The job of everybody in accounts payable is a critical one. In your role at the organization, you need to ensure payments are going out on time, on schedule, with proper invoicing, and without any fraud/spend risk associated with the payment. Similar to buying a home or finding a great deal on homeowners insurance, it can be a long, complex, and convoluted process. Fortunately, automating things can streamline the entire AP process and make everyone’s job easier in the long haul. Here are five ways automation contributes to that goal.
1. Avoids Slow Processing
Working with third-party vendors can be a tricky proposition at times. The key to ensuring a positive, mutually beneficial relationship is to thoroughly vet them before inking a contract. Simple procedures for vetting suppliers ensure they can handle the workload you give them, deliver goods promptly, provide high-quality service, and communicate effectively. When paying out their invoices, processing should be much faster! Slow processing is the bane of existence for any organization. It’s especially annoying for suppliers who want to get paid and for an AP department that desires accountability and smooth workflow. Improving the workflow is the shortest route to enhance processing speed. Spend some time evaluating your basic operations and replaced outdated procedures with more streamlined ones. Go electronic! E-invoicing is the single-most convenient way to capture spend data, prevent common AP errors, verify invoices, and get them paid out promptly. Automation and delegation also help speed things up greatly. All of this serves to cut out manual processes, making data available digitally for any later spend analysis that needs to be performed.
2. Prevents Invoices From Disappearing
The case of the disappearing invoice isn’t just a terrible name for a mystery story; it’s something that can happen in your AP department. But what leads to disappearing or misplaced invoices? Human error, fraud, an excessive workload to name a few. AP departments won’t usually even know about them until a supplier reaches out inquiring about payment. Poor data entry, bad invoices matching, inferior filing procedures, and other factors all lead to disappearing invoices.
An AP automation program can prevent invoices from disappearing. With a robust tracking interface that lets you manage invoices in real-time, there should never be another situation where invoices get lost or aren’t submitted and approved. Along with implementing such a program and staying on top of training, an AP department can stop this issue right in its tracks without much trouble at all.
3. Uses Three-Way Matching
Every company faces difficulty with unauthorized purchases from time to time. Consider using a combination of advanced software tools, going completely digital, and using three-way matching to prevent unauthorized purchases. Three-way matching is the secret weapon for AP problems. It ensures unauthorized purchases go the way of the Dodo while ensuring payments are being made accurately. It’s fast and easy to use. It involves finding discrepancies in your P2P documents (purchase orders, receipts, and invoices). The system looks at these variables, assesses them across your organization, and then outputs the data in a useful way. This procedure ultimately prevents overspending, nips unauthorized purchasing in the bud, and prevents pay-outs for items you have yet to receive.
4. Streamlined Workflow
No one who works in an office wants to deal with a slow, frustrating workflow. It takes a lot more time to get basic things done. It brings down morale. It costs more money. It just doesn’t work out well for clients, suppliers, or team members. Using automation and leverating smart technology to streamline the accounts payable workflow has significant benefits. These include (but aren’t limited to) the following:
- Routes expenses to the appropriate expense accounts
- Mobile invoice processing
- Blocks invoices if suppliers can’t be reached
- No payment before delivery
- Avoiding matching errors
- Preventing double payments
- Optimize working capital
- Early payment discounts
Streamlining the accounts payable workflow cuts invoice costs, gives team members more leeway to work on more important projects, and cuts back on the tedium of the manual process. Over time, smoother workflows lead to better cash flow management, less significant risk, and fewer days to process supplier invoices. Finding ways to more efficiently manage invoices and payments makes everyone happier in the long term.
5. Aids In Compliance and T&E Expense Tracking
Every industry has its own version of compliance. In the AP department, it means ensuring adherence to both internal and external purchasing rules. Some software allows departments to set rules and parameters for purchasing and approvals. Simply set the parameters for your company’s authorized and unauthorized purchases. The system can flag any potential compliance problems so the department can react appropriately. Expenses aren’t merely limited to working with suppliers. What about travel expenses and reconciliation for employees? Capturing T&E spending is just as important as managing invoices. The idea is to control your costs as much as possible, prevent employee fraud (such as fudging or misplacing receipts), and reduce spending issues wherever they may occur along the line. Automation also saves your employees time—especially if your company trusts them with a purchasing card (P-card) that can be automatically reconciled. When combined with automated invoicing, guided buying, and proactive spend analysis, these procedures can truly make a difference for Accounts Payable—and the entire organization as a whole.
