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Automating accounts payable (AP) saves a company in invoice processing cost, time, and risk, benefiting the bottom line. Here are four major problems that AP automation software resolves:

1. Process inefficiency

If approvals are managed manually, documents may be:

  • printed, coded, and approved by hand,
  • manually input into the finance system for payment, and
  • filed in a paper format.

This process is highly resource-intensive and inefficient – invoices get lost on desks, emails exchanges are left unresolved, documents are misfiled, and data is entered into finance systems incorrectly. Human error is inevitable with so many touchpoints in the process, and this can lead to late payments, damaged supplier relations, and demoralised staff. 

With automation software, the accounts payable process is digitalised and highly efficient and accurate. Further, staff know what is expected of them as business rules are put in place for the software. This contrasts with manual AP departments where there may be much unwritten knowledge and key person dependencies that can cause roadblocks in the process.  

    2. Slow approval times

    Prior to deploying automation software, business processes may need to be re-engineered and optimised. Often it makes sense to change the business process to fit the product. This is because the software’s in-built workflows are the result of specialist expertise and extensive experience, representing best practice in procure-to-pay. As such, the product streamlines the AP process as much as possible to deliver the lowest cost per invoice.

    With business rules governing the approval process, there is transparency around who is responsible for authorising specific payments. Therefore, an invoice cannot get stuck in limbo with nobody taking responsibility for it; the system will allocate a time-sensitive task to the appropriate user to action, with escalations up the chain of command if it is not completed on time. This ensures accountability, helping to keep the payable moving through the workflow.

    3. Audit and compliance challenges

    Keeping comprehensive records when working with paper can be very challenging with lost documents a frequent occurrence. With a digitalised accounts payable, all invoices are stored electronically. Further, the software collects a full audit history of every interaction (human or system) with a payable. Therefore, accounts payable can generate reports at the click of a button, as required.

    A software solution enforces compliance and largely removes the potential for human error in the accounts payable process. The system has embedded security checks on each invoice to validate that the payable has come from a known supplier with a current ABN and GST registration (if applicable). For purchase order invoices, the system will match line items to the purchase order stored in the system and the goods receipt. For non-purchase order invoices, the system will initiate the relevant approval workflow.

    In a manual AP department, performing these compliance checks, matching purchase orders, routing invoices, and entering data into company systems takes time, with checking and re-checking necessary to avoid mistakes. This work is often slow and inaccurate. In contrast, an AP automation solution manages the invoice validation and approval process, following pre-configured business rules to ensure timely and accurate payments.  

      4. Limited visibility

      In a manual accounts payable environment, one of the most significant issues is that the finance department has limited visibility into upcoming payments. This makes accurate financial reporting difficult and undermines informed, confident decision making.

      An AP automation solution identifies due payments, giving visibility into every stage of the invoice process lifecycle. This provides accounts payable the ability to time payments to take advantage of the full payment term or to benefit from early-bird discounts. It also makes it easier to manage cash flow and invest in new opportunities as they arise.

      With all communications and interactions with a payable logged in the system, authorised users have full visibility into an invoice’s history. This makes it easier to respond to supplier queries and share information with colleagues.

        Conclusion

        If a company is managing its accounts payable manually, it is invariably spending too much time, money, and resources on invoice processing. An automation solution makes the processing of invoice data fast, efficient and failsafe – it lowers the processing cost per invoice, reduces risk, and benefits the bottom line over time.

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