Key areas for efficiency gains from Accounts Payable automation

We did a software demonstration for a finance executive recently who started out the meeting by saying, “I just don’t understand where we’re going to gain efficiency from AP automation. We’re still going to have to do all the same things we do in our ERP system today.” By the end of the demo, he had seen the light and was telling us all the ways they would gain efficiency by deploying our system.

Here is a description of 8 key areas to find AP processing efficiency gains with a strong accounts payable automation solution:

  1. Faster, more accurate invoice data capture – An advanced capture system can automatically extract data from invoices, validate that data against ERP data, and enrich the data with additional associated data from the ERP system, which reduces the time AP would have otherwise been keying the data while concurrently improving the accuracy of the captured invoice data.
  2. Tracking and escalation of approvals – The workflow system automatically distributes the work items based on the rules defined for the process, automatically notifies participants when they have work to do in the system, and automatically escalates work items that haven’t been completed within the allotted times defined, thus eliminating the need for AP to track and escalate invoices manually with spreadsheets while emailing and making phone calls.
  3. GL coding or distribution of non-PO invoices – The workflow system allows business users who would also be approving invoices to code or distribute non-PO invoices to valid, postable general ledger accounts, and to use stored templates, favorites lists, or spreadsheets to import commonly used GL accounts for coding, thus alleviating AP from having to key handwritten coding data from invoices or to have to determine the codes on their own.
  4. Reduced time and effort of manual matching – The workflow system can automatically match invoice data with purchase order and goods receipt data, taking into account tolerance matching rules, thus eliminating the need for AP to manually search for PO and good receipts and manually match invoices.
  5. More efficient match exception processing – The workflow system can automatically manage match exceptions by routing price and quantity exceptions to the associated buyer to handle with the supplier, automatically routing work items requiring goods receipts to be entered into the ERP system to warehouse or receiving personnel, and automatically re-checking for goods receipts to hit the ERP system for a specified number of days when the invoice precedes goods receipts, thus eliminating the need for AP to manually manage and track match exceptions processing.
  6. Automatic posting of invoice transactions in the ERP system for payment – The workflow system automatically posts invoice transactions into the ERP system for payment, which eliminates duplication of effort while allowing all associated post-payment processing to be performed as needed in the ERP system (consumption of PO and receipt lines, closing of POs, etc.).
  7. Improved visibility and faster, more accurate accruals management and posting – Invoices are captured immediately upon receipt, so invoices don’t sit in piles on desks where the associated financial liability is unknown; accruals can be automatically pulled and posted for those invoices captured but not yet posted for payment in the ERP system, thus improving period-end financial reporting accuracy and timeliness. Without this capability, AP personnel would have to manually track all invoices, if they can get their hands on them to start with, to have a prayer of a chance to accurately record accruals.
  8. Finding and researching invoices and associated workflow history for audit purposes – The workflow system will provide the complete audit history of each work item, while the associated content repository will hold all invoice images and other associated documents, to be used for audit purposes, thus eliminating the need for AP to be at the beck and call of audit personnel to manually pull invoices and other documents to support audits.

These capabilities drive incredible AP efficiency gains for organizations that deploy and use strong accounts payable automation solutions.

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