Why Intelligent Accounts Payable Automation Delivers
February 19, 2020
By The OneDataSource Team
Many finance and operations leaders still view accounts payable as a cost of doing business. Yet, the cost of manual accounts payable is exorbitantly high.
Intelligent accounts payable automation can change that. It can turn your accounts payable department or function into a strategic and scalable resource. Your operational efficiency will increase while invoice processing costs will decrease dramatically. Don’t just take it from us…
The Institute of Financial Management shows us that automation delivers significant cost savings.
And it makes sense…
How the Accounts Payable Process Works
Let’s dive in to why accounts payable automation makes sense by looking at the typical existing accounts payable process.
The AP process begins with invoice collection, or when an invoice is first received. The methods in which invoices arrive can vary. Here are the typical methods: email, mail, fax, inter-office deliveries or in-person delivery.
Invoice Processing & Approval
From here, invoices start to be processed. They are either manually typed into an accounting system or canned in order to create a digital record. Even with digitization in place such as an enterprise resource planning system (ERP), there is plenty of room for manual error.
It is critical each invoice is reviewed to ensure its authenticity and approved by an individual with correct authority. This will ensure invoices are accurate – no unnecessary cash will walk out the door. If this process does not exist, manually entering invoices is a complete waste of time because invoices would get paid any way.
The AP team should have a clear set of guidelines as to who is authorized to approved invoices by dollar amount and purchase type. If this does not exist, the process can be confusing for everyone involved.
In the event a clear AP structure exists, then approvals, or an approval hierarchy, typically happens electronically via email. In the event the process is still paper based, then hard copies create a written approval paper trail.
Managing and approving invoices used to be tedious and cumbersome. Now, it’s easy. The real win from onePAY is what we accomplish with the time we have saved. – District Manager, Fulenwider Enterprises
Payment Approval & Processing
Once invoices have been processed and approved, invoices need to be paid. This can happen via a payment authorization system or feature, or they get paid manually. Payment processing requires an employee to determine the payment approval hierarchy, workflow and then getting final signoff for payment.
It’s during this process that severe inefficiencies can happen, specifically with a paper-based model. If invoices are being handed off, then figuring out who made the order, its accuracy and tracking down the approver takes a significant amount of time.
Even a well-defined AP workflow and approval process can require extra communication to get invoices from one approval to the next. These processes also do not often lend themselves well to creating the necessary auditing trail. Then finally, think about the manual steps that still lie ahead reagrding fulfillment of the actual payment: check printing, envelope stuffing, postage and signatures on checks.
That’s facilitating a payment for a single invoice!
Online payments come with their own set of issues such as repetitive manual data entry, unsecure payment portals and inability to capture vendor preferences. Again, all of these items add to the cost of processing invoices.
Enter Intelligent Accounts Payable Automation
As you can see, the accounts payable process can be costly and time consuming. With intelligent AP automation, you can reduce costs associated with the invoice lifecycle by 80%.
With the efficiencies gained, your staff can focus on value-added tasks and more impactful operational objectives such as expense and vendor management. You can also take advantage of early payment discounts, avoid late fees and optimize cash flow for more efficient procure-to-pay cycles. Finally, with improved access to your data, your team will have greater visibility, control and reporting of each payment sent.
To learn how you can implement a modern approach to accounts payable, download our latest guide that walks you through the modern AP workflow, hard ROI of AP automation, considerations of implementing an intelligent AP automation solution and how to prepare for implementation.
OneDataSource’s powerful accounts payable software can reduce administrative complexity, increase operational efficiency and improve your bottom line. Start now by contacting firstname.lastname@example.org.