Accounts Payable Automation: Everything You Need to Know

  Taylor Pettis    December 5th, 2020

Accounts Payable Automation illustration

Accounts payable is a key business process in every organization. However, the reality is that a manual accounts payable process almost always results in errors or wasted resources. Even if you have the most experienced accounts payable professionals, entering data manually, matching numbers line by line, and filing paper documents is simply outdated and inefficient.

Fortunately, accounts payable automation can solve this issue. Let’s dive deeper into what it is, how your organization can benefit from it, how it works, and what to look for when shopping for accounts payable automation software.

What is Accounts Payable Automation?

Accounts payable automation is a technology that shifts the onus of tedious, traditionally manual accounts payable tasks from human team members to software.

Typically, accounts payable automation software takes over tasks like invoice processing, approval routing, managing documents, and more. Regardless of what steps it handles, an accounts payable automation tool exists to help streamline processes.

The Benefits of Automating AP and Invoice Processing

There are many noteworthy benefits that come with automating the processes an accounts payable department handles, including:

1. Saving time

Accounts payable automation leads to significantly faster invoice processing—particularly if you’re using optical character recognition (OCR) software to scan invoices and sidestep manual entry of invoice data. In fact, the Institute of Finance and Management’s (IOFM) 2019 Efficacy Benchmarks report found that accounts payable departments that implemented automation processed roughly twice as many invoices per full-time employee compared to organizations that had less automation. That sort of time saved means teams have more capacity to work on more complex and high-value work.

2. Reducing errors and data redundancy

Errors and data redundancy are inevitable with a manual accounts payable process. Indeed, researchers have documented that people’s error rates range between one and four percent for spreadsheet data entry. Software that automates accounts payable can drastically reduce mistakes since it eliminates the need to manually key data from invoice headers and line-item data.

3. Easily locating and tracking payments

If you’re dealing with physical invoices, all too often, those papers get lost in the shuffle and are nearly impossible to track. Accounts payable automation software often requires organizations to digitize and go paperless. As a result, all invoices and data will be in one place, making it easier than ever to locate and track them.

4. Accessing invoices from anywhere

Another result of the shift to digital documents is that accounts payable team members and other employees can access those documents from their home, office, or just about anywhere. Such accessibility streamlines workflows, saving even more time, and avoiding headaches.

5. Saving money

All of these other benefits—easier access to and tracking of invoices, fewer errors, and less time spent on data entry—often add up to lower costs and actual discounts. By automating accounts payable processes, you’ll spend less on labor and save on the high costs of missed, late, and duplicate payments. You can also take advantage of early payment discounts that may potentially save you hundreds, thousands, or even millions, depending on your company’s invoice volume and size.

How to Automate Accounts Payable

Knowing the benefits of accounts payable automation is one thing, but figuring out how it will work within your workflow is another.

These days, automation solutions are typically cloud-based, which enables companies to utilize and access the tool anywhere there’s an internet connection. (In the event you’ve chosen an on-premise solution, users won’t be able to access the information as easily, plus, your IT team will need to set it up and maintain it.)  Automation solutions also tend to play nicely with major ERP systems like Infor, Oracle, and Microsoft.

Aside from those high-level capabilities, what does it look like when you add automation into the accounts payable equation? Depending on the solution, there are many steps of the accounts payable process where automation can make a difference.

First and foremost is invoice processing. Software can convert any incoming invoices that you receive into a digital format. (You’ll likely also be able to scan physical invoices into the system.) Then, OCR technology will extract the invoice information with minimal to no verification. To increase straight-through processing in the future, quality software can train itself based on any verifications made by humans, saving you even more time and money down the line.

Once the data extraction process is complete, the invoice image and data will make its way to your ERP system where it will live with and be linked to other documents critical to accounts payable, like purchase requisitions and purchase orders. Often, you’ll be able to automatically route invoices for approval, too.

Lastly, authorized users will be able to view and retrieve approved invoices directly from your ERP system whenever they’d like.

Though this isn’t a comprehensive overview of every step that can benefit from automation, these are the ones that benefit the most.

What to Look for in Accounts Payable Automation Software

While the above benefits are part and parcel with a solid accounts payable automation solution, know that not all software is created equal. It’s important to do your research and consider all of your options. Look for tools that offer the following:

1. Seamless integrations

If you opt for accounts payable automation software, invoice processing and other tasks will occur outside of your ERP.  Because of that, it’s essential for whatever solution you land on to seamlessly integrate into your ERP and other critical, legacy systems. This way, you can ensure information transfers from point A to point B without any issues. If your organization has already invested in a specific ERP software, don’t settle on an accounts payable automation tool until you’re certain the two are compatible.

2. Self-serve portals for vendors

Vendor relationships can make or break your business. One easy way to maintain a good relationship with vendors is to anticipate their needs and questions with self-serve portals. Software with this feature enables suppliers to track payments, access payment history, and even check your inventory levels of their product.

3. Easy-to-use interface

Even the best tool is useless if no one uses it. As such, everyone involved in the accounts payable process should be able and willing to use the software with ease. Team members need to be able to access data and various functions quickly so they can keep work flowing. If the tool is overwhelming or requires a great deal of training to understand, onboarding will be challenging at best. At worst, employees may stick to their manual accounts payable tasks instead.

4. Customization

Your organization is unique. Therefore, it requires an accounts payable automation software that can meet its needs, not the other way around. You should be able to pick and choose settings like invoice automation exceptions and tiered approvals, so that employees can perform their daily tasks easily and efficiently. If you’d like your invoices to be approved by managers, for example, it’s essential that the software allows you to easily route them.

5. Automated and Robust Reporting

Automated and robust reporting is another factor to consider. It gives you visibility into the status and history of invoices, helping uncover opportunities to improve your workflow. For example, you may realize your company consistently pays a certain vendor on time, rather than early, causing you to miss out on their early payment discount.

The Next Step: Finding the Right Accounts Payable Automation Solution

If you’re frustrated with the issues that crop up when handling accounts payable steps manually, automation can do wonders for your organization. In fact, the right accounts payable automation solution can almost completely streamline processes.

Though you know what to look for in a solution, deciding which tool is right for you can be tricky. MHC can help. Its powerful OCR technology makes invoice processing a breeze. Plus, tiered approvals, vendor self-serve portals, and an intuitive interface smooth out bumpy workflows, saving everyone time and money. Ready to improve your accounts payable process?

Request a personalized demo and see our platform in action today!

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