How to Digitize Accounts Payable Without Changing Your ERP

Ira Brooker   March 22nd, 2024

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Nearly every element of the modern workplace has been digitized to some extent, and accounts payable is part of that trend. Some businesses that are still relying on older methods are reluctant to embrace digitization because they worry that it will require an overhaul of their processes, including making major changes to their enterprise resource planning (ERP) system. The truth is that incorporating more automation and digitization can be done efficiently and effectively with virtually no disruption to your ERP.

What Does Digital Accounts Payable Include?

Almost anything that’s a part of your end-to-end AP process that can be moved from a manual or paper-based process can — and probably should — be digitized. Relying on outdated and obsolete methods can put your organization at a serious disadvantage, and even put you at risk of compliance violations due to human error. Your business needs to take a serious look at digital accounts payable solutions if you’re still using manual methods to handle:

Paper invoices

Invoice capture

Manually orchestrated workflows

Non-automated payments

Data analytics

How to Digitize Accounts Payable: 4 Key Strategies

Managing an accounts payable process takes a lot of work. Tasks such as manual data entry, routing documents for approval, collecting physical signatures, and distributing paychecks take a great deal of time and effort. Not only that, but if any errors or unforeseen delays arise, detecting and correcting the causes only slows down the process further.

Accounts payable digital transformation may seem like a lofty goal, but with the right solution, modernizing your AP process can be a smooth and seamless transition. While you might presume that upgrading to an automated AP solution would require a costly ERP upgrade, that doesn’t have to be the case. Follow these strategies to modernize AP processes without making significant changes to your current ERP.

1. Leverage Accounts Payable Automation Software

Relying on manual processes and outdated tools substantially raises the risk of human errors and also puts your business at a competitive disadvantage. Making use of AP automation software is the simplest and most effective way to streamline your workflows and ensure consistent production. While the eventual goal should be integration with your ERP, a quality AP automation solution can also work independently, giving your team as much time to adapt as is needed. Just a few of the day-to-day functions that can be revitalized using AP automation include:

  • Invoice capture and data extraction – Optical character recognition (OCR) tools allow your system to scan paper invoices and other documents and convert all of the necessary information into digital format. E-invoicing capability allows vendors to submit electronic invoices via their preferred channels.
  • Matching and verification – An automated system can compare invoices against purchase orders, delivery receipts, and other documents to ensure that all data matches and the terms of purchase are in agreement. That allows you to easily locate and correct any discrepancies quickly and accurately, with minimal human touch points.
  • Payment reconciliation – Manually reconciling payment transactions against bank statements is another time-consuming and error-prone process. Entrusting those functions to an automated software system eliminates those concerns with fast, accurate comparisons that make it easy to identify exceptions and discrepancies.

2. Optimize Approval Workflows

Creating consistent, productive AP workflows is easy with automated software solutions tailored to match your specific business rules. Automated tools speed up invoice processing while providing deeper visibility into each step of your process. That significantly reduces the risk of human errors.

Physically routing invoices and other documents for approval can be a long and frustrating process that can be easily disrupted if any of your approvers is slow to sign off. Automating the approvals process ensures that all documents get where they need to be, when they need to be there. Automated reminders and notifications keep everything on time and accurate while reducing bottlenecks and improving communication between team members.

3. Enhance Vendor Communication

Keeping open lines of communication with vendors is crucial to your AP functions. Miscommunication and delayed responses can lead to strained vendor relationships that hurt your business in the long run. Digitizing your AP system reduces your reliance on manual communications and inefficient data exchanges.

A vendor self-service portal is a valuable tool that allows your suppliers to communicate in the ways they prefer. A self-service portal allows vendors to submit invoices, track payments, and update information themselves. Not only is this faster and more efficient for your AP team, it also empowers vendors and reduces the risk of incorrect information and other miscommunications.

