How To Automate Accounts Payable?

Such as, in the context of the current payment of invoices and vendors, business organizations are often faced with the problem of labor intensity. In traditional accounts payable where there is manual and paper-based processing, it can be stressful to handle the large volumes of work that come with the job while at the same time ensuring that the work is done correctly and that the company is not violating any regulatory requirements. Thankfully, there are now several approaches and tools that organizations can use to address the issue of automating accounts payable. They have identified some significant advantages for the organization that could arise from implementing automation, these include; Reduced costs of production, Efficiency, and improved cash management.

Accounts payable automation is the process of using technology to manage and pay invoices efficiently.

Accounts payable automation or AP automation on the other hand can be defined as the action of implementing technology tools that assist in the management of accounts payable process from procurement to payment. This is a set of procedures that involve paperless document management, the consolidation of invoices, the use of technology in final approval processes, integration with the accounting software of ERP, electronic payment systems, and data analysis. The idea is to minimize the number of manual steps in the process and turn them into automated processes to leave AP staff to do what they can do best.

Benefits of AP Automation

Automating the accounts payable process offers a wide variety of advantages:

1. Reduced Processing Costs: The figures range from $10-20 per invoice hence expenses on papers, printing, stamps, and time used by employees for such processes. The use of automated techniques can reduce the general costs associated with processing an invoice by between 60-80%.

2. Faster Processing Times: Computerised workflow can direct invoices for timely approval and more volumes of invoices can be managed without increasing the personnel. This results in vendor payments and early payment discounts occurring quicker than expected.

3. Fewer Payment Errors: Such automation helps avoid mistakes and confusion about the status of the flows, notifications, audit trails, and analytical panels to guard against duplicative or fraudulent payments. This increases compliance as well as cash management.

4. Improved Supplier Relationships: By giving vendors better and quicker cash via discounts and on time it makes suppliers more content, cash flow, and bargaining power.

5. Better Spending Visibility: This is because centralized systems control budgets, allow for monitoring tendencies in the quantities and cost of purchases, and evaluate purchasing suppliers and costs organization-wide. This facilitates better decision-making in the procurement of goods and services.

6. Increased Staff Productivity: As a result of automating the data collection process and minimizing paperwork, AP teams can dedicate their time to more useful and meaningful tasks such as expense management, supplier sourcing, and assisting budget holders.

Here’s What You Need To Know To Kick Start Your Company’s AP Automation Process.

Transitioning from manual AP processing to automated workflows is a multi-step process:

1. Document Current Workflows: Explain the steps of acquiring resources, receiving deliveries, approving expenses, assigning account numbers, and paying the suppliers. This helps to pinpoint the areas that should be looked at for automation or areas that have bottlenecks.

2. Set Goals and Metrics: From automation, find out the objective measures that need to be used to assess ROI as well as determine the specific goals of the department to be achieved, such as cutting the expenses or increasing the accuracy level.

3. Select an AP Automation Platform: When it comes to the selection of software, the right choice is the key to long-term success. Evaluate the leading options based on the available must-have and nice-to-have features, and integration with accounting software and pricing plans.

4. Phase Implementation: Begin by changing higher documents, particularly those that are typical, such as low-value invoices. Gradually include automated processes such as expense reports, supplier onboarding, and extraordinary invoices to prevent disruption.

5. Train Employees: A training plan will be required focusing on the new system, processes, and roles and responsibilities of each user. Automate frequently to solve problems, give feedback where necessary, and celebrate successes collectively.

When done correctly, AP automation becomes an opportunity for one of the most paper-pushing and manually laborious departments to be turned into an efficient digital operation that brings savings in terms of time and money. Feel free to get in touch with us to learn more about how our accounts payable automation solutions can help to optimize your operations.