How do you automate an accounts payable department?

How do you automate an accounts payable department?

How do you automate an accounts payable department?

What is Accounts Payable automation?

Accounts payable (AP) automation uses software that captures invoice data digitally. The AP system then classifies, matches, and validates data, it is then forwarded to the accounting system or ERP to be processed.

What is an Accounts Payable process?

The typical AP process usually follows these steps:

  1. Invoice received: An invoice is received;
  2. Review: The AP team will review the received invoice and check it against the purchase order (PO) when possible to ensure validity;
  3. Invoice approval: The AP team then approves the purchase;
  4. Record: It is then recorded and filed for future reference; and
  5. Payment: Payment will be made.

How do you automate an Accounts Payable Department?

1 – E-invoicing  

The first step in the AP payment process is receiving and recording supplier invoices. A small mistake due to human error could lead to significant issues further down the line. By automating this stage staff will only need to handle invoices by exception, instead of handling them all.

2 – Streamline the Approval Process

Invoices are sometimes held up within approval workflows, slowing down the process. By automating this stage, you can have full visibility, to see where or why invoices are stuck. This can result in a reduced processing time as well as allow you to track who approved an item and when.

3 – Remove Manual Data Entry

Typically, finance teams will manually key in data. By automating this stage the OCR technology within an AP automation software allows for efficient document digitisation, resulting in an immediate decrease in manually intensive tasks. The cloud-based technology then stores all of the data for easy access and compliance. 

4 – Protect yourself from fraud

During just the past few years, the number of breaches, phishing attacks, fraud, ransomware, and overreach has seen a significant increase. In order to protect your business from fraud, most teams follow the correct approval process and only pay legitimate invoices. Automated systems track every action that takes place on an invoice, from who handled it to what steps have been taken.

5- Matching and verification

Typically, the AP team will three-way match invoices to verify that it is legitimate and ready to be paid. The process compares what was ordered (the purchase order), what was delivered (receipt) and the supplier’s invoice. By automating this stage the OCR technology scans invoices and supporting documents such as the PO and receipts. It will then match total amounts, keywords, and categories. Allowing easy identification of any inconsistencies in quantities or prices.

Do you want to find out more about how automating AP could benefit your business? Get in touch.

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