Your Guide to Accounts Payable Process Automation
Your Guide to Accounts Payable Process Automation
- What is accounts payable process automation?
- Common problems of finance automation
- Why you should automate your accounts payable
- Top 6 benefits of automating your accounts payable
- How to find the right AP automation solution
If you own and operate a business today, you’re probably knee deep in the many, many mundane tasks that make up manual invoice reconciliation. The inconvenience of manually managing your accounts payable can not only be a huge waste of time but create opportunities for excessive human error. Simply put: manual accounts payable can often waste time and slow the growth of your company.
Business owners are in luck: with the introduction of accounts payable process automation, there’s now a way to quickly and easily reconcile your accounts payable with a minimum of mistakes often associated with manual reconciliation. Automating your accounts payables streamlines the complicated, time-consuming process giving you the ability to eliminate repetitive tasks, focus on creating positive, lasting relationships with suppliers and turn your attention to big, growth-oriented priorities.
Getting started with accounts payable process automation can be challenging. In this guide we’ll walk you through what the AP automation process looks like, the common problems of accounts payable and how the accounts payable automation process helps to solve them, the overarching benefits of automating your accounts payable process, and how to find the right accounts payable automation process.
To begin, let’s explore just what accounts payable automation is.
What is accounts payable process automation?
Accounts payable process automation refers to software and tools that eliminate the manual tasks of traditional payable automation processes. Instead, when using tools or software that allow you to automate your accounts payable process, you are putting into place robotic processes that do the busy work of accounts payable for you. There are many types of account payables process automation software that we’ll explore further later on in the article.
The automation of the accounts payable process makes it so you no longer have to manually do many of the smaller, more data-entry-oriented tasks. When using accounts payable process automation, tasks like submitting and approving purchase orders or invoices as well as reading and extracting data from these invoices become automated, saving your accounts payable team time and effort.
Automation of your accounts payable process allows your business to save time, but more so, it eliminates many of the errors made in the manual data entry process often associated with accounts payable.
There are clearly many benefits to AP process automation that we’ll begin to explore, but first let’s look at the problems commonly found in manual accounts payable operations.
What are the common problems of accounts payable and why should you automate accounts payable?
Before we get started discussing the benefits of automation of the accounts payable process, it is important to note the common problems typically associated with manual accounts payable processing implemented by many businesses today. From a lack of speed to an abundance of manual errors, companies that haven’t implemented robotic process automation for accounts payable face a slew of common issues.
Common Problems of Accounts Payable:
- Slow Processing – Paper-based account processing can be extremely time-consuming. Manually entering, approving, and extracting information from every invoice takes time and it takes effort from a larger group of employees. The lack of speed associated with manually processing accounts payable can lead to late payments and strained relationships with important vendors.
- Increased Errors on the Payer’s Side – If a company isn’t using automated accounts payable processes, they’re upping the chances of errors. Because paper-based account payables processing depends on many people to perform small tasks, the chance of error increases exponentially. And every error creates slowdowns and every slowdown increases the chance of your business missing, or making an incorrect payment, and the fallout from this can affect the way businesses interact with their suppliers.
- Increased Chances of Missing Errors on Supplier Invoices – Not every invoice your business receives is correct. Invoices often have incorrect data because of manual processing and how manual processing is susceptible to mistakes. Invoices that aren’t processed using a robotics process in account automation take far more time to be paid because each of them has to be combed over by an actual person to ensure that there aren’t any errors in data. Even then, errors can be missed and the time taken to fix these issues only slows down the payment process even further.
- Workflow Issues – Manual accounts payable processing leaves the door open for people to move outside of the established workflow. Employees that process invoices without the benefits of an automated accounts payable process can circumvent the regular process in terms of expediency. But with expediency often comes errors and errors lead to a slow, inefficient process.
Why you should automate accounts payable?
In general paper-based accounts payable processing is less efficient, slower, and more susceptible to errors than accounts payable automation processes. Aside from the common problems of accounts payable listed above, the usage of manual accounts payable processes opens the door for many types of errors that can be solved by simply implementing an accounts payable business process automation. Repeated invoices, repeated payments, lost invoices, incorrect payment orders–all of the errors occur within paper-based account payables teams every day. But they don’t need to.
Next will discuss the benefits of automation of the accounts payable process.
