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What Is Accounts Payable Automation?
AP Automation is a process that allows accounts payable tasks to be accomplished digitally. This has significantly altered the way in which businesses handle invoices and their finances.
Automation of accounts payable processes facilitates the receipt of invoices, management of payment approvals, and the processing of payments through one platform with the help of artificial intelligence.
The three main components of accounts payable workflow automation are as follows:
- Receipt of Invoices
Invoices can either be collected in electronic forms or be converted from paper forms to electronic. Electronic invoicing includes methods like EDI/B2B connections, PDF invoicing or receipts through a supplier portal where data flows seamlessly. On the other hand, paper invoices can be scanned and processed with OCR or AI to extract the necessary data and save it using cloud technology.
- Matching and Workflow
When the data has been saved, the invoices will either be matched with their corresponding receipts and purchase orders, or be automatically routed to the appropriate personnel for approval upon review. After approval, the invoice would be sent to the accounting software for payment.
- Archive and Audit
The invoices will be safely archived and the audit trails for all actions taken on the invoices will be available. This will ease audit processes because electronic versions of invoices and receipts are easier to locate than their paper counterparts.
Advantages of AP Automation Software
Automating accounts payable processes is indisputably beneficial to business because it helps them cut costs, make the process faster, more convenient, more efficient, and more error-free.
- Cost Reduction
Accounts payable process automation saves money by reducing labor cost and the amount of data entry needed to successfully carry out the process. It will also remove the cost of storing documents, producing and sending out invoices.
- Improved Time Management
AP automation increases the speed of the process, as there will be less need for human input and manual stages of invoice processes will now be bypassed. This extra time saved can be used on other profitable business operations.
- Increased Efficiency
Automating the accounts payable process will streamline invoicing, payments, and approvals.
- Reduction of Errors
Automation can significantly cut payment errors like duplicate invoices. They can also be programmed to flag potentially fraudulent transactions that could have gone unnoticed by regular workers.
- Enhanced Data Preservation
Invoices have to be saved for audits and each one could need preservation for up to five years. This amounts to a great deal of paper, while occupying space in filing cabinets. Instead of this approach, invoices could be stored on accounts payable automation systems, making them easier to manage while also saving space.
Endnote
Before integrating an automated system into an existing business, it would help to discuss its benefits and possible consequences with key stakeholders to increase their likelihood of considering the idea. It is also important to have metrics to show the return on the investment used to set up and maintain the automation system, to determine if continuous expenses are justified.
