Automating accounts payable processes can help businesses save time and money. By automating the process of paying bills, companies can reduce manual labour and errors, increase productivity, and improve cash flow. This blog will explore the accounts payable automation solutions, their use cases, benefits, and challenges. We will also look at how businesses can leverage these solutions to streamline their accounts payable processes and improve their bottom line.
What is Accounts Payable Automation?
As a result of digital transformation, AP automation or accounts payable automation is enabled by cloud-based software solutions that digitise the accounts payable process. Moving from a manual invoice handling process in which all tasks are performed manually, to an electronic process in which data entry is reduced, and then to an automated process in which tasks are eliminated, is typically the starting point. With increasing levels of automation, accounts payable teams can prioritise more strategic objectives.
AP automation reduces the time and labour required for paper-based manual accounts payable invoicing, as well as lowering the possibility of expensive human errors. The objectives of accounts payable automation are improved control, enhanced visibility, and increased efficiency.
Accounts payable is one of the most important functions of any business; therefore, team resources should not be wasted on low-value tasks. Your abilities and financial expertise extend far beyond filling out spreadsheets and determining whether or not invoices have been paid. Too many businesses waste time locating invoices and accounting professionals on data entry. AP automation eliminates all “busy work” and frees up financial talent for more strategic endeavours.
Benefits of Accounts Payable Automation
AP automation has a wide range of advantages for businesses, including cost savings and processing efficiencies, a decrease in errors and exceptions, and the capacity to maximise working capital by capturing early payment discounts. The key advantages are:
1. Time-saving
The processing and approval of invoices are sped up and made more effective by AP Automation software. By eliminating many manual stages in invoice processing, automation reduces the human touch on an invoice and, subsequently, employee time spent on this aspect of their work.
2. Enhanced efficiency
Automation streamlines the billing and payment procedure, thereby reducing approval times and boosting productivity. AP automation solutions can also be integrated with existing financial systems, making the process even more efficient and ensuring a seamless flow of data.
3. Enhanced accuracy
Automation improves accuracy by removing the possibility of human error and aids in minimising payment errors, such as duplicate or fraudulent payments. Early in the process, invoice data can be validated against ERP data to flag and prevent erroneous payments.
4. Fraud detection
Intelligent automation utilising OCR/AI authenticates documentation, identifies payment anomalies, cross-references invoices to supplies to confirm goods or services have been received before payment, and flags discrepancies for investigation by the AP team in real-time, across multiple accounts simultaneously.
5. Reduced expenses
Automation of accounts payable can significantly reduce the cost of invoice processing, saving the business money, time, and resources. Using automation can decrease labour costs by reducing data entry and eliminating document storage, postage, invoice creation, and other associated costs.
6. Integrated compliance
When AP processes are automated, system-wide compliance rules are incorporated. This makes the process completely transparent, allowing common risks and instances of fraud to be identified and avoided. For instance, the system will identify duplicate invoices, extra charges, and suspicious activity.
Who benefits from Accounts Payable Automation?
While the AP team is the most obvious beneficiary of accounts payable automation, the entire organisation reaps rewards. AP automation solutions have a positive effect throughout the enterprise.
1. Procurement
Automated AP solutions assist procurement with real-time inventory updates, improved accuracy, end-to-end invoice management, and the generation of reports. For instance, procurement requests can automatically generate a purchase order, payments are reconciled, and ledgers and accounts are synchronised.
2. Sales
RPA generates comprehensive customer profiles from multiple sources, creating cross-selling opportunities for the sales team. In addition, delinquent or fraudulent accounts can be immediately flagged for investigation, providing secure due diligence and fiduciary supervision.
3. Finance
Through the consolidation and aggregation of real-time data for budgeting and forecasting, RPA and AP automation can deliver precise cash flow information. It can also evaluate variances, create management reports, and simultaneously follow multiple jurisdictions’ accounting and compliance rules.
4. Customer Relationship Management (CRM)
AP automation produces purchase orders or invoices, captures emailed or faxed invoices, tracks approvals, extracts data, reconciles amounts to purchase orders or shipment delivery receipts, authorises payments, notifies providers, and updates dashboards. Staff members prioritise relationships over data entry.
How do Accounts Payable Automation work?
Through AP automation, purchasing organisations can manage invoices, approve approvals, and process payments automatically. AP automation covers the following components:
1. Invoice receipt
A paper invoice can be electronically received or converted to an electronic format. Electronic invoicing encompasses data-transfer methods such as B2B/EDI connections, PDF invoicing, and supplier portal receipts. Artificial intelligence (AI) and/or OCR are used to extract and store data from paper invoices in the cloud after they have been scanned and processed.
