Accounts payable document management is quickly evolving. AP departments that hope to be efficient in the new environment of paperless document management must learn to streamline their operations using the latest in automation solutions. Organizations that don’t adapt or fail to transition risk losing to the competition.
6 Reasons Paper-Based AP Systems Are Inefficient
- Require managing a high volume of paper documents
- Higher costs to prepare, process, and store
- Duplicate invoices may not be detected
- Wasted time finding and accessing specific archived documents
- Damaged and missing documents
- Difficulty transporting files
High Volume of Paper Documents
Accounts payable departments that still use hard-copy documents face several risks, not least of which is the sheer difficulty of managing and storing all the paper.
Traditional AP processes are also more expensive as departments must spend more time and effort managing the massive volume of data. Older document management methods require more physical space (at a higher cost, including rent and insurance).
Using paper documents requires more office supplies, including paper checks, printer ink, and boxes to store the older records.
The accounts payable staff, accounting department, and vendor invoice approvers don’t always detect duplicate invoices when working with a paper-based accounts payable system.
Paying paper invoices twice wastes money if vendors don’t alert your company of an overpayment. Even if suppliers let you know about a duplicate payment, your business cash flow is negatively affected until a refund for the overpayment is received. And receiving an account credit instead of a refund impacts cash flow longer.
Damaged or Missing Documents
Paper documents are more likely to experience damage or go missing.
Paper documents may go missing before the three-way matching process is done. If that happens, the accounts payable team spends more time looking for them and calling vendors or the purchasing or procurement department for replacements.
If the paper documents go missing after an invoice is processed and approved, the auditors may not be able to check a sample-selected audit transaction. And the IRS requires businesses to comply with its record retention requirements.
Transporting files is difficult. The transport of paper files to or from a storage location adds expenses.
In the face of these disadvantages, solutions for AP departments abound.
5 Advantages of Electronic Document Management
Modern document management systems offer several benefits over traditional methods, with the primary advantage being the ease of organizing large amounts of data.
Accounts payable document management software automates and streamlines many important functions in a traditional AP department. This means that transitioning to an all-digital office is of paramount importance to any company that hopes to keep up with its competitors.
Converting to electronic documents for accounts payable offers a wide range of benefits, including:
- More efficient records management. With automation software, AP departments can develop faster approval processes. Additionally, document workflow is faster and better organized.
- Easier data extraction. When documents are stored electronically, retrieving data is much more efficient. Tasks that were unthinkable just a few decades ago, like copying and pasting an entire document, are now possible.
- Document capture and document scanning are quick and easy. Many software and hardware packages can help accounts payable offices convert paper documents to e-documents cost-efficiently.
- With the right tools, data capture is quick and easy. And with optical character recognition (OCR) software, text in a converted file is searchable.
- Cloud computing. Digital AP tools continue to evolve. Today, departments that don’t have the computer technology or don’t want to invest in it can instead opt for cloud storage of documents using a third party.
Using Tipalti AP automation software as your document management solution lets your company achieve these benefits of accounts payable document management.
How Tipalti Can Help You With AP Document Management
Tipalti provides a SaaS add-on AP automation solution that provides accounts payable document management software. Tipalti works through seamless integration with your ERP system or accounting software.
Tipalti offers a self-service supplier portal for onboarding, tax compliance, payment status notifications, and communications. The supplier portal includes an electronic document management system for accounts payable document storage and payable processing for approving and making payments.
Vendor invoices and other related documents, including contracts, purchase orders, and receiving reports for three-way matching, can be uploaded directly into the document management system/supplier portal. Any paper documents received can be scanned into the system with the system’s OCR software functionality.
6 Advantages of Workflow Automation in the Office
Workflow automation is a business system that uses digital solutions rather than manual or hard-copy processes. Adopting this newer way of performing tasks with automated workflows allows an AP office to spend fewer hours on tedious work as more efficient technologies come to the forefront.
In particular, workflow automation produces the following advantages:
- Saves time. Data entry is quicker with automated tools, and so is invoice processing. With less time spent on paperwork, an accounts payable department can achieve a higher efficiency level.
- Fewer errors. Software programs commit fewer errors than human workers, which means paperless offices have greater accuracy. With a fully digital accounting system in place, a business will not have to correct as many mistakes as before.
- Faster invoice approval. Using digital business processes, authorized approvers can approve the invoices quicker.
- Off-site work is possible. With mobile tools, employees can now work at home or out of the office, completing tasks with tablets, smartphones, and laptops.
- Multiple users. Several departments and employees can work on a single document simultaneously. It’s also possible to restrict who can access a document and track who is editing or viewing files.
- Easier to manage lifecycles. With the right software, you’ll be able to quickly identify documents that are past their standard lifecycle, which is around 7 years. When documents are electronic, they are easier to archive and dispose of.
In short, accounts payable automation results in an office that can do much more than it could in the past.
6 Goals to Set for an Efficient Paperless Office
An AP department that either fully or partially adopts an electronic platform will find several new predicaments. In particular, set and accomplish the following goals:
- Monitor and enforce security protocols
- Convert existing hard copies into digital files
- Make e-documents searchable
- Encourage vendors to submit electronic invoices
- Adhere to government regulations
- Secure early-pay discounts
Monitor and Enforce Security Protocols
Servers that don’t need to be connected to the Internet should be taken offline. Unauthorized personnel should not have access to electronic documents. E-documents that need heightened security because of their content should be password protected.
Other security measures, such as two-factor authentication, could also be used. With the right software, it’s possible to track who views or edits documents.
Convert Existing Hard Copies into Digital Files
Several tools are available to make this transition fast and easy. Making the move will free up office space and bring existing documents under the purview of new technologies. It will also reduce the time spent by staff searching for documents and filing them.
When you scan hard-copy files into electronic format, make sure you scan original documents. This ensures the highest quality and accuracy in the output file and prevents errors from creeping in.
Make e-Documents Searchable
When scanning old or new documents into electronic format, make sure the outputs are in a searchable format.
Encourage Vendors to Submit Electronic Invoices
The transition to a paperless environment will be smoother if your suppliers also use the industry’s latest tools. If you receive hard copies, your business must spend additional labor converting the documents into digital files.
Adhere to Government Regulations
This means following guidelines delineated in IRS, HIPAA, GAAP, and the Sarbanes Oxley Act. Documents that could be subject to an audit in the future should have records of all activity.
Secure Early-pay Discounts
Many AP software programs can identify eligible early-pay discounts on invoices. This is another cost-saving measure that today’s technology is able to deliver to accounts payable departments. Paying early also helps to build good relations with vendors.
Overview of Accounts Payable Document Management
When AP documents are in electronic format, accounting departments, payable departments, and other business sections can quickly and easily gain access to the documents they need. Long hours of searching through file cabinets and storage boxes are a thing of the past.
Time-consuming manual processes and bottlenecks for vendor invoices are eliminated. The procedure for routing matched paper documents for approval, which can cause delays or lost documents, is no longer required.
The ultimate goal of a paperless accounts payable document management process for accounts payable is to free up space, giving employees more room to innovate. It’s an environmentally sound and socially conscious way of doing business. In addition to convenience, electronic accounts payable document management is a modern method that gives your business a competitive edge.