See how forward-thinking finance teams are future-proofing their organizations through AP automation.
Although paper processes have long been at the heart of accounts payable, things are quickly changing. In fact, 39% of professionals recently say their invoices have grown by 10% over the last year, rendering paper invoices time-consuming and cumbersome.
So what entails “going paperless” and how do you get there? Here is a quick guide on automating your accounts payable process and ridding yourself of the paper trail once and for all.
Prior to setting up a digital document management system, your company should follow these steps toward implementing paperless AP processes.
How to Go Paperless with Accounts Payable
1. Plan Out the Implementation Process.
Take stock of the current AP and consider what needs to be done to improve. Before implementing a paperless accounts payable solution, you should get an idea of where the AP workflow stands. How long does it take to process an invoice? What about approval? This should give way to the cost of processing an invoice with the current set up.
2. Involve Your Team.
When it comes to automation, don’t keep teams in the dark. Instead, involve everyone as much as possible during the implementation phase. Change may not always sit well with everyone and sometimes the most resistance can come from the accounts payable department, IT, and upper management. Whatever the case, all concerns should be addressed before moving forward.
3. Scan and Convert Your Existing Documents.
When an AP department has a lot of invoices arriving on paper, they need to establish a good way to convert them into an electronic format. This must be done before you automate invoice processing. The system you choose should include technology known as Optical Character Recognition (OCR).
OCR creates searchable and editable digital copies of all your paper records. Digitizing the invoices can be in-house or outsourced to a document imaging service.
Data indexing goes a step beyond OCR by creating a searchable index for every aspect of the document. It includes a way to tabulate all data within each digital form. This means information like barcodes and text, as well as metadata like users and day received. It allows a clerk to search for information within the document, as well as information about how it was processed. This not only makes data storage easier, but it also enables the highest quality of automation.
4. Select an AP Automation Solution.
For the most cost savings with the least amount of data entry, it’s critical you select a good supplier for your accounts payable automation software. You should consider factors like:
– Speed of implementation
– Whether or not it will work with your existing ERP
– The cost of the system
– How the reporting tools work
– How easy it is to expand
A good provider can make or break an implementation. It’s a standard in the IT/software industry for 2 out of 3 implementations to fail or get scaled back.
5. Customize Your Software’s Settings.
In an automated system, a business will set up custom tolerances to process electronic invoices. A good platform can automatically code incoming invoices and route them for approval while giving you complete control.
Create custom tolerances to pass invoices instantly through the system. This isn’t just a one-time process either. A good platform will allow a business to continuously adapt the setting to accommodate growth.
6. Learn and Scale Your Automation Processes.
Over the first few weeks of implementation, AP employees should test out any new product and brainstorm any questions they may have. The sooner everyone is on board, the faster you can streamline operations and carve a path of success.
This is where the exciting work of scaling automation with your AP processes begins. Continue to integrate your accounts payable department processes and scale AP automation process as your business grows.
The Benefits of a Paperless Office
When paper documents are removed from a business process, it creates a variety of benefits for an organization. This can include:
Paperless Comes with Lower Processing Costs
A 2015 survey by APQC shows that people defined as “bottom performers” are spending an average of $12.44 to process every invoice. On the other hand, “top performers” spend an average of $4.98.
The difference lies in the ap process. How much manual attention the invoice needs matters a great deal. The more time spent handling the paper, the more it costs to process every invoice. However, when you digitize invoices and use a paperless, automated accounts payable process, you save a great deal of money.
Going Paperless Makes Records Easily Accessible
Many companies streamline operations by storing some or all of their paper documents off-site. But, at times, that means there are so many files, it’s hard to locate what you need. In the case of an automation solution, there is a search engine built into your digital document storage system.
Paperless Means Lower Storage Costs
Storing records on-site can be rather costly. You also lose space you could use for something else. Off-site storage can also get expensive. Not only is there a monthly storage fee, but there are also transportation costs and other miscellaneous charges. There can even be a cost if you want documents destroyed.
Digital document storage providers will also charge a fee per month but it’s much easier to use than manual processes. There are no hidden fees for transportation, accessibility, and the like.
Paperless AP = Faster Processing
In a paper-based accounting system, every step of invoice processing is handled manually. This results in missed payment deadlines and delays as AP teams struggle to keep up with incoming invoices. When someone is out of the office, the entire system can come to a grinding halt. Especially if the employee is responsible for issuing payment approvals or initiating the process itself.
With automated accounting software, anyone in the AP department can initialize invoice processing. AP managers can even approve invoices remotely.
No More Lost Files
Since accounts payable departments deal with a ton of paper, it’s easy to lose track of invoices in the shuffle. Lost invoices lead to late or unpaid orders, fees, and issues with audits. In addition, the AP department handles so much information that they tend to be a target for theft and fraud. A paper system makes it easy to steal files and hard to notice when they are gone. It’s also tougher to enforce controls that are designed to prevent fraud.
Paperless Gives Your Organization More Control
Paperless accounts payable software allows the accounts payable department to track invoices and easily access invoice data anytime during and after the approval process.
Real-time information for any invoice in the system is right at your fingertips. There is no similar system with paper.
Be Environmentally Friendly
One of the most powerful reasons for going paperless is the positive impact it has on the environment. The paper-making process includes cutting down trees and putting carbon dioxide into the atmosphere.
Additionally, a good amount of paper used in AP processing just ends up in the trash. In contrast, AP paperless processing is totally “green.”
Plus, a large percentage of the paper we use in accounts payable processing just ends up in the trash. In contrast, paperless AP processing is “green.”
