If you own one of the 90 percent of U.S. businesses still using checks to pay your vendors, it’s time to launch into the 21st century. Change can be scary, especially if you’re worried about uprooting accounting practices that have been in place for years. But what’s even more frightening is looking at how much time you’re wasting each month with busy admin work when those tasks could be fully automated.
The good news is that you can implement Accounts Payable (AP) Automation without overhauling your entire accounting department.
The best way to ease your fears of AP automation solutions is by learning the basics of what it is, how it works, and how it will benefit you. You don’t need to be an accountant to understand, either. We’re breaking down the basics to calm your nerves and get you on board with a more straightforward way to manage payments.
Accounts Payable automation, or AP automation for short, is when you use technology to automate and streamline the Accounts Payable process. This allows you to minimize costs, avoid human error, and improve vendor relations.
By automating Accounts Payable, your business can process vendor invoices without having to manually process each one individually. Having an entirely digital workflow has countless advantages for businesses today. There are many software options for AP invoice automation, each with different solutions and benefits. Many programs also include valuable tools to analyze payment data.
You may think your current payment solutions are working just fine, but businesses of all sizes should see the importance of simplifying and optimizing B2B payments. Whether you’re a small mom-and-pop shop or a large-scale international corporation, payables automation is crucial for all companies looking to reduce costs, streamline processes, automatically capture discounts, and minimize the risk of fraud.
There may be an initial cost when implementing AP invoice automation, but you will begin to see a return on your investment in multiple ways. For starters, your cost per invoice will drop dramatically. In addition, companies can save on printing supplies, mailing costs, and labor, adding up to drastic savings.
With Accounts Payable invoice automation, the entire process from receiving the invoice to payment can be completely touchless. The data on invoices will be extracted automatically, invoices matched to purchase orders and checked for accuracy, and approvals finalized with the click of a button. That means vendors will always be paid on time, and you can reconcile payments immediately.
Suppliers often offer discounts for specific payment terms. Usually, early payments will receive a greater discount. This is sometimes referred to as dynamic discounting. With automated software speeding up the invoicing process and keeping an eye out for favorable terms, a business can save money by maximizing potential discounts. This benefits your supplier as well as you.
Unfortunately, Accounts Payable is one area of businesses that can be more vulnerable to fraudulent practices. By automating Accounts Payable, you can limit your risk and prevent fraud. With full visibility of your AP workflow, suspicious activity can be monitored instantly and effortlessly. This means catching duplicate payments, false billing, and unapproved vendors and putting a stop to some of the most common fraudulent transactions.
The importance of AP automation should be evident by now, but you will see even more hidden benefits after replacing manual processes with high-tech software. AP automation isn’t just good for your bottom line. It’s good for your team, suppliers, and even the planet.
The way AP automation works is pretty simple. It starts by scanning invoices for vital information and digitizing it into the AP software for review. The software will then compare the invoice with the purchase orders already on file, searching for any discrepancies that should be flagged. At this time, the invoices can be coded automatically based on a set of rules that have been established.
Once the invoices have been processed, they will be sent to the designated manager for approval. The software will alert the proper approver that the invoice is ready for review. Approval can be done within the cloud software, which is even more efficient with batch approvals. The payments are then made and recorded.
The manual process of Accounts Payable takes up a lot of valuable time and resources from employees. On top of that, there is so much room for human error using traditional accounting methods. With automated Accounts Payable, companies reduce the time spent on monotonous tasks and prevent discrepancies in accounting.
While saving time and money might be the main reasons companies first look into AP automation, the additional benefits are also crucial driving factors. More and more vendors are also looking to move to fully electronic payments and automated systems, so keeping up with industry standards is vital. Businesses using AP automation can accept more types of payments.
We’ve just barely scratched the surface of all the benefits that Accounts Payable automation can bring to your business. So now that you’re on board, the next step is to figure out exactly how to bring AP automation to your company. For most companies, this means integrating AP software into the systems that are already in place.
For example, P3’s Vendor Payment Automation tool is easy to use with your daily systems. The simple interface enables all vendor payments to be 100 percent automated. In addition, the software has robust data capabilities for storage and analysis and even offers to onboard new vendors.
P3’s Automation Solution is just one of countless options for business owners. It can be a daunting task trying to narrow down which one is right for you. Before making any decisions, consider these factors while shopping around for the best Accounts Payable invoice automation.
Just because the AP software you’ve chosen will be automating Accounts Payable, it doesn’t mean there is no human involvement at all. In fact, the software can only be as successful as those in charge of running it. And while these programs will do a lot of the heavy lifting for you, there are some crucial steps you and your team need to take to ensure the automation process is successful.
Follow these best practices to keep your accounting department running smoothly after implementing AP automation software.
It’s not a matter of if your company will move to AP automation. It’s a matter of when. Digital is the future, and you don’t want to fall behind industry standards. Switching over may seem like a giant undertaking, but with P3 Cost Analysts guiding your way, the move will be seamless and stress-free.
Our vendor payment solutions are simple by design, so you won’t get overwhelmed with a complicated interface. Some key components of our software include payments batch approval, easy integration, robust data capabilities, and full-service vendor enablement.
Contact one of our experts today to see how P3 can help streamline your AP processes.