How automation can simplify the accounts payable process

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Date: 17 May 2022

Technology has transformed all aspects of modern life. By automating processes and employing AI, many businesses are benefitting from quicker, more efficient processes. However, many more are still reluctant to embrace new tech. They shouldn't be as there are some key benefits to automating every day, business tasks. One such area in dire need of automation is the accounts payable process.

Manually maintaining accounts payable records can be time-consuming and prone to errors, resulting in inefficacies and delays in the vendor cycle. Accounts payable automation has the potential to eliminate such problems.

Let's discuss the main issues associated with accounts payable (AP) processing and how automation can solve them:

1. Slow processing speed

The sheer volume of data handled in AP processes makes manual processes inefficient. Data must be extracted, reviewed, and entered to make and approve payments and to maintain accurate records. This process is repetitive and manual. Since invoices have to approved by specified personnel too, the invoice-approval process is also slow.   

AP automation skirts around these laborious tasks by using technology such as Optical Character Recognition (OCR) to automatically identify relevant data from documents, makes entries, and creates records. Computers are quicker than humans so data can be gathered and organised swiftly. Invoices are routed automatically to relevant personnel, and system notifications remind individuals to deal with pending invoices promptly. The AP workflow moves faster, and deals are closed quicker, increasing the organisation's cash flow.    

2. Errors

Manual AP processes are dominated by paperwork and spreadsheet entries, making them prone to human error. Such errors can include entry duplication, incorrect payments, missing payment deadlines, and missed payments. Instances of incorrect data entries and discrepancies can be expected. Such problems can damage relationships with suppliers and your business' credibility. A business can face considerable losses, which can be especially damaging to small and start up businesses.

AP automation significantly reduces the number and likelihood of errors. As data entries are automatic and payments are digitised, instances of human error and missing deadlines are entirely eliminated. This shelters the business from losses and reputational damage and saves time that would otherwise be spent unpicking mistakes and correcting them.

3. Low visibility

Keeping a grip and overview of manual AP processes can be challenging, especially as your business grows. Consequently, the control over your business' finances remains weak, leaving room for inefficiencies. There's also an increased risk of fraud when you don't have transparency: there are no audit trails in manual AP work, spending patterns are obscured, and limited data access is a challenge. Fraudsters work in such blind spots.

Tech-enabled, centralised platforms eliminate these problems by granting data access, organising information into categories, and generating customised reports. For instance, you can easily find late payments and have insight over metrics like average invoice approval time. Such visibility ensures that you can identify problems beforehand and work to fix them as soon as possible. Stringent approval routes and a recorded trail of changes strengthen the business against fraud. Abnormal patterns are automatically separated into reports and notifications. Such enhanced visibility and secure data storages means financial data is monitored and safe, mitigating fraud risks.

4. High costs

A large amount of manual work requires a greater number of employees and working hours. The paperwork itself is costly too. Additionally, the errors associated with such processes entails more time and costs. In contrast, automation eliminates paperwork and reduces the amount and time of workforce required to deal with AP, lowering operational expenses significantly. 

Endnote

Embracing technology is the way forward for businesses. Automation of AP processes can greatly benefit your business: it enables significant time and cost savings and enhances transparency and accuracy. Employing an automated solution will enable you to streamline your operations and improve your efficiency considerably. If you've been harbouring reservations about digitalisation, now's the time to put your concerns aside.

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