Accounts Payable Automation: You Can’t Afford To Be Without It
Today’s day-to-day business processes are complex, particularly in accounts payable (AP), where supplier invoices are received, processed, paid and posted to general ledger. For businesses with high volumes of invoices, AP tasks can become cumbersome, with large volumes of paperwork, manual data entry, and complex approval flows that can result in process bottlenecks.
The COVID-19 pandemic has changed the way businesses operate, with employees working from home in higher numbers than ever before. And this trend is not likely to change any time soon as more and more businesses are realizing the benefits of a remote workforce. This has put additional burdens on AP teams who are struggling to process invoices in a timely manner. In this new normal, AP automation has become critical for remote and on-site AP teams to meet the demands of business and pay invoices promptly and accurately.
Today’s manual AP processes provide businesses with numerous challenges including:
- Process Bottlenecks
- Data Entry Errors
- Fraudulent Invoices
- Duplicate Payments
- Late Payments
- Missed Vendor Discounts
- Challenging Audit Controls
- Too Much Time Spent on Non-Value-Added Tasks
- Too Much Paper
AP automation software can alleviate these challenges and provide many additional benefits.
The Case for AP Automation
Recent studies show a strong trend towards the acceptance and adoption of AP automation software. Companies that are dealing with growing volumes of paperwork and workflow bottlenecks view AP automation as a way to reduce time spent on non-value-added tasks. Additionally, many companies believe that AP automation can reduce the time and effort required for invoice approvals, giving them the ability to take advantage of early payment discounts and avoid late fees and penalties.
In addition to the challenges stated above, large, multinational companies face additional AP challenges: multiple legal entities/subsidiaries, complex purchase orders, and cross-departmental approvals. These companies are looking at AP automation solutions to help them solve these challenges while improving the accuracy and efficiency of their AP departments. Even small to mid-sized companies want to adopt AP automation to bring transparency and accuracy to their data entry and payment processes.
In short, companies of all sizes are starting to look at AP automation solutions to help them solve their invoice processing issues.
Why AP Automation
AP automation solutions provide several distinct and measurable advantages including:
- Steamlined Approvals - The use of automated approval workflows with integrated communication and collaboration options has made the approval process faster. Most solutions feature automated reminders which help keep the approval process moving and allow approvers to review/approve invoices anytime and anywhere including from the comfort of their home offices.
- Shift From Non-Valued Added Tasks - AP automation software can convert invoices to electronic format with intelligent data extraction capabilities such as OCR (optical character recognition), two and three-way matching, and financial account coding which help avoid manual/partial data entry and validation. Not only does automation result in faster invoice processing, it also enables companies to redirect AP resources from manual, non-value added activities to strategic tasks such as vendor relationship management.
- Positive Financial Impacts – The use of artificial intelligence (AI) and OCR help eliminate duplicate invoice payments as well as payment of fraudulent invoices. Additionally, companies are better positioned to take advantage of early payment discounts since invoices are processed, approved and set up for payment more quickly.
AP Automation Solutions Are Not Created Equal
With so many AP automation solutions coming on the market, selecting the best one can be challenging. Several factors should be considered including the price of the software, one-time vs. monthly subscription model, on-prem or cloud deployment, implementation costs and on-going maintenance/support costs. Maintenance/support offerings vary widely, so it’s important to understand what’s included in the cost and what additional costs may be incurred. A comprehensive maintenance plan should include on-going technical support, along with regular software update releases and as-needed patches. Other things to understand and evaluate include:
- Ease of Use - Business users should find the user interface (UI) simple and user-friendly, like SAP Fiori. Users should be able to ask and answer questions about invoices quickly and easily and have the ability to approve invoices with a single click.
- Advanced Options – Power users with appropriate security, such as system administrators and AP managers, should have the ability and authority to edit invoice fields, recall invoices, update approval workflows, add/delete invoice approvers and more through user-friendly screens. Role-based security is critical to help control who can use these advanced features.
- Robust Analytics – Leading AP automation solutions provide businesses with metrics, statistics, and reports on invoice processing and payment forecasts through detailed, configurable dashboards. In addition, users should have the ability to download information to external tools such as Excel, for further analysis and management review.
- Fraud Detection - Some AP automation solutions include fraud detection tools that inform users whether a vendor or vendor manager has manipulated the invoice, leading to discrepancies. This can be a valuable tool for any organization concerned about receiving/paying fraudulent invoice.
You’ve Purchased an AP Automation Solution – Where Do You Start?
Regardless of company size, the need for an AP automation solution can dramatically increase processing efficiency. Before embarking on an automation solution implementation, it is important to understand the current AP processes and the barriers to success to help ensure that the selected solution will meet the needs and expectations of the company. Going paperless, saving time and costs, ensuring error-free invoice approvals and payments are just some of the many reasons companies today should evaluate and implement AP automation to improve invoice processing.