Digitalization has swept the world, and businesses are no exception. Software solutions have transformed business processes to take their speed and efficiency to unprecedented heights. However, many businesses continue delaying the adoption of automation, even in departments as loaded with work as the accounts payable (AP) department.
AP automation enables businesses to manage their data records, invoices, approvals, and payments through a single tech-enabled platform. This process brings with it many benefits that can let a business hone its efficiency. Read on to learn more about which aspects of AP need automation and why your business should invest in it.
Before moving on to the advantages, it is necessary to identify the processes within AP that are dominated by unnecessary manual work. Tasks that require mundane work or are prone to errors, or require repeated communication between members are the ones that AP automation will benefit significantly from. These include:
- Data entry from multiple source documents
- Three-way matching between invoice, purchase order, and notes to the supplier
- Invoice coding
- Approval routing
The conventional accounts payable process requires manual data extraction and entries from a number of documents, from invoices to contracts, bogging down the entire procure-to-pay workflow. Invoice approval further slows the process down. On the other hand, AP automation solutions use technologies such as Optical Character Recognition to gather data from documents and generate records automatically.
In addition, an automated approval routing process makes sure authorized personnel get notifications and reminders to approve any pending invoices. This hastens the process and closes deals quickly, increasing a business’s cash flow. It also takes the workload of mundane, repetitive tasks off the shoulders of your employees, increasing their productivity and giving them the time to focus on functions of a strategic nature.
The amount of paperwork the AP department has to deal with naturally creates room for error in manual processing. These can include mistakes that are caused by inputs that may cause payment duplication, paying an incorrect sum, and late or missed payments. The lack of appropriate oversight and reduced visibility may cause any discrepancies between order and invoice data to go unnoticed as well. This makes businesses susceptible to fraud. Not only can this cause considerable losses to the organization, especially if you are a smaller business on a budget, but errors also take time to get resolved, if they ever get sorted at all. In addition, inaccurate or delayed payments can be detrimental to your organization’s credibility and supplier relationships.
Automating the AP workflow significantly decreases the chances of error occurrence. Automated data scraping, entering, and matching processes eliminate human errors completely, streamlining business operations and increasing the efficiency of operations.
Lack of transparency across business operations leads to weaker control over them. This can be especially problematic for larger businesses with invoices and payments to be made across numerous locations and organizations.
AP automation solves this problem by allowing the generation of customized reports and categorizing information. For example, you can use automation software to get instant reports about such data and metrics like average approval time, rather than scrolling through accounting records to find late payments or aging invoices.
Paperwork brings with it costs of supplies and the wages paid to employees to deal with it. Manual processing is time-consuming and can require more employees and additional work hours. In addition, any mistakes made in entries can lead to costly consequences, even lawsuits. Automation not only eliminates the need to pay through checks, but also lowers operational costs by reducing work hours and improving accuracy.
Fraudsters operate by finding blind spots within accounting processes and exploiting them. Manual AP work does not enable audit trail recording; neither does it allow transparency into spending patterns and behavior. Restricting data access poses a challenge as well. This leaves plenty of loopholes for fraudsters to do their work.
AP automation solutions reduce the risk of fraud in multiple ways. The enhanced visibility and secure data storages they provide contribute to the safety of a business’s financial data. Automated approval routing ensures that the right people always have an eye on invoices. This software can also track changes in spending and separate outliers into reports, ensuring that all processes are running optimally and with oversight.
Embracing the changes in business landscapes is the only way organizations can ensure they do not get left behind. AP Automation solutions are advantageous in a number of ways: they reduce costs and time, enhance visibility, and improve the efficiency of companies. You should leverage such tools to their maximum potential if you want your business to ace the market.