Sending invoices through interoffice mail. Tracking down missing tax information. Taking weeks to verify and authorize payment on an invoice. The tasks in the accounts payable process all serve as internal controls that safeguard the company from fraud. At the same time, these tasks often cause bottlenecks in the accounts payable workflow. If your business is looking to grow, then time-consuming internal processes can cost your company the ability to be nimble and responsive.
However, new technologies like automation help businesses transform and improve the efficiency of their accounts payable workflow. Here’s how companies can use automation to convert common bottlenecks in the accounts payable workflow into time and money-saving opportunities:
Bottleneck: invoice entry
Sending an invoice to accounts payable for payment sounds straightforward, but this seemingly simple task often turns into a bottleneck. A number of issues can delay accounts payable from issuing a payment: the invoice could be missing important information like the payee’s tax identification; the invoice could be in a file format that’s not readable; and if the invoice is from a payee located in a foreign country, the invoice may need additional information as required for compliance with the Foreign Account Tax Compliance Act (FATCA). Resolving issues like these take time, thus creating a bottleneck in the accounts payable process.
A quick and accurate invoice entry process sets the foundation for a seamless accounts payable workflow. Here are two big ways showing how automation sets that foundation:
- Capturing paperless invoices in a variety of file formats. Automation can extract the information from invoices in various file formats—docx.; xml.; pdf.; jpg—and as a result, reduces the manual effort of transferring invoice information into the accounts payable workflow.
- Instantly verifying payee tax identification. Your accounts payable handles a significant amount of invoices, so manually checking each invoice for necessary tax and payment information will inevitably create a bottleneck. Automation eliminates the bottleneck by digitally capturing or verifying payee tax identification.
Bottleneck: invoice approval routing
Invoice routing is another common bottleneck in the accounts payable workflow: authorization of a paper invoice is dependent on the physical presence of the approver; when the approver is out of the office, accounts payable may have to wait for days to receive invoice approval. Even when the approver is in the office, a paper invoice may get misplaced on a desk or rank low according to the approver’s workload. Getting approval on an invoice requires accounts payable to follow up with the approver for a status update.
Automation technology cuts through the bottleneck by converting invoice routing into a digital process. A digital trail gives accounts payable visibility into the status of an invoice in the approval routing workflow. Digital invoices also eliminate the risk of getting misplaced on an approver’s desk. An accounts payable system can provide an email that enables the approver to authorize the invoice with a click. The same system can automaīically notify and send an email to the approver when the invoice doesn’t return within a specific period. If the approver is out of the office, automation can automatically follow up with another designated approver.
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Bottleneck: invoice matching and verification
The three-way match rule—reconciling each payment with the purchase order, the receiving report (such as a delivery confirmation sheet), and a vendor invoice—ensure that an invoice is valid. However, collecting and coordinating all the necessary documents is a time-consuming process, thus creating a bottleneck in the workflow. The three-way match rule
With automation, accounts payable no longer has to dedicate manual, time-consuming efforts on invoice matching. Automation software reduces the complexity of three-way matching by automatically capturing and validating information on supporting documents. Automating the three-way matching not just pieces of the accounts payable process is when automation helps companies save big in time and money.
All companies need an accounts payable workflow that’s nimble and responsive to a competitive landscape. But a system of time-consuming tasks causes bottlenecks in the workflow, which slows down businesses looking to grow. Identifying those bottlenecks and converting them into automated processes helps not only with saving time and money, but it also transforms the role of accounts payable in your company. Instead of a data entry role, accounts payable is a partner in accelerating growth, productivity, and profitability.