Accounts payable automation technology makes it easy for AP departments to automate repetitive and recurring tasks, such as receiving, processing, coding, routing invoices for approvals, and reconciling accounts.
AP automation eliminates the need for manually entering data into the company’s financial system at any stage, requiring only a few clicks at most to approve invoices.
In most cases, companies use AP automation software to manage payables. A well-designed AP automation software provides access to an array of analytical tools and dashboards that help companies manage AP processes and gain more comprehensive insights into business processes.
More importantly, since all AP data is stored electronically within the same system, establishing audit trails and finding associated data for specific transactions becomes incredibly easy.
Accounts payable departments that handle such processes manually are often overburdened, with the staff engaged in working on menial and repetitive tasks. This affects job satisfaction, and reduces the AP function into a very basic department within the organization.
According to a survey by IOFM, AP executives spent 84% of their time completing mundane tasks, including running through manual and semiautomated invoice processes. Data capture was also a key part of this. Moreover, the same study noted that 63% of companies were interested in reducing their costs related to paper-based invoice processing.
AP automation is important simply in terms of the ROI it generates. While it’s not always easy to calculate the ROI generated by implementing an AP automation system, the results do become clear soon enough. AP automation affects multiple areas throughout the company, which creates a compounding effect as the volume of transactions rises.
Most companies can evaluate both the non-financial and the financial ROI of AP automation. The prime benefits of AP automation are as follows:
Repetitive, time-consuming tasks, such as data entry, are generally low impact. Because they take up so much time, AP departments often find themselves short of resources. By automating the AP function, companies can save a great deal of time, while making processing more efficient.
AP automation software gives finance leaders granular insights throughout the invoice lifecycle process. This allows for more comprehensive audit trails that show exactly what has happened so far. If they want, they can also focus on one specific point to get more data about how invoice processing works, or who approved specific invoices.
Another key benefit that AP automation offers is that it drastically reduces the potential for human error. Since manual input is virtually reduced to zero, the chances of human error decrease automatically.
Data doesn’t have to be manually copied from one place to another, and there are no amendments to make. Invoices can be sent for approval automatically to authorized individuals, allowing them to approve or reject an invoice at the tap of a button.
Since everything is automated, labor costs decrease significantly. More importantly, invoices are also cleared on time, which reduces the risk of late fees or contract compliance issues. As a result, the overall cost per invoice decreases significantly, which ultimately translates to more profitability for the company.
Since all processes are set in place beforehand, you don’t have to worry about compliance or regulatory issues, especially with automatically generated audits. Reputable AP automation tools are designed with contract compliance in mind.
Since AP automation reduces the time it takes to process and approve invoices and release payments eventually, it’ll help boost your company’s reputation and can give you a competitive edge in future negotiations with vendors.
There are several AP tasks that you can automate with the help of AP automation software. However, automating certain tasks can help you reduce your processing time and improve efficiency, thus resulting in greater profits and cost reductions. Here are some AP tasks that companies should automate:
Matching invoices manually is a time-consuming and tedious process. By automating this process, invoices can be 3-way matched quickly and efficiently with purchase orders and GRNs. This process is much faster and can result in significant cost savings, especially for businesses that stock higher inventory volumes, and where matching has to be conducted at different sites.
Automatic data capture greatly reduces the risk of human error when copying content from incoming invoices into the system. Entering data manually is not only time-consuming, but it’s also a repetitive job that carries a greater level of risk. By automating invoice data capture, especially using advanced technologies such as Optical Character Recognition (OCR) technology, companies can quickly extract relevant data from invoices.
Seeking invoice approvals is a resource-intensive task, where an AP employee has to manually approach authorized individuals and get approvals. Instead of sending documents manually to each individual, AP automation software lets businesses set up approval routing.
This way, approvals are tracked automatically, and they’re routed through to relevant individuals on time. They can give approvals for invoices via email on the go too, making the whole process significantly easier.
This is a configurable solution that lets businesses assign non-PO invoices by setting pre-configured rules with specific vendors. This way, a correct general ledger code is assigned for every invoice, thus mitigating issues related to inconsistencies when coding invoices manually.
Selecting the right AP automation software is critically important for growing businesses. There are several factors to consider when selecting AP automation software. Here are a few key points to consider:
SoftCo’s AP automation software is the ultimate solution for streamlining your entire purchase invoice process and reducing the burden from your AP department. It offers a full suite of features that help AP departments save money and reduce costs and approval times by up to 80%, without sacrificing control or visibility.