Unlike the common picture, accounts payable (AP) is not just about paying suppliers, it is about owing money to multiple stakeholders. Businesses have embraced AP automation as it is another approach to removing manual processes and errors in accounting processes. In this article, we are going to discuss what AP automation software is, what are its features, and what are its advantages to companies of varying sizes.
What is AP Automation Software?
The aim of deploying AP automation systems is to decrease the burden of multiple manual activities from the accounts department. In regards to how AP Automation software works, we must first address how accounts payable normally work. Accounts payable typically works by running a recurring series of processes that include making invoices and payments all done manually. But with AP automation, a lot of those processes are automated together by workflows reducing the risk of such errors arising. Furthermore, this software is usually integrated into one of the modules of the organization’s ERP (Enterprise Resource Planning) which allows and combines the flow of information in the company and makes data central and easier to use.
Key Features of AP Automation Software
Accounts Payable requires looking into a variety of tasks including processing invoices, approving payments, and most importantly, managing approving workflows. All these components constitute the Accounts payable cycle. Many institutions have now turned to AP automation software to overcome this tedious process. Such software understands the needs of the customers and tries to automate as many repetitive tasks as possible. Here are some common characteristics of the AP automation:
Invoice Capture and Processing
- Automated invoice capture: Scanned invoices, emails, and any other formats of invoices can all be captured through the software. The automated extracting features rely on Optical Character Recognition technology.
- Data validation and matching: One of the core purposes of the SSAP is to achieve maximum compliance. For this, the AP automation always matches their invoices with receipts and orders before proceeding further enhancing accuracy.
Workflow Automation
- Approval Workflows: Most automation software that depends on multiple users often requires repetitive tasks of invoicing and approval, which in turn can be quite time-consuming. There is an AP automation software available that enables users to automate their workflows considerably speeding up invoice processing.
- Notifications and Alerts: The appearance of duplicate invoices within an automated system can only be harmful to the company….unless, of course, a notification system is in place that alerts the users of inaccurate or duplicate invoices.
Payment Automation
- Scheduled Payments: Maintaining cash flow can be quite a hassle unless an AP automation software is in place that adheres to the schedules and is efficient at invoicing.
- Integration with payment systems: Many AP Automation Solutions have been developed in such a way as to be workable along with payment systems, and this integration makes it easier to perform payments electronically in the form of ACH transfers, wire payments, and virtual credit cards.
Analytics and Reporting
- Dashboards and real-time data: The presence of real-time analytics means that the AP team does not only perform calculations but has a lot of metrics at their disposal for analysis, for example, it is useful to observe how long an invoice takes to be processed, the amount of unpaid invoices and the cash flow.
- Customizable reports: Customers are able to generate reports that are specific to summary budgets and their funding in the software which can assist in forecasting and planning as well as prepare documentation for audit purposes.
Security and Compliance
- Data encryption and access controls: The approach of AP automation software usually comes with features such as data access controls and data encryption in order to manage the security of confidential data within the organization.
- Audit trails: A feature practiced by many systems is constant monitoring which records and keeps every process that has been performed on a particular invoice or payment, thus enhancing compliance and audit ease.
The Advantages of using AP automation software
Most organizations pacing themselves to implement AP automation software do so with an anticipation of economic benefits that would positively influence the efficiency and accuracy of their financial operations processes,
1. Time spent savings
AP functions such as invoice matching, approval routing as well as data entry get automated hence time set aside for such activities is less and can be used for important activities like looking for new interesting vendors and spending analytics.
2. Cost Reduction
Automating invoices helps to reduce errors and save on resources that would have emerged from outputting tasks, which is the same as having cost savings. A few of these solutions also assist in saving money from fines and in benefiting from the discounts for fast payment availed by suppliers.
3. Improved Accuracy and Reduced Errors
Automated systems take away the guesswork that leads to the manual loading of databases because of the chances of redundancy – for instance when one is entering data – thereby providing correct and reliable records.
4. Enhanced Visibility and Control
With help of one-on-one reports and integrating all data to one single control panel, you can track how many invoices have been paid and how many remain pending. This helps to increase overall control of the cash flow position and enables sound management practices.
5. Increased Vendor Trust
Trust is reinforced, and vendor relationships bolstered when vendors are paid in a timely basis. Besides, the AP automation helps to quickly resolve vendor requests by the AP teams providing quick communication on the modalities of the partnership.
6. Support for Remote Work
AP automation software enables employees to work from home, or any other desired location. Employees are able to view invoices as well as approve payments, all of which are conducted on the AP automation software during times of interruption.
Choosing The Right Software For AP Automation
Identifying AP invoice software takes into consideration the size of the company, the specific needs of AP, and the applicable systems and integrations. Companies often prefer solutions that:
- Enhance support for security and compliance.
- Usability facilitates user adoption
Conclusion
For companies wishing to upgrade and automate their accounts payable processes, AP automation software is a great option. It lets businesses reduce the amount of paperwork in their accounts department by automating invoice management, and payment authorizations, and allowing for better account keeping. As companies continue to go digital, AP automation is expected to become deeply integrated into efficient business finance management.
