All You Need to Know About Accounts Payable Automation
2 min read
In today’s world, businesses frequently encounter challenges when dealing with invoices, payments, and purchase orders through manual approaches. These challenges encompass errors in data extraction, overlooked information, delayed payments, outstanding invoices, and untracked orders. All these issues can result in bottlenecks in your accounts payable processes, leading to prolonged and complex procedures.
However, with advances in technology in this digital age, businesses can effortlessly address these problems and transform their accounts payable process with Accounts Payable Automation.
What is AP Automation?
Accounts Payable Automation is an effective way of reducing human intervention, automating repetitive tasks, and eliminating manual errors from the accounts payable process. Businesses can easily achieve AP Automation by using accounts payable software integrated with their online digital system and databases.
How Does It Work?
AP Automation offers a highly automated, cost-effective process while giving you full control over your invoices and data. AP Automation software cover three main components:
- Converting your supplier invoices into a standard digital format and then processes the invoices through an intelligent digital workflow. So that all invoices are ready for payment and reconciliation.
- Using advanced technologies such as optical character recognition (OCR) to extract information from invoices. It also uses artificial intelligence (AI) and machine learning (ML) to recognise spending patterns and improve the accuracy of data extraction.
- The capability to work with customised business rules such as acceptable variances and approval workflows. This helps your business eliminate the need for manual interventions and provide the ultimate straight-through, touchless invoice processing.
Learn more about AP Automation Capabilities
How does AP Automation Benefit Your Business?
Enhancing Your Process Efficiency
AP Automation can help reduce invoice processing times and business operating expenses. It increases the speed of invoice processing by reducing the need for manual data entry by as much as 80%. Moreover, AP software can enhances extraction accuracy and processing rates, decrease work effort, eliminate time-consuming tasks and task duplication with a straightforward process and pre-built intelligent workflows.
By setting configurable business rules and workflow approvals within the AP automation system, you can minimise the risks of fraudulent activity and enhance compliance. Furthermore, optimised invoice and purchase order processes will enable early payments to ensure seamless communication and collaboration.
Increasing Process Visibility
With data integrity and control that AP Automation offers, you can gain valuable insights into your payment cycle that allow for real-time access to updated reporting and analysis. AP automation can improve transparency in transactions and communication within your business, as well as with suppliers and stakeholders.
Reducing Cost and Resources required for your Business’s Accounts Payable
By automating the process, you can save on paper, sorting, filing, storage, and invoice retrieval costs. AP automation eliminates the need for printing and scanning electronic invoices, reducing data entry errors and their associated costs. Your businesses can reduce workload within the accounts payable department, thereby minimising the necessity to increase staff numbers.
Facilitating Seamless Digital Transformation
With the help from AP software, you can elevate your AP team and enhance the value delivered to your enterprise through accelerated invoice approval, reducing manual errors, and maximizing scalability. Experience a seamless and convenient workflow without the need to log in and out of different applications or re-enter data into multiple systems.
It also allows you to embrace manageable change with the latest technology, as accounts payable automation can seamlessly integrate with your company's ERP, databases, and major financial systems. Lastly, AP automation provides a great chance for you to empower and encourage the adoption of new technology within the internal team and among suppliers to align with a streamlined accounts payable department and new business practices.
Example of AP Automation
Data Extraction
Optical Character Recognition can scan and extract all invoice information. Invoice header information such as ABN, invoice number, invoice date, invoice total, etc., will be extracted using Advanced OCR techniques, machine Learning capabilities and algorithms designed to locate the required data. Therefore, the system can handle and process all images or documents.
Automated Invoice Matching and Approval
Through the use of PO Matching, AP Automation can quickly reconcile invoices with the corresponding purchase orders, employing 3-way matching principles and setting tolerance levels. Matched or approved invoice information and images can be exported to the ERP for payment processing, as AP software can connect with most Heading ERP and Business Applications.
Dedicated communication channel with suppliers
Using automated AP software will facilitate automatic communication, ensuring they are informed about the status of their payment approvals through instant notifications and updates. Emails will be sent to notify them of the approval of their invoice and the process of their payment.
Streamlined Document Management
Through the automation of AP, it becomes feasible to connect your record-keeping systems with the AP software. This results in the automatic uploading of all documentation into a secure digital storage, maintaining a comprehensive and current trail for audits.
Related: Case Study on How Medius Helped Kennards Self Storage Streamline their AP Processes
How to Automate your Accounts Payable?
Businesses typically employ AP automation software by implementing AP software, which can be either in a cloud-based Software-as-a-Service model or an on-premises solution, suitable for companies that prefer their own system management.
After implementing the system, it's essential to provide training for finance staff and approvers. It's also beneficial to invest time in setting up rules that facilitate the automation of numerous tasks. Although the AP process follows a relatively standardised pattern, companies might have specific needs that you need to make sure solution can accommodate those unique workflows. This approach ensures optimal return on investment.
Related: Top 7 Reasons to Add AP Automation to the Mix
How to Select a Suitable AP Automation Software
Depends on your business’s size, model and operations, each business have different requirements and needs for their own AP team and workflow. Therefore, we suggest the following steps to successfully choose the perfect AP software.
- Determine your company goals for AP Automation
- Identify requirements for AP Automation based on how your current accounts payable processing works
- Explore various AP automation options, assess the proposals provided by vendors in response to your request. Examine different aspects of their proposed solutions, including features, costs, and the approach to implementation.
It is of importance that the AP automation software is capable of accommodating all invoice processing use cases required by your business. This is essential to achieve comprehensive AP process automation and achieve significant time and cost savings.
- Delve deeper into evaluating how well the most promising vendors align with your specific requirements. This might involve creating detailed documents and requesting demonstrations.
Moreover, you should gain a clear understanding of how the AP automation software seamlessly integrates with the company's ERP system to ensure data synchronization and a streamlined workflow.
Check out: APAY - Winner of Most Innovative Accounts Payable Automation
Upon having a clear understanding of AP Automation and completing all these steps, you should be confident in knowing which AP Automation solution provider is best for your businesses.
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