Accounts Payable Automation – End-to-End Explanation

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We repeatedly emphasize the advantages of automation. And the concept is simple: intelligent software handles slow, repetitive processes that waste monthly hours or days.

We examined the benefits of accounting automation and expense automation. However, accounting and expenses frequently rely on outmoded processes and tools, causing teams to move more slowly than necessary. Therefore, we can also include accounts payable. In addition, many touchpoints, including purchase orders, supplier invoices, approvals, and accounting, are still manually completed. This results in lengthy wait times to process invoices, leading to dissatisfied suppliers. Consider hiring an outsourcing service provider for managed accounts payable services to increase profit margin and customer satisfaction. 

This article will discuss automating a significant portion of accounts payable. And allowing finance and purchasing departments to focus on more complex or important tasks. But let us first understand the basic definition of accounts payable.

Accounts Payable Automation

What are Accounts Payable?

Accounts payable is the classification of all debts owed by your business. Your company’s balance sheet lists account payable as current liabilities. Accounts payable manages all debts and liabilities of the business, including credit-purchased inventory from vendors and outstanding bills for fixed costs.

Every business incurs expenses as a result of its day-to-day operations. It uses accounts payable to keep track of and pay for expenses that typically fall into the following categories:

  • Travel expenses: arrangements for flights, hotels, taxis, per diem, etc.
  • Reimbursing employees for business expenses and distributing small changes are examples of internal finance
  • Paying invoices and managing vendor information constitutes vendor payments
  • Reducing costs by negotiating payment terms, identifying ways to save money, or consolidating operations

What is Accounts Payable Automation?

As its name suggests, accounts payable automation refers to tools or processes that automate previously manual aspects of accounts payable. This typically requires specialized software, examples of which we will examine shortly.

AP automation allows you to submit and approve purchase orders and invoices electronically instead of physically placing them in in-trays. In addition, some solutions will automatically read invoices and extract information, eliminating the need for anyone on your team to enter data.

AP automation technology automates many tasks, such as invoice receipt, coding, approval routing, payment, and reconciliation. As a result, you may encounter the term “touchless” processing, which generally refers to AP automation which avoids any need for manual data entry at every stage.  However, approvers may still be necessary to click a mouse to sign off on payments.

AP automation software typically includes dashboards and analytical tools to aid in managing the AP process and diagnosing issues. In addition, because all accounts payable information is digitized and stored in a single system, it is simpler and easier to search for and audit the data.

Why Automate Accounts Payable?

In the present economic condition, businesses cannot afford to waste opportunities to free up working capital. Therefore, businesses must automate accounts payable processes to take a more strategic approach to accounts payable.

Delayed payments, caused by manual processes or complex approval systems, can erode supplier goodwill and result in slower delivery times, less willingness to fix defects and slower responses to customer inquiries. AP automation software enables your accounts payable department to pay suppliers optimally, freeing up working capital and enabling AP departments to take advantage of early-pay supplier discounts.

AP automation offers businesses many advantages, including cost savings and processing efficiencies, reduced errors and exceptions, and optimized working capital by capturing early payment discounts.

By automating this procedure, businesses will have master forms of payment and reduce processing times. Payment automation drives the majority of ROI. Digitizing processes will yield additional cost savings if you’re receiving rebates from virtual cards. 

How Does Accounts Payable Automation Work?

The AP automation software converts your suppliers’ invoices into a standard digital format and then pushes them through a digital workflow that culminates supplier payment.

At the outset of this process, AP automation uses optical character recognition (OCR) to retrieve information from invoices. Some solutions discover patterns over time and improve precision using Machine Learning (ML); for example, they may advocate particular general ledger codes or approval routing based on experience. You may eliminate the need for manual intervention for the vast majority of invoices by configuring business-specific rules, such as acceptable variances and approval hierarchies.

The Near Future of The Accounting Payable Automation

The future of AP is strongly entrenched in the expansion of corporate technology. There are a few methods by which these modifications will affect the operation of the AP department, and Artificial Intelligence is one of them.

