
The invoice time cycle gets minimized by 60 to 80% with accounts payable automation. Rather than spending huge amounts of time locating and examining invoices, you can simply access the system database in order to determine which invoices have the nearest due dates.
Then, you can utilize the time-saving advantages to focus on reconciling the invoices before they become past due. It helps to prevent late payment penalties.
2) Eliminates Fraudulent Activities
A good accounts payable system deploys wide verification coding in order to make sure that all invoices are appropriate. It identifies unknown vendors and sends alerts to relevant entities to make them aware of all the possible fraudulent activities. At the core of an audit, you can see what happened, how it happened, and who was responsible for it.
Accounts payable automation provides you complete visibility as to who authorized the payments and the types of verifications step they need through before approving. When fraud is suspected, automation offers you a clear picture of who is behind it.
3) Improve Cash Flow
With the granular insight into how the amount is being spent, you can make cash flow decisions in a better way. Leverage automation to decide where the money-saving opportunities exist and take full advantage via invoice payment prioritization.
For instance, accounts payable automation reveals there are 12 percent of early payment discounts that you are missing out each month.
You are presently paying a handful of invoices two weeks prior that come with no discounts. Leverage the invoice payment prioritization to adjust the payment schedule and capitalize on an early payment discount.
How to Receive the Most Out of AP Automation Solution
1) Leverage Electronic Purchase Orders
You can create electronic invoices with accounts payable automation systems along with purchase orders, as well. Automatic routing of purchase orders makes sure that they are approved on time and later transmitted to the vendor.
2) Two-way and Three-way Matching
You can set customized tolerance ranges and utilize two or three-way matching to minimizes instances of fraudulent activities and multi-level actions. When the invoices do not get matched, automated purchase order matching initiates multi-level actions to recognize the issue.
Also, you can integrate the PO matching with your end-to-end vendor payments process to enjoy a high invoice process adoption rate.
3) Create an Electronic Invoice
We all know that paper invoice needs a huge storage area and can cause a headache to sort through. Leveraging electronic invoicing, AP automation feature to send and get invoices electronically.
Customize parameter rules in order to meet your requirements and tap into an online vendor portal for a clear view of your complete supply chain. Access portal when and as required to view which vendors are active and which ones are not.
Eliminate Bottlenecks with AP Automation
The AP team does more work than paying bills. When effectively handled, accounts payable workflows can enhance the bottom line by eliminating bottlenecks. Today, digitization is all around us, and for organizations that have yet to implement automation, bottlenecks with the processes are a very common cause.
Automation minimized the need for workers to be involved in the processing and receiving invoices. There is a huge amount of money and time invested in processing volumes of invoices. The money and time can be used in a better way with AP automation.
While sending an invoice to the AP team may seem easy and less in terms of time and labor, but in actual there are many things involved. The invoice needs to get uploaded to the organization’s accounting solution, examined and matched with the corresponding purchase order.
From there, it is sent to a suitable entity for approval. Once the approval is obtained, it comes back to the accounts payable team, where payment is applied. There are several forms of payment options, and supplier preferences dictate which one to utilize.
When dealing with multiple vendors and lacking accounts payable automation, keeping up with all the other preferences can cause a headache.
Unable to know which payment process is preferred by a particular supplier is itself a bottleneck as it reduces invoice processing and delays payments.
Some other bottlenecks that take place within accounts payable invoice entry and processing comprise of :
- Missing details such as the payee’s tax ID details.
- The arrival of invoices from payees in foreign countries.
- Invoices that require more information to comply with the Foreign Account Tax Compliance Act
All such problems can be easily eliminated with automating accounts payable workflow. Your vendors can enjoy a pleasant on boarding experience and that automation service providers can take care of everything.
From payment approvals and securing invoices to examining accounts for adequate funds ensuring all vendors are paid according to the preferred payment process, you need not have to worry about any other relevant tasks.
Switching from one financial software to the other in order to trace invoice data is a thing of the past with accounts payable automation. You need not have to worry about which payments are due. You can receive alerts whenever the invoices are nearing the due dates and are not set up on automatic payments.
No matter whether it is an XML, PDF, Docx file, your accounts payable team does not have to go through the administrative and time-consuming task of entering data manually. Automation eliminates the bottleneck while minimizing the occurrence of human error and simplifying the AP process.
Think about all the things that the AP team can do when the invoices have been received, matched, and paid. It is only possible with automation. Accounts payable automation software stores, receives, and processes invoices around the clock through the cloud.
Mobile access enables anyone with authorization to access invoice database to see invoices, view status updates as well as approve whenever required. With the best customer service, the right AP solution future-proofs your operations and delivers end-to-end accounts payable performance.