Managing accounts payable process requires you to understand the end-to-end process clearly. Every AP process includes four steps – invoice capture, invoice approval, payment authorization, and execution. Manually managing these steps would result in errors, limits visibility into invoice payments, and gives you no visibility into cash-flow.
How manual processes limits visibility?
The main drawback of handling AP process manually is the lack of visibility into invoice status. When a business unit wants to know the status of an invoice, it may not be readily accessible.
This requires you to send a series of emails that waste the time of multiple resources checking on the invoice and payment. Right from frontline personnel to senior management, everyone has to spend time on tracking and validating invoices.
Lack of visibility makes it difficult to find information, which would cause delays in day-to-day operations. Not paying invoices on time can deteriorate relationships rapidly, which could have a negative impact on the businesses offering products to customers.
Mitigating Costs through Automation
Businesses can address the key challenges by automating the AP processes. Automation offers key benefits that can cut down errors and manual work in managing the internal processes.
Invoices can be captured digitally and stored in the ERP system – line items, amounts, and coding are extracted using optical character recognition technology. Invoices can be directly synced to the ERP system while eliminating the data entry.
Automated workflows send approval requests with invoices attached as a reference; approvers can be determined based on invoice amounts. And, approvers can approve or reject invoices from any device.
All the approved payments go on a scheduled date, and approval records, invoice copies, receipts, and payment records are attached to the invoice record. Someone has to still keep an eye on what’s happening. Accounts payable solution makes it easy to manage invoices and identify data discrepancies.
By automating the accounts payable processes, businesses can cut down the time AP staff spend on chasing information and processing invoices. This can also reduce the time spent on entering invoices into the accounting system. Another benefit is that automating AP processes facilitates vendor payments on time.
For the finance department, automating AP process provides better visibility into payment due dates, early payment discounts, and late payment fees. This facilitates cash flow management and makes decisions promptly. The improved efficiency and visibility enable businesses to understand which payment methods are beneficial to the vendor.
Invest in AP Automation
Accounts payable solutions can help eliminate inefficiencies at various phases in the accounts payable process. The solution must include the following features:
- Optical character recognition
- Document workflows
- Purchase order management
- Centralizing accounts payable operations in one place
- Approval history and storing payment details
- Integrated payables
- Simplified transitions
These features can help you keep track of AP process while offering granular insights into invoices, approvals and payments.