Accounts Payable Automation is when you use technology to streamline accounts payable processes by automating manual tasks. This means eliminating tasks like approval-chasing and manual data entry and giving the organization better visibility into the actual state of their finances.
It almost sounds too good to be true. After all, your business most likely already has a process that works and has trained your employees to follow it well. But with any manual or paper process, and the hundreds or thousands of invoices that your department handles, there’s always room for improvement.
Current State: Manual Invoice Processing
Let’s start with reviewing how most do manual invoice processing.
- Your department receives the invoice by fax, email, or snail mail.
- You send the invoice for hand-coding and then matching.
- An employee matches the invoice 2 or 3-ways depending on the business. The employee finds and matches, by hand, the Purchase Order, Receiving Order, or both, to the invoice.
- The invoice is sent to several different people for approval, which takes some time, no matter how it’s sent.
- The Accounts Payable department processes the invoice. It may be processed by vendor, department, or on a first come, first serve basis.
- The department pays and files away the invoice.
Those are…a lot of steps. And even then, many of those steps have sub-steps. That means a ton of labor hours and leaves a lot of possible chances for mistakes to be made, even by the most skilled employees.
With accounts payable automation, you can cut down on the time, cost, and risk to processing invoices by hand.
How to Improve Your Accounts Payable Processing
For example, when your department receives an invoice, no matter what the format, they can run it through document capture software. The software will automatically find and fill-in information like the invoice number, vendor, and total cost.
And then the system can take the invoice number and automatically match it to the purchase order and/or receiving order. This creates your 2 or 3-way match quickly and without leaving your desk.
Time for approvals? No problem. As soon as invoices are verified and matched, you can setup a workflow that delivers the invoice via email to the approver. This way your employees don’t lose time tracking someone down and invoices never get misplaced on a desk.
Once the approver, well, approves the invoice, the AP employee is alerted via email. So now the employee can pay the invoice and file it away in your ERP system (and document management system, for backup).
Future State: Automated Invoice Processing
So let’s look at that workflow as automated invoice processing.
- Your department receives the invoice and scans it if necessary.
- Data/document capture technology captures the invoice data and checks it for accuracy against necessary documents.
- The invoice is sent for approval by email so that each approver receives it without delay.
- The Accounts Payable department pays the invoice and files it away securely into whatever ERP system your company prefers to use, and it can be accessed at any time.
It seems that simple and straightforward because it is.
Now all of your employees who were spending their workdays doing data entry or chasing down approvals have the time to do higher level work or other important projects.
Another benefit is that with all of your data digital and in the same place, you can get serious visibility into the finances of your company. You have an easier look at spend, trends, and anything else of importance to your business.
Related resource: AP Automation Quote Calculator
How to Automate Accounts Payable
There are two main ways that you can automate your accounts payable processing:
- Having your IT staff and decision makers evaluate and implement an out-of-the-box solution
- Working with a knowledgeable document management consulting agency who already know the software and can design a solution for your particular needs
(Full disclosure: Datamation Imaging Services is one of those consulting agencies!)
Whichever method you choose, you must communicate the changes with your employees at all stages. This is just as important as making sure that your backfile documents are scanned and the software is working. The word “automation” can be scary, as some people feel like it’s replacing their job. So communicate the benefits of getting more time back in their day, the efficiency of not needing to dig around in the filing cabinet, and how simple audits will be.
Once your solution is implemented, you’ll start to wonder why you waited so long to start automating!
If you think that automating your Accounts Payable processes is the next step for improving your business productivity, we’d love to help. Give us a call at (630) 321-0601 or contact us today!
This post is part of the comprehensive Datamation Guide to AP Automation.