A manual accounts payable process may be tiresome and error-prone, as most finance departments know. Working with stacks of paper invoices, personally contacting important approvers, and mailing checks is also not inefficient, but it also exposes the company to fraud and complicates audits.
This necessitated an electronic payable process, thus giving birth to accounts payable automation. Often known as AP automation, it handles accounts payable operations digitally rather than manually, utilizing technology. It has changed how companies handle and pay bills. By removing manual procedures and stacks of paper, AP automation may strengthen your connections with partners and suppliers then saving time and resources and decreasing days of sales outstanding (DSO), which enhances cash flow.
Components of AP Automation
There are three components of Ap Automation, as discussed below:
Matching and Workflow
Invoices are matched to purchase orders and goods receipts once the data has been taken. They are automatically routed to the appropriate team or individual for evaluation and approval once the data has been captured. They’re forwarded to the ERP or accounting system to be paid once approved.
Electronic invoices can be received, or conversion of paper invoices can be to electronic invoices. B2B/EDI connections, PDF invoicing, and receipt via a supplier portal are examples of electronic invoicing methods. The data is scanned and processed using artificial intelligence or OCR to extract and store paper invoices.
Archive and Audit
All invoices are securely saved, and audit trails of all invoice operations are conveniently accessible for financial auditing. Invoice archiving in the electronic format also makes it simple to look for and locate invoices.
How Does Accounts Payable Automation Work?
AP automation software translates your suppliers’ invoices into a uniform digital format and then moves them through a digital workflow that ends with payment to the providers.
AP automation begins by extracting information from invoices using optical character recognition (OCR).
Some solutions employ machine learning to discover patterns over time and enhance accuracy; for example, depending on experience, they may recommend specific general ledger codes or approval routes.
You may be able to eliminate the need for manual intervention for most bills by creating rules for your organization, such as permissible variations and approval hierarchies.
Specific AP systems use machine learning to improve accuracy and recognize patterns over time. Artificial intelligence can recommend specific ledger codes or approval routes based on previous experience.
Most of the time, AP teams use specific business regulations to remove the need for manual operations. Everything has been removed from approval hierarchies to PO matching and allowable data deviations. The accounting system handles all invoice coding and routing through a digital process.
Benefits of AP Automation
There are various benefits of AP Automation:
Users can construct the AP workflows that best meet their needs using an intuitive, versatile account payable automation software with several advantages. You decide how invoices are delivered to people who have permission to receive them.
You may set up approval timers and receive notifications. Nobody knows your needs as you do, and a robust platform helps you maintain it that way.
By limiting which personnel have access to invoice approval and payment release, AP automation software can help your company protect itself from fraud.
You can create approval workflows involving many persons to improve your chances of discovering fraudulent invoices before they are paid. With a system like this in place, no single employee is responsible for approving payments independently.
By eliminating time-consuming and error-prone manual tasks, accounts payable automation speeds up invoice processing and approval significantly:
● With character recognition software, invoice headers and line-item data are scanned.
● Payables are sent to the business processes that you choose.
● Human involvement is not required for a two-way, three-way, or advanced matching.
AP automation improves accuracy by reducing errors. Some of the most common faults can be avoided with AP automation software. It is not necessary to manually enter line-item data or invoice headers . Additionally, invoice data is cross-checked against ERP data, making it simple to detect duplicate payments.
Document management, which is beneficial for auditing, can be aided by comprehensive AP automation software. All documents and messages associated with a transaction are linked, and invoices are matched to purchase orders and receipts.
This searchable audit trail lowers the likelihood of misplacing vital documents. It can also assist you in complying with regulatory requirements for quarterly or annual filings.
Accounts Payable departments have recently had to contend with many operational adjustments. On the other hand, AP departments are swiftly adjusting, enhancing processes, and significantly impacting enterprises by implementing digital technology such as accounts payable automation software. For better understanding and use of AP Automation Contact Us