Accounting is one of the most vital driving forces behind the operation in the modern business world. Proper accounting helps you track income and expenditures and enables you to take control over critical business decisions. Whether the company is private or publicly traded, accounting plays a pivotal role in keeping the business afloat. To accomplish these tasks, several departments must work together to ensure suppliers get paid and money is received from customers. Two of the most essential are accounts payable and accounts receivable. Accounts payable (AP) is one of the most vital, as it tracks and pays out money owed to suppliers/vendors for various products and services. Accounts receivable involves money owed to the company by customers. The two work in tandem with each other, but AP may require a bit more finesse. Manual AP processes can take a long time to sort out, process invoices, and pay suppliers promptly. That’s why automating the process is a prudent move for most modern businesses. We’ve put together a list of seven ways automating AP processes can help you run your business more efficiently. Check it out below:
Time-consuming errors can cost a significant amount of money. Errors can pop up at any step of the manual accounts payable process. AP managers are only human, after all. By supplementing their work with an automated process, AP managers can easily prevent many of these errors. In typical manual AP processes, mistakes and discrepancies mean the invoice gets returned to the supplier. The delays this causes can lead to headaches for both parties and additional errors in the future. Using a software solution swiftly addresses this concern. As part of the automation process, your company’s database gets connected to your AP workflow. In this manner, the system can automatically validate data, ensuring the invoice is correct. Ultimately, this prevents errors, discrepancies, and other issues from creating late payments or halting the process entirely.
Easier Electronic Invoices
Manual invoice processing can be a drawn-out, costly process. Automated processing, however, transforms it into a simple, low-cost affair with multiple validation points. With electronic invoicing, different team members have the power to validate, approve, or reject invoices from mobile devices at any step along the process. Furthermore, automation drastically reduces the cost per invoice. Did you know the average price of manual/paper invoicing is $15? That’s per invoice. It can cost higher, depending on the situation. Overhead costs like paper and ink add up over time. Other expenses, such as payroll for additional data-entry clerks or preparing invoices for mailing, can also contribute to higher invoice processing costs. Then there are the hidden costs associated with manual processing. Lost time, slow transit, and myriad other issues can raise the price significantly. Ideally, you’d like to avoid such problems. Automation reduces that to about $3 – 4 per invoice, making it easier to save time and money throughout the process.
Fraud—whether it’s internal or external—can cause severe issues in any organization. AP Automation is a shockingly effective, secret weapon in the battle against fraud. Think of it this way: manual AP processes are relatively easy to manipulate. Workers can falsify documents, fudge numbers, or utilize other techniques to perpetrate invoice fraud. Unfortunately, it can happen to anyone. Luckily, automation bolsters your defense against such tactics. Every time the invoice moves along the organization, another point in its audit trail gets validated. As it moves across the organization, it’s easier to detect fraud at various points along the way. The workflow automatically routes documentation to as many approval points (multi-level validation) as needed, so documents are easier to authenticate. In this manner, senior staff can prevent fraud before it becomes a significant problem for everyone. Automation can also provide critical insights into your expenses and help you manage the entire organization’s spending visibility related to suppliers/vendors.
Archiving Your Invoices And Gain Quick Data Access
With paperwork stacking up and new invoices constantly arriving, how do you take control over archiving invoices and extracting their data? Another unique aspect of AP automation is the valuable ability to add invoice automation to the AP department’s mailbox immediately. Suppliers don’t have to worry about extra work dealing with invoices, and you can use invoice templates to extract/archive automatically your data. Whether you save it as a PDF, spreadsheet, or email attachment, you’ll have a complete archive of invoices and related details at your fingertips anytime. Missing/lost purchase orders (PO’s) or invoices shouldn’t be a problem ever again, giving your AP department the peace of mind it needs to do a spectacular job performing its essential duties.
Sharing and collaboration are the cornerstones of any successful team-driven venture. Accounts Payable is no different. AP automation software enables more transparent and faster communication between team members. The software should also provide automated alerts to follow up on invoice processing and streamline team communication. By improving communication within your team, you can further reduce invoicing costs and ensure suppliers get paid on time.
Discounts and Compliance
Every industry has a set of regulations by which they must abide. To make it easier to comply, AP automation can use a compliance-as-a-service solution to ensure compliance for any area in which you may do business. Automation also helps you get the most out of various early payment discounts. Paying supplier invoices early helps them improve their cash flow while offering you a discount on multiple invoices. It ultimately lowers the cost of goods and services while building solid relationships with suppliers. Taking advantage of an early payment discount when offered is critical to reducing costs and increasing your cash flow without anyone leaving money on the table.
Quick Access to Reports
The final piece of the AP automation puzzle involves reports and auditing. Ideally, your organization should have quick access to statements, past invoices, and other pertinent information during an audit. With automation connecting your database, you’ll reap the benefits of extensive, quick access to all necessary reports all in one place. Through helping you maintain accurate data, proper tax compliance, and better overall visibility, AP automation is the best way to ensure more direct, consistent audit results for your organization over time.