INTELLIGENT ACCOUNTS PAYABLE AUTOMATION
3 Ways to Improve Your Accounts Payable Workflow
February 22, 2021
The modern view of the accounts payable process is that it can be a strategic and scalable resource. Over the last decade, there has been a want and need from business owners to see growth in AP. Today, companies know that as the business grows, they need to be prepared to handle that growth.
However, if you want to scale without the process breaking, that requires a critical look at the current operations of your AP department, and more specifically, the accounts payable workflow.
Many business owners view accounts payable as another cost of doing business.
We explore where you can find workflow improvements to turn AP into a strategic and scalable resource.
What is a workflow in accounts payable?
Let’s take a step back and discuss how to define a workflow in accounts payable.
Of course, a workflow is simply the end-to-end process, all the incremental steps within the lifecycle of a project or function. When it comes to accounts payable, there are certain complex processes that have defined workflows like the invoice lifecycle. It’s also an area where there’s tremendous value to be had with greater efficiencies and lower processing costs.
Explaining the end-to-end process of accounts payable
There are really two ways to think about the end-to-end process of accounts payable and the invoice lifecycle: legacy versus modern.
In a legacy process, there are multiple steps to get from invoice collection to post-payment management with much of it being manual. The AP process kicks off when the invoice is received. Then, begins the stage of handoffs – invoice processing and approval – where the invoice winds its way through a hierarchy of authorizations. Payment processing includes its own set of tasks, requiring an employee to determine the payment approval hierarchy, workflow, and then getting final signoff for payment. Of course, then there’s payment fulfillment as well as all the post-payment management like data entry into an ERP as well as physically archiving and filing.
The modern AP workflow via intelligent automation takes the procure to pay process and streamlines every aspect of it. Let’s look at the three primary ways you can leverage the modern AP process to improve the accounts payable workflow and what it could mean for your business.
Standardizing accounts payable invoice automation
You step into the elevator and press the button for the basement. You hear the ‘ding, ding’ as you descend. The doors open and you step out into the dark quiet. This may sound like the start to an office horror film, but it’s something that likely sounds all too familiar to AP professionals. The vast expanse of filing cabinets holding an abundance of paper in dimly lit rooms is still a common existence for businesses everywhere, unfortunately.
At the same time, invoice collection isn’t much different with invoices coming to the AP department through a mix of snail mail, email, or fax. From there, invoices are either manually typed into an accounting system or scanned in order to create a digital record. That manual, paper-based system of invoice collection and processing is time-consuming and error-prone at best.
Here’s the good news: an automated process removes the burden of receiving and capturing invoice data, introducing standardization and a streamlined process. It cuts out those labor-intensive, error-prone tasks like invoice entry, scanning, receipt, and migrating data from AP into the main accounting system.
With intelligent AP automation, all invoices are digitized and stored in a central digital repository. No longer are you sifting through paper and filing cabinets in a single physical location. You get greater visibility into your data, at your fingertips. That also translates into easier month-end and year-end close as well as greater ease when it comes to audits.
Remove accounts payable approvals roadblocks
Every AP team has been there. You have an invoice that’s in process but moving through approvals is happening at a snail’s pace. You’re spending time tracking down the approver or figuring out if it’s already been handed off in the approval hierarchy. All the extra time and communication to simply keep things moving is taking you away from more strategic work.
In a paper-based AP process, manually routing invoices, working through multiple levels of approvals, and being in the uncomfortable position of nudging approvers to act to ultimately process a single invoice and payment can be exhausting. Now, with teams working remotely, that puts an extra level of pressure on the time it takes to facilitate invoice processing. With an average of more than eight days to manually process a single invoice, there are certainly gains to be found.
AP automation removes accounts payable approval roadblocks, bringing efficiency to the process. It allows you to set multiple business rules, approvals, thresholds, and limits throughout the workflow. Invoices automatically get routed to the correct individual. And setting automatic threshold levels for approvals can save time. For example, let’s say you want invoices under $200 to get automatically approved and sent to a payments queue. It’s as simple as a few clicks to save significant man hours.
Plus, when there are hundreds of invoices in the queue for approval, staying on top of where each one stands can be daunting. With AP automation, there is a clear view all your active invoices, where they are in the process, and what comes next.
“The biggest benefit we receive from onePAY is the insight into our invoices at any moment that we need to. We can drill down and see that. Our folks do electronic approvals, so we know who’s approved the invoices and when they’ve done that.”
James Bodenstedt, President & CEO at MUY! Companies
Shift to electronic payment processing
Payment execution is the last mile of the AP process – and a significant one. It’s certainly not in question that paying accurately and on time is paramount to the success of any business. Disruptions in the payment process have repercussions across cash flow, reporting, and reputation.
A manual process inherently means there’s more risk for those disruptions. Plus, it’s not without its own labor and (both hard and soft) costs. Fulfillment of the actual payment means check printing, envelope stuffing, postage, and signatures on checks. That’s a lot of time for a finance professional to spend on such menial tasks.
AP automation means you can shift to electronic payment processing, a win in terms of both hard and soft costs as well as improving time to pay.
Electronic check payment vs. ACH electronic payment processing
AP automation also provides you more payment options, including electronic check payment and ACH electronic payment processing. Whether your vendor prefers electronic check, ACH, or still insists on getting a paper check, you can facilitate any request. The combination of improved time to pay and flexibility on how they receive payment means stronger relationships with vendors and suppliers.
Not only that, but these payment methods are more secure and financially advantageous. Electronic payments open the door for rebates from vendors who accept payment cards.
Discover the latest from our blog.
Flexibility is at the core of both of our products. We explore how this foundational principle helps our customers grow.
We examine how our intelligent accounts payable automation solution, onePAY, handles the last mile of the accounts payable process: bill payment.
With every challenge in multi-unit restaurant operations restaurant lies an opportunity, we explore how to handle key these QSR challenges in 2021.