Optimizing the accounts payable (AP) process involves more than paying vendors on time — it’s also about maximizing efficiency and accuracy with every outgoing payment while managing cash flow to maintain a healthy business.
That’s why many AP teams are turning to automation and digitization to eliminate tedious, manual tasks, reduce human error, and ultimately streamline the AP process. As a result, finance departments can ensure accuracy in their processes, maintain strong vendor relationships, and avoid unnecessary costs, like fees associated with late or duplicate payments.
In this blog, we’ll explore 12 steps to optimize the AP workflow, focusing on process improvements in accounts payable.
Key takeaways
- Digitizing and automating AP processes is key to boosting efficiency, reducing manual errors, and accelerating processing times, allowing staff to concentrate on strategic initiatives
- An efficient AP process requires a holistic analysis of existing workflows, including invoice approvals, handling overdue payments, and effectiveness of automation tools
- Continuous assessment and embracing innovative solutions is a key element to maintain an optimized AP process
What is the AP process?
The AP process involves managing and tracking all outgoing payments a company is liable for, from vendor invoices to expense reimbursements. The process includes invoice receipt, verification, approval, and eventual payment. The primary goal for AP teams is to ensure timely, accurate payments to vendors.
How do you increase productivity in accounts payable?
Efficiency in the AP process is paramount, especially in today’s economic climate where doing more with less is top of mind for many finance professionals. To achieve this, it’s important to complete a holistic analysis of your existing AP process. Consider re-examining areas such as:
- Invoice approvals
- our process for handling overdue payments
- The effectiveness of current analytics tools if applicable
By auditing your existing processes, you can pinpoint places to boost efficiency and productivity. In most cases, the next step involves digitizing and automating AP processes. According to MineralTree’s 2023 State of AP Report, AP is the top digitization priority for finance professionals.
Streamlining AP workflows through automation frees up valuable time for staff to concentrate on strategic initiatives, reduces manual errors, and accelerates processing times. It also helps maintain vendor relationships, which have grown in importance for two-thirds of finance leaders, according to the same report.
12 ways to improve the AP workflow
As finance departments face the challenge of doing more with less, many are leveraging automation and digitization to enhance AP workflows. Here are 12 ways your team can improve their AP workflow for a more efficient process:
1. Digitize invoice approvals
Eighty-seven percent of AP teams say the speed of payment is important to their suppliers. Digitizing invoice approval helps streamline the process by allowing easy approvals via email and automating the routing of invoices to the appropriate approver. As a result, you can reduce delays and facilitate faster processing.
2. Combine OCR and human review for faster invoice capture
Human error and delays are common in invoice capture when teams rely on either manual data entry or optical character recognition (OCR) technology alone. MineralTree’s unique integration of OCR technology with human review significantly accelerates invoice capture, enhancing accuracy and speed.
3. Leverage electronic payments
Outdated payment methods like paper checks can quickly become time-consuming due to processing costs and associated manual tasks. Transitioning to electronic methods like virtual cards and ACH payments helps improve efficiency and supports cost savings. Digital payments can also help bolster vendor relationships — 79% of vendors want to receive more payments electronically.
4. Reduce overdue payments
Late payments often occur due to human error or inefficient processes. But they aren’t just costly in the form of interest and late fees — they can also hurt your relationships with vendors. Prompt payments are crucial for maintaining these relationships and ensuring a healthy cash flow. Digitization and automation can help reduce human error and boost efficiency in your processes to ensure timely payments.
5. Avoid duplicate payments
Duplicate payments can also strain vendor relationships and waste resources. Duplicate payments often occur due to payment scams, a lack of digital payments, a lack of visibility into the AP process, or even a lack of a centralized process for receiving invoices. By using automated systems like MineralTree, you can streamline how you receive invoices and use digitized invoice capture to improve visibility into your process. This not only safeguards your organization’s financial integrity but also strengthens relationships with vendors.
6. Invest in analytics
AP analytics play a pivotal role in strategic decision-making and cash flow management within AP. Investing in the right analytics tools can help turn your data into meaningful business insights. By looking at historical payment data, you can identify patterns and trends — like which vendors offer early payment discounts or rebates. These insights help you negotiate favorable terms with vendors and strategically decide between ACH transfers and virtual cards to optimize your payment mix.
7. Enroll vendors in digital payment methods
Digital payments don’t just boost efficiency and reduce fraud for your team — they also provide faster access to funds and reduce administrative costs for vendors. MineralTree helps you enroll vendors in virtual card payment methods for smoother transactions. This ultimately fosters stronger vendor relationships.
8. Combat fraud
ACH fraud, business email compromise (BEC) emails, and other forms of fraud have become major risks for AP teams as bad actors become more sophisticated. Robust internal security controls are crucial in safeguarding your business. For example, integrating payments with AP automation solutions reduces the need for human intervention, reducing unauthorized duplication or alteration.
9. Embrace a paperless process
AP workflows historically involved paper processes and time-intensive manual tasks. Fortunately, the emergence of AP automation platforms has demonstrated the value of digitization and automation within AP. A paperless AP process minimizes errors, enables faster payment processing times, and optimizes workflows for hybrid and remote work environments.
10. Reduce human error
Human error can be costly and time-consuming, which makes this a critical area of focus for your AP team. Automating repetitive tasks and digitizing processes helps ensure accuracy, significantly reducing the risk of costly mistakes.
11. Improve document management
Inefficient document management can make your AP data disorganized and difficult to access. Keeping your files organized with an AP document management system helps create an accessible, single source of truth for team members across your department. Additionally, an organized system can help team members answer supplier questions or make it easier to audit AP. As a result, you save time and reduce the risk of human error.
12. Automate the entire end-to-end AP process
AP automation is critical to the success of modern AP teams. MineralTree’s end-to-end AP automation solution revolutionizes the entire AP process from invoice receipt to payment. The comprehensive platform optimizes efficiency, reduces manual intervention, boosts AP team productivity, and ensures a seamless AP workflow.
Final thoughts
Enhancing efficiency in your AP workflow is fundamental to your organization’s financial health and your department’s success. MineralTree’s comprehensive solutions cater to these needs, providing a robust platform to automate and optimize your AP process.
By implementing these 12 tips and leveraging MineralTree’s solution, you can achieve significant process improvements in accounts payable, leading to increased efficiency, reduced costs, and enhanced financial stability.
Remember, continual assessment and adaptation are key to maintaining a highly optimized AP process. As technologies evolve, embracing innovative solutions will further elevate AP efficiency.
Request a demo of MineralTree’s end-to-end AP automation platform to learn how your team can more effectively manage AP.
