Anyone and everyone following our Outsourced Bookkeeping blog is well aware of how strong a proponent we are for automated Accounts Payable Services. Being one of the most trusted outsourced bookkeeping and accounting services on the block, we provide Automated Accounts Payable Services to our clients, advocate the same on our blog and also offer help for business looking to automate their Accounts Payable. And our Accounts Payable experts have been getting a lot of queries on the ways one could automate Accounts Payable. So this blog is dedicated to the same.
Here we would like to provide necessary information of the problems associated with manual Accounts Payable, the reason for Accounts Payable Automation and then provide you with 5 ways you can seek the help of automation tools and software for streamlined and optimized Accounts Payable. Read on:
The Inefficiency & Tediousness of Manual Accounts Payable:
Manual Accounts Payable in general involves receiving invoice, invoice review, invoice approval, recording and payment processing. Each step of this manual process is often plagued with multiple issues pulling and holding back Accounts Payable from achieving efficiency and productivity.
Having worked with many small, medium and large business, Outsourced Bookkeeping has come across many Accounts Payable issues that we have solved successfully. Here are a few common problems that plague businesses with manual Accounts Payable:
Errors in Data Entry: It all starts with invoice receiving which arrive in manual or online formats. If your business still relies on manual data entry then data entry errors w.r.t purchase orders and payments are inevitable. Even correcting them takes so much time as your resources can go around in circles in case the invoice is lost – costing you both time and money.
Duplicate Payments & Matching Errors: In most cases when the vendors do not receive payment or were expecting early payments, they send multiple invoice and businesses sometimes end up paying them resulting in multiple payments – this can happen when there is no visibility. Then there are matching errors which again is time-consuming to correct.
Unauthorized Purchases & Early Payments: In few cases when invoices volume is larger than what AP resources can handle, they tend to approve the invoice and payment without checking the delivery status of the product or service. A manual AP process without visibility or transparency is a ripe ground for unauthorized purchases which can wreak havoc for a business.
Small and medium businesses commonly cop above blows since they rely on manual Accounts Payable fearing the complete revamp of the Accounts Payable with automation is costly and impractical, which is not true. Any business need not go for a complete revamp, they can leverage individual automation tools to assist individual process or stages in an Accounts Payable process whose manual version is bothering them. Here’s how automation can help each stage of the Accounts Payable Process to avoid AP problems and improve its performance:
Choose e-invoices : Simplest and easiest step you can take to significantly improve the accuracy and efficiency of your invoice process is to switch to e-invoices. Given invoice arrive in a different format – PDF, JPG, DOCX and even physical copies, the simple act of categorizing them for data entry is time-consuming and is prone to errors. By adopting e-invoice methods you can get rid of the paper clutter and make it easy to adopt automation solutions to further accelerate your AP process and improve accuracy.
OCR + AI for Data Entry: The second thing you must replace in your AP process is manual data entry which is responsible for more AP problems than any other stage in an AP. Instead of manually entering the invoice details, a business can make use of OCR (Optical Character Recognition) which can detect the invoice formats and automate the data entry.
Loading your invoice data into an OCR system that captures and stores data in a spreadsheet or CSV file can not only accelerate the entire process but also avoid errors and help you analyse the invoice data for future purposes. OCRs today come up with AI technology that further improves the detection and processing capabilities over time through self-learning.
Invoice Matching and Verification: Invoices received must be again two-way, three-way or four-way matched with purchasing order receiving reports and other documents which may further delay the process with complexities.
By choosing an automation solution’s document management system stores all the relevant information in its database which is readily matched with incoming invoice data to accelerate the entire process and eliminate the bottlenecks of matching in the paper-based approval process. The time saved can help your AP staff to indulge in other processes which require manual expertise and assistance.
Automation for Routing & Approval: In a manual AP process with paper-based invoicing, the invoice has to go to the purchaser to ensure that the right amount is billed for the right quantity and then it is routed for approval authorities or authorities. AP process lags and delays are common in the AP process that entails multiple routing and approvals and this can be solved with automated AP workflows which can be integrated into the AP process for routing and approval in seconds.
Payment Automation: Once all the conditions are met, the invoice is directly pushed for payment automation which generates a transaction ID that is again matched with the invoice. By adopting a payment automation system, all the payments are tracked recorded and are up for analysis for a CFO to control budget spends, improve visibility transparency and communication with the vendor.
Though, businesses with AP expertise in their department can easily switch to automation of each stage in the AP process once they get the hand of the system. But if you are short of resources or expertise to adequately make use of automation for Accounts Payable, You can simple reap all the benefits by outsourcing the Accounts Payable for back-office accounting firms like Outsourced Bookkeeping. With a team of Accounts Payable Experts equipped with advanced automation tools and software, we can provide you comprehensive Accounts Payable Services for your business at an affordable cost. For more information on our Outsourced Accounts Payable Services, visit: https://outsourcedbookeeping.com/