6 Benefits of Accounts Payable Automation
Accounts payable automation benefits are numerous, particularly for companies making business-to-business (B2B) payments. The accounts payable (AP) process serves as a guardian of the funds distributed by a business. Once those funds have been applied to an invoice, they can be extremely difficult to retrieve in instances of double payments, accidental payments, and especially in occurrences of internal fraud.
Looking for more tips on increasing AP efficiency? Check out our Ultimate Guide on AP Automation.
According to PayStream Advisors 2018 Payables Insight Report, 36% of businesses receive invoice receipts on paper. 34% receive them via email, 15% via EDI/XML, and 15% through a web upload or supplier portal. Of the 400 back-end employees surveyed, 55% stated their invoice data is entered manually by their AP staff. Thirty-four percent reported that invoice data is captured via software using optical character recognition (OCR) technology and then double-checked by AP staff for errors. Nine percent said invoice data was entered by a third party, and 3% stated that their companies combine automation and manual processes.
Built-in OCR scanning integrated with coding and approval prediction technology allows AP automation to take your business to the next level. Multi-tier approvals and automated purchase order (PO) matching can easily be customized to meet your business’ unique needs. Below, we explore the top six benefits of AP automation.
Ways to Increase AP Efficiency With Accounts Payable Automation
1. Save Time with OCR Scanning Technology
OCR stands for optical character recognition. AP automation software that features this technology converts printed characters into digital text, allowing you to turn scanned documents into editable word processor files. Compared to traditional scanning, AP automation software with OCR technology delivers several benefits. Robotics process automation or RPA takes that one step further.
No need to retype: Losing digital invoices and proposals is a common occurrence, especially among businesses that process large volumes of payments on a regular basis. As long as you have the hard copy, though, you can use OCR technology to scan and upload the document with no need to retype information. This cures the headache of losing digital copies of paperwork.
Perform fast digital searches: Use OCR technology to scan documents and convert them into a word processor file. Perform fast searches using keywords or phrases to conveniently locate a specific invoice.
Eliminate tedious AP processes: Once documents are scanned using OCR technology, the AP software will automatically extract and pre-populate pertinent details. Override changes are pinpointed and applied to future invoices thanks to the AP software’s intelligent and intuitive coding. This augments efficient AP performance, particularly when a second layer of data extraction is applied to verify that all information has been accurately procured from the documents.
2. Improved Oversight and Transparency
Your payments to vendors and suppliers are essential to the success of your company. Monitoring each payment is of the utmost importance. Some businesses fall prey to believing they will lose B2B payment oversight with accounts payable automation, when, in all actuality, it improves transparency.
The software enables you to present data to relevant parties in a customized way. Do B2B approvals and payments fall into the hands of only a select few of your AP employees? Use custom permission settings to set admin and user privileges to ensure only authorized individuals are able to view and edit pertinent data and approve B2B payments.
Oversight is also improved because you gain a full view of your B2B payment cycles with AP automation software. You can identify payment delays and monitor who is responsible for their approvals. Real-time reporting and oversight speed up the payment cycle and ensure invoices are paid on time. Furthermore, the electronic trail created by AP automation allows you to recognize and expose fraudulent activities before they cost your company significant losses.
3. Streamline All of Your AP Processes
There are numerous activities involved in processing and reconciling invoices. Manual processing is laborious and extremely prone to human error. AP software automates all AP processes and makes your workflow more efficient. You can check to see that all payment amounts are correct, and when important documents go missing, you can easily search for them among a large volume of digital files, instead of having to sort through stacks of paperwork. When a snag occurs in the invoice approval and payment process, the AP automation software paints a clear picture of what went wrong and who can fix it.
4. Use SoD to Stop Fraudulent Activities
Accounts payable automation software comes with the ability to create a custom-tailored AP control framework. You can implement a Segregation of Duties (SoD) approach to ensure the entire AP department is being held accountable for their tasks. In doing so, no single employee serves as the only person tasked with approving B2B payments. Instead, all AP activities go through multiple entities before funds are released. Not only does this mitigate fraudulent activities, but it double-checks for missing and incorrect information. By having the B2B payments go through several entities, this creates a larger digital trail, which is of the utmost value if an investigation is needed regarding a particular payment.
5. Integrate with Existing Financial Systems
AP automation software benefits are most noticeable when integrated with existing financial systems. Gone are the days of having to switch back and forth between systems to re-enter data. Integration improves AP department efficiency and ensures all data remains accurate from one system to the next. Integrate AP automation software with enterprise resource planning systems to further enhance enterprise visibility.
6. Advanced PO Matching
AP automation software helps you achieve advanced PO matching by supporting two- and three-way matching. Tolerance ranges can be customized to ensure unmatched invoices are only paid when proper permission is provided. Being able to customize tolerance ranges makes it simple to align the AP software’s matching features to your company’s unique needs.
There are many options to choose from to make back-end processes more efficient. Strategic management initiatives are at the core of transitioning to automated solutions. With accounts payable automation, importing and reconciling B2B payments becomes a breeze.