The accounts payable department plays a crucial role in your business. It directly impacts cash flow and important relationships with suppliers. Many accounts payable departments are still reviewing invoices manually and cutting paper checks. This is an outdated, labor-intensive process. The solution is accounts payable automation.
Benefits of Accounts Payable Automation
Here are some of the benefits of automating your accounts payable workflow.
Automating your accounts payable reduces the time it takes to process invoices and payments. You can also track each invoice throughout the approval process, so your employees won’t need to spend time searching for invoices or payment status. All the relevant information is available with just a few clicks. With electronic payments rather than paper checks, your vendors will also receive their payments more quickly.
With any manual process, there’s a potential for error. Even a few small mistakes can create extra costs for your business that can easily be avoided. These mistakes often go unnoticed until you close the books at the month’s end. Automating accounts payable ensures that the data in your accounting system is accurate and error-free.
AP automation will save your company money. Accounts payable software makes it easy to take advantage of dynamic discounting. You’ll also avoid late payment penalties because invoices can be approved more quickly. Approved payments can be set up and automatically sent on the desired date. AP automation also alerts you to duplicates or overpayments. You won’t need to worry about accidentally paying an invoice twice.
Accounts Payable Processes to Automate
Automating the following accounts payable tasks will streamline your workflow and provide far-reaching benefits to your business.
1: Receiving and Capturing Invoices
Receiving invoices from vendors sounds simple enough, but it can be a surprisingly complex task. Suppliers send invoices with a number of different methods—such as fax, email, or traditional “snail” mail—and in a variety of different formats. Sorting and routing all of these invoices can be a time-consuming task, especially at large companies. When invoice data is entered manually, it’s easy for an invoice to be overlooked or for mistakes to occur. With payables automation, paper invoice processing is eliminated. New invoices are categorized and routed automatically, which saves time and ensures accuracy.
2: Payment Approval
Each invoice needs to go through several layers of approval before being posted for payment. It often must be approved by multiple people or departments. This can be a cumbersome process, often leading to payment delays and late payment penalties. It can be difficult just to find out where an invoice is within the approval process. Automating invoice routing and approval makes it easy. With just a few clicks, the invoice is routed to the correct person for approval, making your workflow much more efficient.
3: Invoice Matching
In order to make sure that each invoice paid is correct, every received invoice must be backed up by relevant accounting documents such as purchase orders or receipts. Automation software will store all of the necessary documentation electronically. Each invoice will be matched to its supporting documents automatically, which will significantly speed up the accounts payable workflow.
4: Vendor Payment Inquiries
If there’s one question that accounts payable departments hear more than any other, it’s “When will I receive my payment?” Electronic vendor portals allow your suppliers to log in and check the progress of invoices and payments. This saves time for your suppliers and your accounts payable team alike. Your vendor can access the portal any time it’s convenient, and your accounts payable staff won’t have to spend hours responding to payment inquiries.
Automation is all about efficiencies and getting cash flow coming back to you as soon as possible. Try automating these 4 task and see your AP department flourish.