What Is Accounts Payable Automation?

Among the most often received business papers from their suppliers and merchants daily are certainly invoices. Should the bills be handled personally, this means a significant amount of effort as well as very thorough accuracy standards. Automating the accounts payable process entails the use of A/P automation tools helping to capture, handle, approve, and pay all A/P bills.

Automation of accounts payable is the method of mechanically managing and processing accounts payable within a company without human involvement.

It is the process of applying technology solutions to the accounts payable system. That is, A/P automation reduces or eradicates the basic tasks such as data entry, approvals, matching of purchase orders with invoices, and payments to suppliers. It eliminates the traditional paper handling in operations such as invoice creation and approvals, reconciliation, and payment.

Advantages of automating accounts payable

Reduces the Overall Time for Invoice Processing – When the invoice processing is automated, the total time required for the whole process is greatly reduced and the staff does not have to spend a lot of time entering data manually or checking the accuracy of the data. Invoices are automatically captured and approved by sending them to the next approval level.

Enhances Accuracy – Automation products provide the extraction of accurate data from invoices, as compared to manual entry. They also do the verification process between the issued purchase order, the received invoice, and the goods received in the note.

Compliance aids – Automation controls, audits, security features, and reporting all assist businesses in meeting compliance with financial regulations.

Supports Working Capital Decisions – Dashboards enable the finance teams to have real-time visibility of outstanding receivables, cash needs, supplier payments, and other important areas to ensure enhanced working capital management.

Facilitates Strategic Purchasing – Automation systems in A/P generate various reports like the spend analysis, which gives businesses the ability to drive better negotiations with vendors and suppliers.

How Automation of the Accounts Payable Work?

1. Capture Invoices: This consists of receipts of invoices through e-mail, Electronic Data Interchange (EDI), supplier portals, or paper documents that get entered into the system. It may also leverage OCR software which scans the invoice data and enters it into the correct forms for further processing.

2. Validate & Route Invoices: It approves suppliers and invoices for payment and forwards invoices to the approvers depending on some conditions. Approval procedures have been made to fit the structure of the organization.

3. Three-Way Matching: The software relates invoices to the preceding purchase orders as well as the received goods receipts to ensure that the payments are accurate. A case of exception is indicated with the help of a bar.

4. Initiate Payments: After the invoices are approved, other smart solutions issue payments to suppliers through ACH or wire transfers on the due dates to take advantage of early payment discounts.

5. Maintain Audit Trail: In case of any auditing or reconciliation requirements, the system also keeps an unaltered record of all the invoices, approvals, changes, or payments made on the same.

Implementing Accounts Payable Automation

It is for this reason, that the implementation of accounts payable automation entails the support of key stakeholders, ample time before implementation of the new system, adequate training for employees before the new system is implemented, and the Payable Management of change. It is recommended that objectives need to be set, approval processes identified, master data management performed, systems reviewed, and staff development done during the implementation phase. While the initial cost of automation might appear to be higher When undertaking automation of this process it is clear that the long-term benefits include less processing cost and more early payment discounts. When done right, accounts payable automation helps to increase the efficiency of the processes and make the suppliers happy.