Here’s What You Need to Know About Controlling and Automating Accounts Payable
by Sumona Finance 03 November 2021
Accounts payable (AP) is the backbone of your business. If it’s not managed properly, you’ll damage vendor relationships and could even end up losing your company. And if you’re still doing AP manually, you’re not only inviting mistakes and errors to creep into your AP processes, you’re also wasting time and money.
It’s high past time you automated AP. And it’s not just about sending electronic invoices. It’s about streamlining payment processes across the organization so that invoicing and purchasing can be done from anywhere, rather than from a specific accountant’s desk. It’s about automating tedious processes to save time and eliminate errors. And it’s about managing your money better with auto-categorization.
E-Invoicing Is Just the Beginning
Invoicing is where AP begins, and if you mess up this crucial first step, you’re going to struggle throughout the rest of the process. When you choose a platform for AP automation, you will need to begin by doing electronic invoices and only electronic invoices.
E-invoicing has far-reaching benefits beyond saving some trees. It makes it so much easier to keep track of those important invoices. With cooperation from vendors and the right tools, you can save the considerable amount of time that employees may currently spend processing invoices that come in the mail, or arrive in any one of a dozen file formats.
Use an AP automation tool that allows for electronic invoicing, and work with your vendors to get them to submit their invoices in your preferred format(s). You may need to use an optical character recognition (OCR) system to capture data from physical invoices, but the goal is to phase these out entirely.
Eliminate Most Sources of Error in AP Processing
Human beings make mistakes, and when they’re faced with a tedious, time-consuming manual task, they’re bound to make more of them than they might if they were doing something engaging and interesting. People just make more mistakes when they’re bored because boredom is less about what you’re doing and more about how intellectually stimulating the activity is.
Automating AP can reduce or eliminate much of the potential for human error to foul up your processes. Computers don’t make mistakes, and can handily tackle the same repetitive task over and over, doing it perfectly each time. AP automation can help your team quickly identify inconsistencies in price per unit, total price, payment due dates, payment amounts, and more by automatically gathering all the documents relevant to each invoice or account into a single file.
You can also automate complex coding tasks, which will be a big source of relief for your accounting department. General ledger (GL) coding has historically been one of the most time-consuming AP tasks. It’s exhausting, and there’s a lot of it.
The more invoices you have to pay, the more coding there will be — and the burden grows exponentially with each new invoice, meaning it’s almost certainly necessary to automate these processes before your business grows too large for your team to handle them.
Capture Data Instantaneously
Data entry jobs are becoming a thing of the past as OCR technology makes it possible to automatically capture data just by scanning documents. That’s a good thing because data entry is probably the most error-prone process in your entire organization.
AP automation can allow you to capture data quickly using a scanner and the right OCR software, so there won’t be any potential for human error. Data entry will get done several times faster when it’s automated. And even after the invoices are paid, automated data entry can still pay off — the data will be stored in a CSV file, a smart spreadsheet, or some other easily accessible format, so you’ll already be prepared for any future data analysis.
You Should Move ACH Payments to a Card
Auto categorization of purchases can give you more nuanced control over your cash flow than using ACH payments for everything. Many AP automation platforms allow you to use a virtual card to make payments, and you should take advantage of that feature because it allows you to keep cash in your bank accounts a little longer and that can be beneficial for your company’s cash flow.
Sure, you’ll have to pay your virtual card bill, but having your purchases on a card allows you to float purchases a little so you don’t have to worry so much about your bank balance. You can keep your cash in your accounts until the payment is due, so you’ll have much more control over your cash flow. Most virtual cards allow you to automatically categorize purchases so you can track your spending.
AP automation can save your company a ton of time, streamline processes, eliminate human error, and more. It’s time to join the 21st century and automate your company’s AP processing. You’ll be so glad you did.