Your Complete Guide To Accounts Payable Automation
Updated: Oct 17, 2022
AP automation software opens the door to supercharged and streamlined processes for your business. The software effortlessly extracts information, reduces input errors and allows your finance team to set aside tedious, mundane tasks and focus on the important stuff.
Let’s take a look at this nifty guide we put together that tells you everything you need to know about automating the accounts payable process for your business.
What is Accounts Payable Automation?
Accounts payable automation is used to reduce the amount of time spent administering manual data entry, by automating the process instead.
This in turn, reduces costs for your business. It’s a win win for everyone.
The most common way that companies automate their accounts payable processes is through an accounting software solution. This software solution can either be an on-premise or a cloud-based tool.
Why are Accurate Accounts Payable Processes Important?
A good accounts payable process helps to alleviate the risk of human error, improve business relationships, eliminate late fees, and make sure that all business expenses are properly managed and accounted for.
Accounts payable isn’t just about paying the right bills on time - it’s an essential part of managing any business.
Nine Advantages of Accounts Payable Automation
Here are some of the main advantages of utilising an accounts payable automation system:
By reducing the process of manual data entry, accounts payable invoice automation frees up much more time.
The dedicated accounts payable clerk will no longer be required to manually enter invoices into your accounting system. Instead, the software will automatically pull information from your vendors' systems.
Another time saving benefit is that invoices will no longer sit around waiting for approval - because an accounts payable automation solution makes sure that the right person automatically receives the right invoice at the right time. Genius.
AP software solutions also offer greater real-time visibility into the invoice processing status. This cuts down the days payable outstanding (DPO) in a big way.
Reduction in Errors
When using an accounts payable automation solution, there is a major decrease in human error. This is because the system removes the task of manual data input.
The software will also be able to validate invoice planning against ERP information to help you avoid duplicate payments.
Lowers Invoicing Costs
Accounts payable automation can help to save on accounting expenses by reducing labour costs and office expenses.
Using an accounts payable automation solution will provide clearer insights into the payment cycle. Businesses can use a single dashboard to gain complete visibility of all invoices and AP responsibilities in real-time. (I bet you’re asking yourself where you can sign up).
The software will also make it easy to track employee productivity. This will give you full transparency, and will help improve employee and team performance and output in general.
Using an AP software solution allows you to manage multiple vendor relationships at once.
That’s right. When you receive an order from one vendor, you can immediately start processing that order while you're still working on another order from a different vendor. (insert mind blown emoji).
This improves efficiency, and it also makes it easier for small businesses and startups to scale.
AP software solutions provide added security. This is because of their use of encryption technology that protects sensitive financial information.
The right software solution can help protect your business against fraud by carefully managing which employees can access invoice approval and payment release functionality.
You can also create approval networks that involve multiple people to ensure that it is easier to detect any fraudulent activity.
This means that a single person is never solely responsible for releasing payments and approving invoices. Not only does this protect the business against fraud, but it also reduces the possibility of incorrect or missing data.
Lowers Storage Costs
By using an accounts payable automation solution, all of your AP data will be backed up and stored on the cloud.
According to the IRS, businesses should keep financial records for up to seven years. This is normally done by storing physical documents, which takes up heaps of space and can add to storage costs for your business. Yikes.
Many states require businesses to file specific forms electronically. An AP software solution makes this process quick and simple.
By using the automation software, you ensure that all necessary procedures are covered with the wide range of templates available.
Greater Control Over the Accounts Payable Process
Accounts payable automation uses specific workflows that you can customise to your business. By standardising your business rules within these workflows, you can gain greater control over the entire AP process from start to finish.
This can help you track the activity of all team members involved in the AP process, it offers you greater insights into AP documents, and it allows you to make sure the right people are working on the right documents every time.
With full control over the accounts payable process, you also get a complete trail of your documents and processes for any audit purposes.
Accounts payable automation is one of the easiest ways to save your business time, improve operating efficiency, and achieve greater financial accuracy. This can all have a significant effect on your bottom line. (show me the money, am I right?!)
By utilising the right AP automation solution, achieving this is easy. And when it comes to businesses that need to scale, being able to automate the AP process can add immense value over the long run.
Sweep offers the most convenient expense tracking app for freelancers, startups, and SMBs. Using this app is the easiest way to optimise your AP automation for a better managed business.
Sweep’s software helps your business scale while your expenses are properly managed. See how Sweep can help your business with AP automation.