Using AP Automation
Updated: Mar 22, 2022
Accounts Payable Automation (otherwise known as AP Automation) is a process which provides companies with the ability to automate the processing of supplier invoices. This means that no human interaction is required during this digital workflow which would have normally been processed by an accounts staff member.
The process of AP Automation begins with the capture of invoice data in a readable digital format. This can come through a variety of ways, but is usually through an optical capture recognition (OCR) process. This is what is used in order for a system to ‘read’ a PDF file.
The AP Automation system will then take that information which they have deciphered and push it through the accounts payable workflow. The AP Automation system will be linked with the company’s enterprise resource planning (ERP) system(s). This means that all information gained can be seamlessly transferred between the two systems without causing strain to the internal IT system.
The core benefit of account payable automation is the cost saving it can provide to companies. However, there is more to it than just the saving of costs. Companies are able to gain significant efficiency and morale improvements within their teams through the implementation of automation. Automation also reduces the potential risk of human error. This means that duplicate creation and erroneous payment risk is almost eliminated.
How to Automate Accounts Payable?
It is common for companies who plan to automate accounts payable to look towards an AP automation solution which can link up to their ERP system, and many other applications throughout the business. It can be argued that it is better to have one system which covers all bases, and does a decent job, rather than many different systems which specialise on a singular task perfectly.
There are many cloud-based systems out there which can automate accounts payable. The variety of options will cater to different companies depending on their size and industry. For example, there may be a specific system which suits a manufacturing company more than a tutoring company.
It would be best to analyse your accounts payable process, and then begin to look for options which match your process. This is because every accounts payable process can be different, depending on the type of supplier invoices that are utilised. For an indirect expense, the invoice will be received, and distributed to the relevant approver within the firm. However, for direct expenses, there is a purchase order involved, and the process will involve matching the purchase order to the invoice. If there are no comments on the matching check, then the invoice is pushed for payment.
The trick with automation is knowing which type of expense payment it is, and whether the process needs to involve an approval step or not. Of course, if your business only involves direct expenses with just a match to the purchase order required, it makes the automation far simpler.
How to Select your Accounts Payable Automation System?
The important step here is to really understand your processes so that you can carefully select the best system for your specific organisation. It is essential that the system has the ability to work with every invoice processing scenario which your organisation handles on a daily basis. You do not want to end up in a scenario where suddenly you realise a certain type of invoice can’t be handled (or worse, it is handled incorrectly).
The best approach here is to go for a system with flexibility. One which can handle anything you throw at it. This means that while a certain process might not exist in your company right now, it may in the future, and the system already in place can handle it. This happens all too often at companies, where they sign up to a very rigid system which is perfect for their current application, but causes headaches if the company’s setup changes slightly.
In addition to flexibility, you should look to understand how the system will link-up with the other technology used within the company. How does the AP automation integrate with your ERP system, for example? It is important to not end up with a system that creates just as many manual tasks as it eliminates.
Reasons to Consider using Accounts Payable Automation
Improved Invoice Accuracy
Dealing with mistakes in the accounts payable process can be costly, and frankly a pain to have to fix. AP automation can resolve a lot of these issues by automating the manual input process, which eliminates the potential for human manual error.
Furthermore each step in the automation process is streamlined. There will never be an instance again where one staff member is left waiting to approve an invoice because it is sitting on another staff member’s desk. Once a step in the process is complete, it automatically pings over to the next step.
Faster Data Entry
We’ve already mentioned the element of a reduction of input errors due to the automation. But the speed at which data is input is also significantly increased. The reality is that an automation process can open a file, read it, and transpose the data often before a human has even had time to open the file.
Overall, the speed at which AP automation runs means that the whole accounts payable process runs far more efficiently, without error. But there is a final core benefit of the automation…
Your staff do not have to spend their day doing monotonous repetitive tasks which they ultimately hate. Providing automation of the boring roles of jobs can lead to a significant increase in productivity. But why? Because automation can actually increase staff morale. Employees will feel more empowered because they have time to take on other responsibilities which are deemed more important and require more responsibility from their part instead of the same dull task that they previously hated. Generally humans enjoy autonomy (ie - an ability to make their own decisions over their work). When they’re forced to do the same manual task every day, without variety, they can get bored and complacent. It is employees who have to do this that are more likely to dislike their jobs.