Accounts payable is the backbone of any successful organization. It involves receiving and processing invoices, paying vendors, and managing expenses. The more efficient an organization’s accounts payable process is, the more efficient the organization will be as a whole. However, many of the processes involved in accounts payable are traditionally tedious, time-consuming, and error-prone due to their manual nature.
Automating accounts payable takes efficiency to the next level and eliminates the monotonous, manual processes involved. It streamlines the entire end-to-end accounts payable process from invoice capture to coding through processing payments, and integrates with your ERP solution. Automating AP also provides more visibility and centralized control over the accounts payable process as well as reduces the risk of fraud, improves cash flow, and helps businesses scale more easily.
How Does AP Automation Work?
There are many AP Automation solutions that exist and some only solve single pain-points within the Accounts Payable process instead of providing a holistic end-to-end solution.
End-to-end solutions improve the AP process by allowing for the following:
- Automated Data Capture & Coding: Invoice information is automatically extracted from paper and electronic invoices and coded at near-perfect accuracy. Invoices can be uploaded directly into your ERP allowing for the data to sync with your existing accounting system. Duplicate invoices are automatically detected and flagged for review, saving time and preventing duplicate payments that require reconciliation.
- On-the-go Approvals: Automation allows for invoices to be approved anywhere, including on-the-go via mobile devices, and paid according to your preferred method. Organizations can also utilize important payment controls such as segregation of duties, two-factor authentication, and dual approvals to add more security and further protect against payment fraud.
- Automated Purchase Order (PO) Matching: Purchase Orders allow organizations to bypass the tedious approval process which sometimes involves many people including hard-to-reach department heads. Rather than collecting everyone’s “stamp of approval” for every invoice that is received, automated PO matching links invoices with their corresponding POs, allowing the invoice to bypass approvals and go directly to payment scheduling and completion.
- Automatic Payment Scheduling and Routing for Approval: Automating payments is a huge part of automating AP. Many organizations start out by automating their payments as a gradual gateway towards end-to-end efficiency. In many automation solutions, you can select a preferred payment method for each vendor and it will be automatically applied for each future payment made. By utilizing automatic approval routing and simple payment scheduling, you can dramatically increase efficiency and decrease the time it takes to get a payment out the door. All the while, making sure this happens safely and securely by utilizing the advanced security features of your automation solution. In some cases, AP teams can take better advantage of early-pay discounts by having a more organized, automatic bill pay workflow. It’s also likely that vendor relationships will be strengthened as payments arrive accurately, securely and on-time.
- Payment Method Flexibility: Typically, organizations can choose their preferred payment method and the AP Automation solution will execute payments on their behalf to streamline the process. Some solutions will help you optimize your payment methods, which can lead to quicker payment completions, the ability to earn cash-back rebates, and more! After a payment is complete, electronic remittance details are sent to vendors. A great automation solution will sync this data back into your accounting system so that there are no discrepancies between the platforms.
- Simplified Audits: All approval and payment details are automatically stored in one central repository that can be accessed by authorized users at their convenience.
What are the Benefits of Automating AP?
Automating accounts payable allows organizations to streamline operations and address inefficiencies associated with the manual process. By taking a holistic approach to AP, organizations can realize a number of benefits including (but not limited to) the following:
Improved Vendor Relationships
Nobody likes a late payment. AP automation helps businesses pay their vendors accurately, efficiently, and on time. It also provides transparency and increases visibility in the payment cycle. Armed with automation solutions, business can ensure that each invoice is paid in a timely manner and via the most advantageous method. When vendors are paid promptly, business relationships are strengthened and strategic partnerships are solidified.
Optimized Cash Flow
Automation gives you control over when you pay your vendors. It not only cuts down processing and labor costs for your business, but it allows you to create a longer average payable period and increase your cash on hand. Organizations, in turn, realize improved working capital management and optimized cash flows.
Enhanced Business Operations
Before automation, accounts payable was slow and meticulous work that was prone to human error. Now, businesses can leverage automation solutions to save time and money, avoid errors, and improve day-to-day operations for the finance team and the business as a whole.
How to Select an Accounts Payable Automation Software
Not all AP automation solutions are made alike. If you’re looking to implement AP automation in your business, it is important that you research solutions carefully to find a good fit. Be sure to investigate whether the solution integrates with your ERP, saves time and money, and can support your business needs.
MineralTree Helps Businesses Streamline Their Processes with AP Automation
Have we put the automation bug in your ear? We’d love to tell you more about all the ways it can improve your AP processes for the better. Get in touch with us today to see if MineralTree’s industry-leading, end-to-end AP automation solution is right for your business!