If your organization manages accounts payable (AP) manually, you’re losing out on a chance to save money, time, and lower hassle. Your finance staff may eliminate errors, lower business fraud, and save time to work on larger plans that will advance the business using AP automation. This article will examine AP automation, its functions, and its uses.
What Is Accounts Payable Automation?
Using software to digitize the vendor invoicing process and produce quicker, leaner, and more affordable AP workflows is known as AP automation.Additionally, the accounting software that drives AP automation uses various data sources to fill dashboards and offer analytics features that help the company manage its cash flow.
For example, a general ledger code may be automatically assigned to an invoice for a company’s monthly rent if the amount aligns with the expectations. The bill may then be sent to the manager for approval. However, if that sum suddenly increases by 15%, the AP automation system will alert the team for further examination. The system may recommend a GL code for one-time invoices or those without a corresponding PO. However, an authorized person must verify accuracy.
AP Automation Anatomy
Different invoice types, such as paper invoices, PDFs, and Word documents, will be manually used by a company. AP automation solution employs optical character recognition (OCR) to digitally extract data from these invoices, doing away with the requirement for manual data entry.
Additionally, some platforms allow you to set up instructions that automatically send bills to individuals for review. Next, the bill is compared to a purchase order after being accepted, and the information is forwarded to the ERP system for record-keeping.
The entire process, from the original purchase request to the three-way matching and consent, can be made faster, and many bulky manual stages can be eliminated with an automated AP process. The limited human involvement in all of this allows the AP team to concentrate on other crucial tasks.
Why Use AP Automation?
AP workflows have historically been prone to fraud and error as it was done manually. As a result, AP teams have an increasing number of invoices to process as businesses expand.
This added workload worsens current issues and may slow bill payments, costing the business cash or even alienating suppliers. In order to manage, many businesses add more staff members, which is a costly solution that can be eluded by investing in financial AP software that is more capable. AP automation also helps to:
- Increase staff morale and offer them extra time or essential tasks
- Recruit and keep top AP talent
- Reduce the duplications and errors that result from human data entering
- Find information that will help make decisions
- Boost policy adherence and improve vendor relationships
- Improve employee loyalty
Endnote
AP automation is an excellent place to start for businesses that are just starting to automate because it is a time-consuming task that must be managed continuously. AP automation is an inexpensive and easy process and helps lower errors and fraud.