The technological move toward accounts payable as the strategic stance is unmistakable evidence of AP’s crucial function. Consequently, your companies analyze how they may leverage the new data sources to prepare. In addition, leaders of the AP should be willing to acquire new skills related to current technology and security to become more strategic partners and less reliant on paperwork.

So, is your organization ready to implement accounts payable automation?

Online AP software facilitates the process with simple installation and compatibility with existing systems, allowing you to harness the power of automation quickly. Also, considering a trusted Accounts Payable Services is another great option.

Accounts Payable Automation Software

Even though most of the solutions provide business entities with a plethora of useful capabilities, many of them are incapable of managing complex AP procedures. AP automation systems aid accountants in deciphering these intricate AP processes and handle a greater volume of invoices.

In addition, they can significantly reduce human error and physical labor. The optimal AP software can assist accountants in charge of accounts payable and managers who wish to monitor the AP process.

Alas! Finding the optimal AP product for your organization can be more challenging than managing accounts payable. Based on our own experiences, we compiled a list of the finest AP automation tools currently available.

Accounts payable automation should be thoroughly researched to ensure the optimum fit for a company. The chosen accounts payable automation software must support every invoice processing scenario to achieve true accounts payable automation and real-time cost savings.

In addition, it is essential to comprehend how the new AP automation system connects with the current ERP to enable data synchronization. And a streamlined process that eliminates manual activities and delivers accounts payable automation.

We have also covered more on AP in our previous blog, “Pros and Cons of Outsourcing Accounts Payable Services” have a look at it.

Top Automated Accounts Payable Applications

This list is by no means exhaustive. Rather, we wished to present a few excellent, distinct options to demonstrate the types of tools available and the issues they help solve.

Many tools are listed here that might suit your specific requirements. Therefore, peruse our list to determine which of the following fits your business’s needs.

1. Paramount WorkPlace

With its innovative and user-friendly features, Paramount WorkPlace Spend Management can deliver powerful Accounts Payable Automation and experience, making it a very compelling solution.

With Paramount, you can convert paper invoices into digital data using OCR. And robust document management capabilities enable paperless invoice processing. And provide a centralized and secure invoice retention system for easy information retrieval.

The OCR technology utilized by Paramount WorkPlace is one of the most effective on the market. It accurately recognizes and captures invoice data down to the line-level details, which are then forwarded to the standard approval process.

2. Spendesk

Spendesk’s capabilities extend beyond accounts payable management. Rather, it is a comprehensive solution for spend management that automates the worst aspects of expense reports, billing, and company credit cards.

This is advantageous because it provides a single platform for all operational expenditures. Employees will quickly learn the proper procedures for claiming expenses, paying for items while traveling, requesting new subscription tools, and paying consultants and independent contractors.

3. Docsumo

Docsumo is intelligent document processing software that allows users to extract data from any document efficiently. Regardless of its layout or structure, without requiring manual configuration. In addition, the software efficiently and precisely extracts information from various invoices.

It provides users with a pre-trained Invoice Capture API that offers increased customizability to facilitate data capture with minimal professional training. In addition, the captured data can be converted into various formats, including Excel, JSON, CSV, text, etc. Allowing users to import it into their system or third-party software easily.

4. Melio

Melio is a straightforward Accounts Payable software. Signing up for the software is free, as are monthly descriptions and checks. Additionally, it supports a limited number of users, and a single account is free. Melio is PCI DSS compliant and secures all client data perfectly, 

Accounts Payable Automation (AP Automation) is a technology system used by accounting departments to automate invoice processes for accounts payable. To automate accounts payable invoice and payment processes, AP Automation software is equipped with intelligent optical character recognition (OCR) technologies that integrate both artificial intelligence (AI) and machine learning (ML) software. The most frequent form of accounts payable automation involves the receipt, capture, and coding of invoices.

Conclusion

The objective of the majority of process automation is to increase efficiency, reduce errors, and facilitate company expansion. And in the case of accounts payable, Purchase Control explains, “this eliminates manual tasks and improves visibility and control over vital financial information.I hope this blog explained and gave you complete information about accounting payable automation and the top tools in this space that organizations can rely on based on their requirements. 

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