Top 6 benefits of automating your business’s accounts payable process.
The downsides of manual account payables processes are, clearly, legion. But for tech-savvy businesses, implementing an AP automation process flow provides benefits above and beyond the paper-based accounts payable processes.
Here are the top benefits of implementing an accounts payable automation process for your business:
- Time saved – When you use robotic process automation for accounts payable, you’re going to save a huge amount of time. Paper-based accounts payable processing means invoices are subject to the time constraints of those who do the actual data entry. With robotic process automation for accounts payable, all of the necessary invoices are streamlined so invoice management is incorporated into the accounts payable automation process, streamlining the workflow and approval process. AP process automation translates to about roughly 18% fewer days DPO, which amounts to almost 5.55 days of time saved on average.
- Money saved – AP process automation cuts back on the costs of doing business. With a paper-based, manual accounts payable process, employees have to be hired to do the actual data entry. With robotic process automation in accounts payable, the manual tasks are accomplished by the software, meaning the need for employees to do these tasks is greatly reduced. Furthermore, the hard costs of manual invoice management–supplies and such–can be cut from the budget. The switch from manual accounts payable processing to an AP automation process flow can save businesses up roughly 85% on the associated costs.
- Fewer errors – Switching from paper-based accounts payable processing to robotic process automation in accounts payable equates to far fewer day-to-day errors. As noted above, there are many different ways to make mistakes when manually inputting accounts payable information and by using a accounts payable automation process you eliminate many of the most common errors. The automation of the accounts payable process removes manual data entry and thus errors commonly associated with the management of invoices are far less.
- Greater payment cycle visibility – The accounts payable automation process provides a series of tools built around giving businesses a better outlook on the payment cycle. Automated dashboards let back offices know where payments are and which payments need to be followed up on. The visibility provided by automation of the accounts payable process allows data to be accessed in the moment, meaning reconciliation is faster and more seamless.
- Increased security from fraud – AP automation process provides greater security for a business by allowing the business to limit who can approve invoices and invoice payments. By using an accounts payable automation process approval workflows can be built with specific permissions included, increasing the ability to identify fraudulent invoices and payments before they go live. Beyond that, automated workflows create a system that allows you to double check for both fraud and for errors that could cause massive slowdowns to your workflow in the future.
- Easy software integration – The automation of accounts payable provides a level of integration with existing financial software that provides massive benefits for businesses. Document management becomes easier with robotic process automation in accounts payable because the system connects all documents and messages associated with each transaction and the linked invoice. At the end of a payment cycle this makes reconciliation–and overall management of your accounts payable process–much simpler.
The benefits of automation of the accounts payable process are, clearly, extremely useful for businesses of any size. Next, we’ll walk you through how to find the right accounts payable automation process.
How to find the right AP automation solution for your business.
Finding the right AP automation solution isn’t always easy. There are many different solutions and sorting through which one will provide the best accounts payable automation process for your specific business can be difficult. Here are a couple of tips to help your business find the accounts payable automation process that works best for your needs.
- Get in internal buy-in – When you’re starting the search for the correct AP automation process you’ll need to know the specific issues your accounts payable team is dealing with. Start by surveying your team to figure out what the issues they’re facing are and how accounts payable automation can help to counteract those issues. Try to figure out what the main problems are and how these manual accounts payable issues decrease efficiency. By doing so you’ll have a clearer understanding of just what automated accounts payable processing can do to help your back office improve.
- Research solutions that fit your business – Once you’ve figured out what your company needs in terms of AP automation process workflow, it’s time to start researching what automation accounts payable process software exists on the market, and which one will address the issues you’ve discovered. You’ll need to do an extensive search of robotic process automation accounts payable software and with help from your IT team, pick the one that best suits your automated accounts payable process needs.Depending on the size and complexity of your business you may need to choose an automated accounts payable process software that is standalone–entirely dedicated to the work of ap accounts payable automation–or a software suite that includes software built for accounts payable automation. Regardless of what you end up choosing, extensive research will only make your selection better suited to your specific automation needs.
The accounts payable automation process comes with so many benefits for any business. And though there are complications that come with selecting an AP accounts payable automation system, the time, money, and effort saved by integrating one into your existing accounts payable is worth it.
Check out Plastiq’s payable automation platform to start increasing your business’ payables efficiency today.