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Time is money - and saving time on tedious accounting processes lets your accounts payable department focus their time on more strategic efforts. Automation reduces the business payment cycle, governs financial policies, automated approval mechanisms, and creates a digital paper trail.
Plenty of businesses are still playing catchup in this regard. An Association of Certified Accounts Payable Professionals (ACAPP) survey reveals that only 5% of businesses are utilizing a fully automated system, while 19% had no automation at all. As a result:
- The top two issues that AP teams said they faced were with the handling of paper invoices (38%) and the related task of manually processing the information (28%)
- 34% of respondents said the inefficiency caused stress
- 24% said their situation was damaging supplier relations
On the flip side, in a recent automation survey in an SAP whitepaper, the following benefits were reported from those who already use AP automation software:
- 72% report improved accuracy
- 62% report reduced operating costs
- 58% report reduced time spent on AP administration
- 52% report increased finance team productivity
The risks of a fully manual AP department are clear - staff facing burnout, who are then more prone to making mistakes and potentially causing major headaches for you down the line. Read on to learn more about how accounts payable process automation can have your accounting department moving like a well-oiled machine.
The Accounts Payable Process
Any liability on your balance sheet is in the realm of Accounts Payable. Travel experiences, credit card bills, debt payments, vendor payments, reimbursing employee expenses are all examples of accounts payable.
Let’s explore the manual tasks involved in accounts payable first and then how the processes can be automated.
The AP Process
- Invoice Received: An unpaid invoice or bill is received and documented.
- Invoice Audit: The invoice is carefully reviewed checking for vendor name, an itemized list of purchases, totals, date of issue, and payment. Invoices are also compared to purchase orders.
- Invoice Approval: The quantity, price, and use must be verified by an accounting manager.
- Invoice Record: Expenses are recorded in the company ledger, with invoice and any related data properly filed.
- Invoice Payment: Electronic payment or check is sent on time or early, with records kept.
How Automation Streamlines Accounts Payable Processes
Accounting automation not only makes your life easier but the overall workflow simpler and more accurate. Here are various ways to implement accounts payable workflow automation.
When it comes to invoicing, it’s easy to get disorganized and let invoices slip through the cracks when they arrive in any number of formats. Invoices received could be mailed, faxed, emailed - and then if they are digital they could be in any file type under the sun. Simply unifying and cataloging all of these invoices can take far more time than is worth.
Save on headaches and save the planet by switching entirely to e-invoicing, and utilize an Optical Character Recognition (OCR) invoice system. This technology converts digital invoices into editable files with parsable text that is then pulled by AI and logged for review.
Managing approvals can be tricky with any number of stakeholders needing to be involved. An automated system can automatically route an invoice to the party needed to review, whether the individual who ordered or a department head, and send automatic reminders if they’re hanging too long on responding. You can then set it up to automatically ping the next level approver.
3. Data Entry
Manual data entry is one of the more time-consuming aspects of accounting, and also the ripest for errors. When the OCR systems pull the line items and totals from an invoice, it can then populate those numbers into accounting ledgers. You’ll retain a full audit trail to help facilitate future audits or investigations.
4. Data Validation
One of the more powerful aspects of automation is the AI’s ability to match an invoice to your original order to make sure you got what you’re paying for. Manually matching and verifying every line item is also time-consuming, and automation here saves plenty of time.
OCR technology is used to match purchase order numbers and quickly match totals for total goods, amount of payments, due dates, and price-per-item. You can set up the system to verify against purchase orders and any other type of supporting document. Your team is notified as soon as an insistency is flagged.
5. General Ledger Coding
Manually coding and classifying ledger entries is a huge endeavor and another large venue for accounting errors. Codes are typically defined to identify the many items including the following:
- Invoice category
- Product line
- Country code
- Freight details
- Business unit
Instead, you can set up your automation system so as data is pulled from each invoice, the correct code is automatically applied to every data point. This makes tax time simple and ensures everything is correctly classified and ready to roll.
How Punch Financial Can Help
Most small business owners and founders are wasting from 10 to 15 hours per month doing tasks that could be streamlined with automation. Unfortunately, most “traditional” accounting firms aren’t forward-thinking or technology savvy and therefore, they cannot help their clients save valuable time.
Our primary goal at Punch Financial is to implement strong operational processes paired with the right technology that saves you time. We can help with:
- Seamless Integration With an AP Automation Solution
- Technology-Assisted Transaction Coding
- Effortless Payroll
- New Financial Process Implementation
Every client gets tailored flexible pricing. Let’s connect to give you a customized quote and free consultation. You have nothing to lose but so much to gain.