4. Maximize Data Utilization and Reporting

Data is all-important in any modern business transaction, but attempting to efficiently collect and analyze data using manual processes is a losing game. An AP software solution generates detailed reports that can inform future business decisions by identifying spending patterns, opportunities for cutting costs, and other important details. Real-time data insights and automatic data capture makes it simple to pinpoint industry trends, weed out inefficiencies, and optimize cash flow.

Can You Modernize Accounts Payable Without an ERP Upgrade?

Even knowing the potential benefits of digital transformation in accounts payable, many businesses are understandably nervous about undertaking such a big project without also upgrading their enterprise resource planning systems. An ERP upgrade can be expensive — employees need to be trained on new processes, processes can be delayed due to the learning curve, and any customizations you’ve made to your ERP may need to be reconsidered.

While every organization will eventually need to make updates to its ERP, digitizing AP processes without an immediate ERP change is very doable. MHC software solutions are designed to integrate seamlessly with your existing ERP, allowing you to phase out obsolete manual processes, speed up approval workflows, enhance vendor communications, and upgrade data analytics without making significant changes to the rest of your system.

Five Benefits of Digitizing Accounts Payable

Moving to a digital accounts payable system has a long list of benefits for organizations of all sizes. Whatever your industry or volume, moving to automation offers so many improvements over outdated manual systems that it has become close to a necessity for any business trying to stay competitive in the modern landscape. Just a few key benefits of digitizing accounts payable include:

Faster processing times

Getting invoices processed quickly and accurately is one of the most important functions of any AP team. Trying to keep up with the rapid pace of a modern invoicing system using manual processes is simply unfeasible. A digitized AP solution speeds up every step of the process, from data extraction to approvals routing to issuing payments. That adds up to a far more speedy and satisfactory invoice process on all sides.

Cost savings

Time is money in business, and that’s definitely true of accounts payable. Not only do manual processes take up more time, paying employees to perform tedious tasks like manual data entry and approvals routing is expensive and can also contribute to higher burnout rates. Automation frees those employees up to work on more productive tasks, while also eliminating much of the risk of human errors and the cost of correcting them.

Regulatory compliance

Accounts payable is one of the most heavily regulated areas of most businesses. Between governmental regulations, industry standards, and internal policies, maintaining compliance can be a real challenge for your AP team. Automation allows you to set business rules and internal checks that make sure your AP processes are compliant with all applicable rules, and to make adjustments to any areas that don’t measure up.

Deeper insights

Every system has room for improvement, and digitizing your AP processes makes it easier than ever to identify bottlenecks, inefficiencies, and other potential problems with invoicing and payments. Real-time visibility into every stage of your process also helps you quickly locate those issues and correct them before they become more costly.

Improved vendor relationships

Maintaining strong relationships with the vendors and suppliers who keep your business running is crucial. The speed and consistency that come with an automated software system not only help to reduce delays and potential conflicts, they also make it easier for your AP team to earn early-payment discounts and establish yourself as a reliable partner for years to come.

Digitize Accounts Payable with MHC

Ready to take a closer look at the ways automating your AP system with MHC can revolutionize your accounts payable processes, whether or not an ERP upgrade is in your immediate future? Contact us today to schedule a demonstration of our industry-leading AP automation software solutions. Our in-house experts will speak to you about your organization’s specific business needs and create a demonstration tailored to you.

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Ira Brooker

Ira Brooker is a freelance writer and editor based in Saint Paul, Minnesota. He has been writing blogs and copy about software-as-a-service solutions for most of the past decade. Before exploring accounts payable and workflow solutions with MHC, he wrote about fields including cybersecurity, workforce management, online accessibility, audiology, retail sales, and much more. When he’s not doing business writing, he also indulges in writing fiction, journalism, arts criticism, and bar trivia.

Notice – Portions of this blog post were generated using Generative AI tools. Our writer has carefully fact-checked, edited, and added their own insights to ensure accuracy and a unique perspective.

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