As businesses automate certain parts of their operations to digitally transform, accounts payable (AP) emerges as one of the most beneficial areas to automate. Everything from invoicing to data entry to matching and verifying entries can move from human hands to software solutions – freeing up accounts payable employees to handle more strategic work.
The benefits of AP automation are many – among them is immediate cost savings. Kofax reports that AP automation keeps processing costs below $3.00 per invoice compared to $8.00 in a manual processing environment. They also noted that an organization using AP automation discovered a $1.2 million staff productivity gain and a 32 percent return on investment from their AP automation project. Read on for a deeper dive into how to access these benefits.
What is Accounts Payable?
Accounts payable refers to the operation in a business in charge of processing the money a company owes. It includes the processing of outstanding bills and the managing of debts. This work can include anything from vendor payments to distributing petty cash to travel expenses. AP can also oversee negotiating payment terms and finding ways to save or consolidate costs.
The AP process consists of receiving invoices and bills, reviewing them, approving them, recording expenses, and making payments.
What is Accounts Payable Automation?
AP automation involves handing off the tedious, manual tasks of accounts payable to software. Through automating any number of steps in an AP workflow, businesses can see spikes in productivity and reduced costs.
AP automation includes streamlining purchase orders and pre-approval stages, using automatic bill pay, improving expense management and bookkeeping, and onboarding any software as a service (SaaS) subscriptions necessary. While many AP processes can benefit from automation, not every business will want to offload every aspect of AP. Data-gathering and any tasks that are repetitive or tedious are usually the first workflows to be automated.
How to Automate Accounts Payable
Start by working with an expert in AP automation who has helped businesses like yours migrate to automation technology. From there, you’ll be able to decide which of your processes you want to automate. Consider automating:
Data Entry
One of the biggest benefits of using AP automation software is relieving human employees of manual data entry. Automation frees up these workers, and it greatly reduces the number of errors that can enter operations due to human input. The data entry automation aspect of the software enables you to capture invoice data and keep it on file for easy retrieving later and better insight into your financial health.
Coding and Classification
Your AP department works through General Ledger coding, which is a classification process that helps identify a range of values for invoices. This process is time-consuming because of the number of values, and the bigger your business, the more complex it grows. AP automation takes this task off your department’s plate as they can set rules and identifications for incoming invoice classification – dramatically reducing errors as well. Automating this process ensures your coding is appropriately applied and speeds up document assembly for taxes as well.
Invoicing
The first step of your AP process is one of the most beneficial to automate. AP automation will help you move to electronic invoicing and streamline the intake of invoices no matter their document type. This step will improve organization throughout the rest of your AP workflows as the system will automatically consolidate invoices for processing.
Approvals
Automating approvals will make sure appropriate parties receive invoices for approval in a timely manner, and it will speed up their processing for payment. Faster approvals mean faster payments and ultimately better relationships with your vendors.
Matching and Verifying
Ensuring each invoice is correct is massively time-consuming for employees and one of the most important aspects to automate. With software, you’ll be able to quickly identify when invoices are inconsistent with prices per item, totals, and due dates. AP automation matches totals with data to verify purchases, so you know you are paying for exactly what you received.
When you work with a third-party expert like All Star Software, you can best evaluate which AP automation solutions work best for your business. Contact us to discover how much time and money you can save – while improving efficiency and productivity – through AP automation.
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