2. Compatibility and workflow
An invoice is either matched to its purchase order or goods receipt, or it is redirected to the appropriate team or individual for review and approval after data capture. After approval, invoices are forwarded to the ERP or accounting system for payment.
3. Archive and audit
Invoices are securely archived, and audit trails of all invoice actions are readily accessible for financial audits. Electronic archiving of invoices makes it simple to search for and locate invoices at any time and from any location.
How does AP Automation fix invoice-related communication problems?
What is required to build an effective, productive, and strategic AP department? The best Accounts Payable departments have digital champions who are:
1. Changemakers dedicated to change management
Best-in-class accounts payable teams examine change holistically and strategically to develop a digital transformation roadmap. They begin by recognising the need for modernisation. Then, they conduct research with the intent of constructing a business case for investment and change. Along the way, they evaluate various technologies and solution providers, determining which would be most advantageous, both strategically and monetarily, for the long-term success of the accounts payable department structure and the business.
2. Innovators embrace change
Changing and automating your accounts payable department requires a close examination of its operations. Best-in-class departments are willing to implement extensive changes to significantly improve team performance. Consequently, the most effective AP departments have adopted new processes supported by modern technology. AP teams with the best practices are 48% more likely to make electronic payments and 56% more likely to receive electronic invoices.
3. Committed to standardising accounts payable
52% more likely to standardise accounts payable processes across the organisation are top-tier teams. It may sound elementary, but many departments still struggle to manage a standard invoice approval process. Whether the process is paper-based, decentralised, or simply outdated, the results are the same: ineffective control, decreased efficiency, and process bottlenecks. Due to these issues’ high costs and increased risk, businesses throughout the world are transitioning to e-invoicing and investing in accounts payable automation systems.
4. Customer-centric
Teams that excel in accounts payable understand the significance of a positive departmental image. They have adopted a mindset of collaboration and cooperation with both external and internal stakeholders (we’re looking at you, Procurement). This may not sound like typical accounts payable job descriptions, but it lays the groundwork for the team to become a strategic partner to multiple stakeholders across the organisation. This is reflected in the data: best-in-class teams are more than twice as likely to partner with procurement and treasury using digital insights.
How to select an Accounts Payable Automation software?
Companies looking to automate accounts payable should conduct extensive research on various AP automation solutions to ensure the best fit for their organisation. Choosing an accounts payable automation software that supports all invoice processing use cases is crucial to ensuring end-to-end automation and measurable cost and time savings.
In addition, it is essential to comprehend how the AP automation software integrates with an organisation’s ERP to ensure data synchronisation and streamlined processing. Through ERP integration, master data can be transferred from the ERP to the AP solution. In general, AP automation solutions provide a variety of ERP integrations, ranging from pre-packaged to fully managed connectors.
Conclusion
In summary, accounts payable automation offers significant advantages, including time savings, reduced errors, improved visibility, enhanced compliance, and cost efficiencies. Additionally, it is a powerful tool that can transform financial operations, allowing businesses to operate more efficiently, reduce risks, and position themselves for success in today’s competitive landscape.
FAQs
1. What is AP Automation?
Ans: As a result of digital transformation, AP automation or accounts payable automation is enabled by cloud-based software solutions that digitise the accounts payable process. Moving from a manual invoice handling process in which all tasks are performed manually, to an electronic process in which data entry is reduced, and then to an automated process in which tasks are eliminated, is typically the starting point. With increasing levels of automation, accounts payable teams can prioritise more strategic objectives.
AP automation reduces the time and labour required for paper-based manual accounts payable invoicing, as well as lowering the possibility of expensive human errors. The objectives of accounts payable automation are improved control, enhanced visibility, and increased efficiency.
2. How does AP Automation resolve communication issues related to invoices?
Ans: AP automation can help solve communication problems about invoices by making an accurate, real-time record of all comments, questions, and inputs about a specific invoice or client. Also, it means that anyone with permission can look at documents and communication records and search for them.
3. Can AP Automation software help prevent invoice fraud?
Ans: AP automation gives you a wide range of controls that can be used in your financial processes to prevent fraud and make them safer. During the invoice approval process, for example, approval limits can be set for certain or all user accounts and additional approver requirements can be set. The reporting tools that come with AP automation also make things clearer and easier to see, so any fraudulent, suspicious, or unusual activity can be found quickly.
4. How does AP Automation prevent duplicate payments?
Ans: The solution’s validation checks examine all invoices upon receipt and flag any duplicates. This means that duplicate payments are prevented before they occur, rather than having to be recovered after the fact.
