What Is A Workflow Accounts Payable?

Accounts payable (AP) refers to the management of outstanding payments of a company that is similar to a kind of credit line. Accounts payable workflow can be defined as the process that covers the receipt of the invoices, the approval process, and actual payments to vendors.

Using Wf in the management of AP can help to improve the management of AP since it would be more efficient, accurate, and clear. In this article, we provide information on what the accounts payable workflow involves and its uses.

Accounts payable is also referred to as AP, what is an AP Workflow?

An accounts payable workflow involves the various procedures and steps whenever an invoice has to be processed and the supplier or vendor paid. It includes the processes of receiving the invoices, approving the payments, and finally, making the payments.

Here are the main steps in a typical accounts payable workflow:

1. Invoice Receipt

This precedes the accounts payable cycle. They include invoices that come in through electronic mail or post or by interacting with the vendor through online portals. The next step is that invoices must be checked and entered into the accounting software, if necessary.

2. Invoice Processing

In this step, the invoice details are checked and approved, the general ledger accounts are correctly assigned to the invoice amount, the purchase order and receiving documents are reconciled with the invoiced amount and payment is made according to the agreed terms.

3. Invoice Approval

A major requirement is that the invoices should be signed by authorized personnel before payment can be processed. Auditors check the invoices for correctness, make sure all the necessary documentation is provided, abide by the established standards, and make sure the budget is sufficient.

4. Payment Processing

Afterward, when invoices are approved, check out or cash disbursement is made and recorded for the payment of the vendors. This could include ACH transfers, check writing, or any other form of payment that may be processed.

5. Payment Disbursement

Last of all, the payments are made to vendors to pay all the account payables. Control account balances are cleared out in the system while payment confirmations are documented.

Advantages of managing accounts payable workflows

Automating the accounts payable process through structured workflows provides various benefits, including: Automating the accounts payable process through structured workflows provides various benefits, including:

1. Increased Efficiency

AP workflows get rid of idle time and repetitive tasks, facilitate handoffs between teams, and drive process efficiency. This in turn leads to a significant amount of increase in efficiency and a cost reduction.

2. Enhanced Visibility

Everyone receives automatic, real-time visibility into invoices and payments through approval processes in between. That aids in increasing transparency, and accountability, and results in sound decision-making.

3. Improved Compliance

Procedures allow for stricter compliance with approval policies, payment terms, etc., thus avoiding costly mistakes, frauds, and penalties.

4. Better Vendor Relationships

These two approaches of payment convey the message of credibility and reliability in business dealing with vendors. This may mean better prices and services from vendors are received and required improvements in operations.

5. Dynamic Scaling

This is good for business volumes and business continuity needs because when business volumes increase due to holidays, new products, and such instances, the workflow adapts automatically, and vice versa.

As we have seen above, there are some primary aspects of accounts payable workflows that are worth emphasizing in this paper.

Accounts payable workflows vary across organizations but typically contain these integral elements:

• Hardware scanners, OCR solutions, APIs, etc. for converting paper invoices
• Here, OCR stands for optical character recognition for fast data extraction.
• Approval rules and routing as per the policy that can be tailored to the instance.
• Linking accounting/ERP
• Automation of routine processes where people spend a lot of time and effort
• Approval, modification, and other transactions relating to audit trail recording.
• Tracking and analysis of various metrics for a better understanding of the performance of the AP
• Switchboard notifications on pending action
• Vendor self-service for inquiries
• Create a cloud storage solution for invoices and documentation to avoid possible fraud.
• Fraud examination to discover risky deals
• Payment files/check runs/remittance advice

In conclusion, it is possible to observe that by evaluating their requirements and difficulties, it becomes feasible to create effective and efficient AP processes for various organizations. It is realizing the most favorable balance of control, efficiency, visibility, etc., needed for the executive’s overall strategic business goals.

Implementing Accounts Payable Workflows

Here are some tips for successfully implementing accounts payable workflows:

• Identify and document the existing AP process and the challenges encountered
• In defining the objectives, metrics, scope, and requirements of the project, means that the project must focus on the following factors.
• Secure the AP team’s commitment to the cause, the management’s support, and the ultimate stakeholders, namely end-users.
• Approach the legal and financial frameworks currently in place and capacities with caution
• Use low-code solutions to create business workflows without delay
• To apply this strategy, start with the high-volume transaction points first.
• Before launching and implementing the use of the application, it is important to thoroughly evaluate the various processes that might be affected by it.
• Instruct the AP team on how to employ new working methods
• Adjust/optimize existing processes from time to time depending on the users’ response

By embracing structured accounts payable, organizations can turn inefficient paper-driven and manually intensive processes into efficient and highly automated process maps that would yield significant productivity improvements. It enables the AP team to spend less time on low-value, repetitive work, and more time on higher-level analysis, which adds value to the business. A properly managed AP process is one of the keys to financial management, financing requirements, vendors, and business performance.