Technology has become the primary element of many business industries. To thrive in the business world, improve productivity, and save time, many businesses adopt the latest technology. Enterprises are leveraging technology to automate time-consuming tasks and processes, to achieve efficiency, minimize human errors, and save costs in the long run.
Accounts Payable Process
Accounts Payable (AP) is an everyday operation in all businesses. It plays a crucial part in managing an enterprise's debts, invoices, bills, etc. Generally, the accounts payable processes consist of:
- Receiving Invoice: When an enterprise makes a purchase, it receives an invoice with a declaration and details about the products, services, and the unpaid amount it owes to a vendor. Receiving invoices is essential for keeping a record of all purchases.
- Reviewing Invoice: After receiving an invoice, the accounts payable team must check the bills by verifying vendor identification, purchases, date of purchase, total payment, etc. To ensure validity, AP teams also compare the purchase orders against the invoice whenever possible.
- Approving Invoice: Without the approval of AP managers/supervisors, payments cannot be processed. Once the purchase orders are compared against the bills and other details like price, quantity, etc., are verified, managers approve the payments.
- Adding Records: After payment is complete, the AP team records the expenses in the company ledger book and the invoice and other details for future reference.
- Payment Processing: Another essential task for the AP team is to authorize and process payments through electronic means or paper checks and ensure that all payments are made on time.
When processed manually, accounts payable tasks can be time-consuming, and in many cases, the AP departments are dependent on manual data entry for invoicing. So much time is spent on mailing payments, printing checks, filing records, etc. Clearly, AP tasks are not just time-consuming but also require a lot of effort and money and are still be prone to error.
Automating AP tasks can benefit both vendors and enterprises and helps them maintain financial transparency. By automating AP tasks, enterprises can save time and money and achieve more financial freedom. Start by automating these top AP tasks:
AP Data Entry
We all know that managing finance involves a considerable amount of data. All this data is manually entered on paper forms or filed in an electronic system, after which employees recheck the data. Even after all these precautions, data is prone to human error, and there is no guarantee that the data entered is meticulous. Accidentally adding an extra digit or mispositioning a decimal point can affect the entire financial calculation and affect enterprises financially.
AP automation can automatically capture information directly from paper or electronic invoices. Enterprises can also convert physical files into digital files to provide data for automation. Businesses can minimize errors, improve data accuracy, check for irregular entries, and manage the balance sheet for clear financial information by automating data entry tasks.
Invoicing is a significant financial task for any business enterprise. It's not just about sending and receiving money but also ensuring that the processed payment is legitimate. Manually handling AP involves cross-examining invoices and purchase orders, sorting and filtering emails, finding invoices for every purchase, etc. These tasks can be exhausting and prone to error.
Automation allows automatic cross-examining of every invoice, its status, and whether a supervisor approved it or not. It can automatically match invoices with the purchase order to ensure payments are sent to the right vendor. AP can automatically send follow-up reminders to supervisors to ensure timely approval.
Vendor Relationship Management
The vendor relationship is significant in any business, and multiple processes require more attention from the AP team and managers. Tasks such as following up with vendors, answering questions, sorting, and verifying documentation, etc., take up a lot of time for employees.
Automation tools benefit many functionalities for Vendor Performance Management such as implementing a supplier’s portal. This is a crucial aspect of automating tasks as it allows vendors to submit invoices, monitor order progress, and add missing details and notes directly into the system. Vendors can add information and leave remarks without directly contacting the AP team, saving both parties' time.
With any manual work, there is a contingency that errors might occur. For example, manually tracking payments and due dates is a simple task, but there is a chance that a few records might get lost. Losing payment records means an enterprise is prone to lose already paid records, records that are yet to be paid, and even early payment discounts. Due to this, enterprises might lose money or be charged for late payments. In many cases, payments are executed via paper check, which has a high possibility of fraud.
Using top AP automation systems will provide enterprises with safeguards such as invoice approval for electronic payments. At the same time, it monitors payment dates to ensure there are no pending bills and assists vendors with payment methods.